Mary Barra says she’s rolling out the red carpet for GM’s $700 million in payouts

DEARBORN, Mich. — She has her team, customers, and potential investors. But for General Motors, it’s up to Mary Barra. GM boss Barra told shareholders at its annual meeting in Dearborn, Mich., on Tuesday…

DEARBORN, Mich. — She has her team, customers, and potential investors. But for General Motors, it’s up to Mary Barra.

GM boss Barra told shareholders at its annual meeting in Dearborn, Mich., on Tuesday the automaker was out to win over critics of the $700 million it’s already committed to General Motors Co., including payments by federal taxpayers, most of which came before she took over as CEO.

“We’re going to demonstrate it’s money well spent,” Barra said.

GM also announced that production at its Orion Township Assembly plant will return to 100 percent of capacity during the second quarter of 2014, with 1,350 jobs coming back to the region.

“Everybody in the State of Michigan will be excited about that,” Barra said.

Barra said GM would be “significantly” investing in its Michigan plant with the influx of 1,350 jobs and its current plans to build 1,000 Chevy Malibu sedans at the plant.

To help the company’s cause, she said, the company can look to its investments in newer technologies. GM has invested $26 billion since 2008 in the Detroit area.

General Motors came under intense scrutiny after nearly losing its entire government-backed bailout. The automaker has since repaid the government’s $49.5 billion investment in the company, after repaying its $9 billion convertible preferred stock and $1.7 billion loan in February.

Barra has been in the spotlight in part because of her leadership in the domestic auto industry’s slow and painful return to profitability after the financial crisis. GM is the second-largest automaker in the United States, with more than 10 million sales last year.

But as Barra reassured shareholders on Tuesday that the company was putting money where its mouth is, she faced criticism over how well the company is performing overall.

GM reported first-quarter revenue of $32.2 billion, compared with $35.1 billion for last year’s same period. GM has been reduced to a quarterly cash flow of just $1.6 billion. And its net profit last year was nearly $5 billion, well off its $8.4 billion in 2011.

GM was also criticized by its largest shareholder, United Auto Workers retiree health fund, which filed a shareholder derivative complaint that said GM has been failing to keep shareholders informed on its progress.

In February, the fund filed a derivative lawsuit that claimed that former CEO Dan Akerson’s decision to invest nearly $3 billion to retool the Michigan plant left the automaker with a pension obligation that couldn’t be funded.

Following the lawsuit, GM announced in July that it was in talks with its bondholders on a potential exchange. In exchange for exchanging some of their outstanding bonds for shares, they would receive about $2.2 billion, reducing the bondholders’ obligations by as much as $1.1 billion.

In a regulatory filing Monday, GM said a $1.5 billion of the $2.2 billion in savings from the exchange could come from the company not having to honor pension obligations owed to workers. The filing said the pension plan was “financially unsecured.”

A GM spokesman said the automaker’s health plan is fully funded. He said current GM retirees have received $15 billion in cash benefit payments since 2009.

This article is part of our Next America: Communities project, which is supported by a grant from Emerson Collective.

Leave a Comment