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Published: Tuesday, 7/14/2009

Now for the hard part

THE stripped-down "new" General Motors emerged from bankruptcy in record time last week, with CEO Fritz Henderson and new board chairman Edward Whitacre, Jr., vowing that GM would be a leaner, better automaker focused tightly on quality performance and customer satisfaction.

Now comes the hard part: Competing successfully in a much smaller market with many more rivals than in the old days.

There is no doubt that GM should be more competitive. The bankruptcy judge allowed the once-mighty automaker to separate itself into the "new GM," which consists of everything good, or at least potentially profitable: Cadillac and Chevrolet; GMC and Buick. Everything else - the 50 obsolete factories, the mountains of debt - were put into a separate company, Motors Liquidation, which is supposed to divest itself, settle all outstanding accounts (most likely at pennies on the dollar), and go out of business within five years. This was, clearly, not the sort of bankruptcy our fathers used to fear, but a sort of government-cushioned purification.

The process might seem unfair, but it is in the interest of every American that GM succeeds. The government now owns 60.8 percent of the automaker, and the taxpayers would like someday to get their $50 billion in loans back. Mr. Henderson, who President Obama elevated to CEO by firing Rick Wagoner, is gamely promising to pay them back ahead of schedule, and to make sure GM stays competitive. "Starting today, we take the intensity, the decisiveness, and the speed of these last several weeks and we transfer it to the day-to-day operations of the company," he vowed.

Mr. Henderson went on to pledge that the bad habits that got GM into trouble in the past would be permanently purged from the corporate culture: No more smug arrogance, no more inability to make timely decisions, no more spending billions on a whim to acquire other companies far removed from GM's core business of selling cars.

A man who has spent his entire adult life at GM, Mr. Henderson appears to mean that. If he falters, however, he is likely to be brought up short by his boss, Mr. Whitacre, the former AT&T chairman, who has never spent a day in the car business and is free from any sentimental attachments.

Still, General Motors is a long way from robust health. It emerges from the financial operating room into the worst economy in many years. Odds are that even in a best-case scenario, Detroit's once-Big Three will be no more than half of an auto world that will look more like the Medium-Sized Six or Seven.

Still, there are a few hopeful signs. Detroit has a new spirit of honesty, and General Motors seems suddenly to have a new hit car with the Camaro. It may take years before we know for sure, but America has to hope that GM can survive and again become prosperous. After all, we own it, for the foreseeable future, anyway.



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