GM's Rick Wagoner Steps Down

[WarrenJ]

GM's Rick Wagoner has stepped down at Washington's request. Vice Chair Fritz Henderson will replace him.

The message is clear:

This is GM's absolute last chance.

[Bruce Nunnally]

I think this was symbolic more than anything, but we'll see how things go from here.

[JimD]

Things will not go well from here. After this Administration, in concert with the Congress, completes their redesign of our financial system, our auto industry, plus medical care delivery, you will not recognize the country you live in.

There is an opportunity for the voters to slow the process. That would be to replace all the incumbents in the House of Representatives and fire 33 incumbent Senators in 2010.

Fat chance.

[JimD]

Stay tuned folks; the plot thickens.

"The administration planned to send a team to Detroit to help with the

restructuring during the next 60 days."

Right! I'm from the government and I'm here to help you.

Color me skeptical.

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Obama to give GM 2 months to restructure

By KEN THOMAS

Associated Press Writer

WASHINGTON — The White House forced the resignation of General Motors' top

executive Sunday, on the eve of announcing new aid and a 60-day deadline for the

ailing auto giant to restructure. Chrysler LLC will get up to $6 billion and 30

days to complete an alliance with Italian automaker Fiat SpA.

Two people familiar with the plan said Sunday it will demand further sacrifices

from the automakers and bankruptcy would still be possible if the automakers

failed to restructure. The officials spoke on condition of anonymity because

they were not authorized to make details public.

President Barack Obama was announcing his plan on Monday. It includes government

backing of warranties for GM and Chrysler vehicles to give consumers confidence

in the U.S. automakers' cars and trucks.

Administration officials said Sunday that General Motors CEO Rick Wagoner was

stepping down immediately at the request of the White House, a sign of major

changes at the auto giant.

GM has already received $13.4 billion in government loans and Chrysler has

survived on $4 billion in federal aid. The automakers have been hard hit by the

economic downturn and the worst decline in auto sales in 27 years. In progress

reports filed with the government in February, GM asked for $16.6 billion more

and Chrysler wanted $5 billion more.

But the officials said the Obama plan would not go that far, providing

short-term aid in exchange for significant sacrifices.

The officials said the administration did not view Chrysler to be viable as a

standalone company. Under the plan, the government would provide up to $6

billion to forge the alliance between Chrysler and Fiat, but if the companies

failed to reach an agreement or find an alternative plan for viability, Chrysler

would not receive additional federal aid.

Fiat executives have talked to the White House auto task force about a proposal

to acquire a 35 percent stake in Chrysler in exchange for small car technology,

transmissions and other items that Chrysler has valued at $8 billion to $10

billion.

General Motors, meanwhile, would have a limited window to work with the United

Auto Workers union, bondholders and other stakeholders and would receive an

undisclosed amount of "interim financing" over 60 days to restructure the

company. The officials said the administration would determine how much GM would

need in "permanent capital" during the 60-day period.

If GM failed to reach the concessions needed, some type of bankruptcy could be

used at the end of 60 days, the officials said.

The administration planned to send a team to Detroit to help with the

restructuring during the next 60 days. With Wagoner's departure, new management

would be decided by General Motors' board of directors in consultation with the

government. An official said a majority of the GM board was expected to step

down.

Obama, in an interview with CBS' "Face the Nation" broadcast Sunday, said the

companies must do more to receive additional financial aid from the government.

"We think we can have a successful U.S. auto industry. But it's got to be one

that's realistically designed to weather this storm and to emerge — at the other

end — much more lean, mean and competitive than it currently is," Obama said.

Obama said the government would require a "set of sacrifices from all parties

involved, management, labor, shareholders, creditors, suppliers, dealers.

Everybody's gonna have to come to the table and say it's important for us to

take serious restructuring steps now in order to preserve a brighter future down

the road."

Both companies are trying to reduce their debt by two-thirds and persuade the

UAW to accept several cost-cutting measures.

Very little was being done in negotiations with debtholders and the union ahead

of Obama's announcement, a person briefed on the GM talks said Sunday. This

person did not want to be identified because the negotiations are private.

Under the terms of a loan agreement reached during the Bush administration, GM

and Chrysler are pushing the UAW to accept shares of stock in exchange for half

of the payments into a union-run trust fund for retiree health care. They also

want labor costs from the union to be competitive with Japanese automakers with

U.S. operations.

Neither GM nor Chrysler have deals with the union on the trust funding or

concessions from their debtholders and the administration has been trying to

accelerate those efforts.

GM and Chrysler, which employ about 140,000 workers in the U.S., face a Tuesday

deadline to submit completed restructuring plans, but neither company is

expected to finish its work. The administration's plan would be designed to

accelerate those efforts.

GM owes roughly $28 billion to bondholders. Chrysler owes about $7 billion in

first- and second-term debt, mainly to banks. GM owes about $20 billion to its

retiree health care trust, while Chrysler owes $10.6 billion.

In February, GM said it intended to cut 47,000 jobs around the globe, or nearly

20 percent of its work force, close hundreds of dealerships and focus on four

core brands — Chevrolet, Cadillac, GMC and Buick.

Chrysler issued two scenarios in its February plan: one as a distinct company,

and the second in an alliance with Fiat. Chrysler said in its February report

that it would cut 3,000 workers and eliminate three vehicle models, the Dodge

Aspen, Dodge Durango and Chrysler PT Cruiser.

___

AP Auto Writer Tom Krisher in Detroit contributed to this report.

___

[Bruce Nunnally]

Again, I wish the Government had handled the Banks and Bank holding companies with the same level of scrutiny and involvement. They are the ones who CAUSED the current economic problem after all. The Automakers should have been in better financial shape to begin with; no question. But if the credit markets had not disappeared, and people stopped buying cars due to the economic meltdown, GM would not be in the place they are at today.

[Bruce Nunnally]

GM Message from Rick Wagoner

On Friday I was in Washington for a meeting with Administration officials. In the course of that meeting, they requested that I “step aside” as CEO of GM, and so I have.

Fritz Henderson is an excellent choice to be the next CEO of GM. Having worked closely with Fritz for many years, I know that he is the ideal person to lead the company through the completion of our restructuring efforts. His knowledge of the global industry and the company are exceptional, and he has the intellect, energy, and support among GM’ers worldwide to succeed. I wish him well, and I stand ready to support him, and interim Non-Executive Chairman Kent Kresa, in every way possible.

I also want to extend my sincerest thanks to everyone who supported GM and me during my time as CEO. I deeply appreciate the excellent counsel and commitment of the GM Board and the strong support of our many partners including our terrific dealers, suppliers, and community leaders. I am grateful as well to the union leaders with whom I have had the chance to work closely to implement numerous tough but necessary restructuring agreements.

Most important of all I want to express my deepest appreciation to the extraordinary team of GM employees around the world. You have been a tremendous source of inspiration and pride to me, and I will be forever grateful for the courage and commitment you have shown as we have confronted the unprecedented challenges of the past few years. GM is a great company with a storied history. Ignore the doubters because I know it is also a company with a great future.

[WarrenJ]

Again, I wish the Government had handled the Banks and Bank holding companies with the same level of scrutiny and involvement. They are the ones who CAUSED the current economic problem after all . . .

I'm uncertain; is it the government or the banks to whom you are assigning primary responsibility?

It is my view that the 1999 repeal of the Glass-Steagall Act was the watershed moment where our current crisis is concerned. The Community Reinvestment Act (CRA), further, required banks to loan money to folk who couldn't repay their loans. The confluence of these two allowed/urged/forced banks to get stupid. The government was the initiator.

It frightens me we now look for a solution to the very entity that caused the problem.

Regards,

Warren

[BodybyFisher]

This is due to the government's trade policy, how do you allow NON UNION FOREIGN auto manufacturers to produce vehicles within this country and then allow them to compete against our home grown UNION auto manufacturers, without leveling the playing field?

[Thummpa315]

This is due to the government's trade policy, how do you allow NON UNION FOREIGN auto manufacturers to produce vehicles within this country and then allow them to compete against our home grown UNION auto manufacturers, without leveling the playing field?

I agree thought i believe whole heartedly that GM figured the government would step in like they did with the banks, they never stud up to the task at hand. Look at Ford...they sold off Jaguar and Volvo at the least, and Chrysler..they have been doing horrible in the past few years with out a rough economy. Many of my friends work at the Chrysler plan in Toledo, Ohio they had to bring in Hyundai and Mazda PLUS they are in talks about bringing in a home appliance company like whirpool and maytag to there assembly lines. Not to mention they have 1 week off a month now mandatory.