Wagoner Out as GM CEO; Obama to Provide Details on New Auto Aid on Monday
29 March 2009
The Detroit Free Press reports that the Obama Administration has asked GM CEO Rick Wagoner to resign, which Wagoner agreed to do today. President Obama will unveil his new rescue plan for GM and Chrysler in a White House ceremony on Monday.
Not since President Franklin Roosevelt considered taking control of Ford Motor Co. in 1943 from a failing Henry Ford has the federal government pushed for such sway in the management of Detroit’s automakers.
The tack suggests a hard-nosed approach from the Obama administration toward the automakers, bondholders and the UAW, all of whom have yet to reach agreements on key concessions, despite months of talks.
GM is not commenting on the reports. No successor has been named yet. The Detroit News reported that:
...Obama told four Michigan members of Congress on a conference call Sunday that GM President and Chief Operating Officer Frederick Henderson would run the company for the time being, according to a source familiar with the situation. Henderson has been carrying out the company’s restructuring on a day-to-day basis and knows the task force leaders.
Industry experts credit Wagoner with pushing through profound reforms at the 100-year-old automaker, but his critics say Wagoner moved too slowly. After losing $82 billion since 2004, GM is now subsisting on federal loans as it struggles to survive one of the most perilous stretches in its history. The company has received $13.4 billion from the government and is seeking up to $16.6 billion more. According to a source familiar with the matter, Obama will provide GM with an unspecified amount of working capital over the next 60 days.
An Obama administration official said Sunday that the White House asked Wagoner to resign and he had agreed. Most industry insiders were not entirely surprised, given the political mood.
Bravo Obama for knocking some heads together. It was GM's fault for getting themselves in this position in the first place. If you don't want federal meddling, don't take federal money. This will provide incentive to pay the money back faster...and for the UAW and company management to start working out their differences in meaningful ways. A problem will be turmoil in the ranks & revolving door management if too much more of this occurs...and a downward spiral in quality....let's hope not.
Posted by: ejj | 29 March 2009 at 08:00 PM
The fact that a sitting president has the power to fire a CEO is really sad. If private companies are now subject to political whims, then god help us. Waggoner has done a great job trying to turn around a bad company he took charge of. In his time he has shrunk the ranks of the UAW, and won concessions from them during every round of negotiations. For the tree huggers out there, he has also pumped huge amounts of R&D into improving fuel economy and will have made GM the first major auto company to produce a vehicle with an electric drive train.
To speak to my first point: Have we lost any sense of capitalism whatsoever when a politician can force a CEO to step down? So far Obama has set CEO pay at banks, ignored negotiated contracts for AIG employees (that he signed off on months prior, not to mention), and now he is replacing CEOs. Do we really want to be a socialist country? really?
Posted by: Bryan | 30 March 2009 at 08:43 AM
You can't be serious Bryan. The auto and finance companies came begging to the government for handouts as a result of their failings over the last 10 years, as a result of their short sighted greed, as a result of government deregulation.
Obama has every right and obligation to step in and call the shots when he is doling out taxpayers' money to these mismanaged institutions.
GM's record on electric vehicles is atrocious, they killed the very promising EV1 10 years ago. Tesla, a small startup company, has beat them to the punch. I think Tesla should be getting billions in bailout money to set up plants in Detroit, now that would be a fundamental restructuring.
Posted by: Mark_BC | 30 March 2009 at 09:37 AM
I think Obama made a mistake here. If GM goes out of business, it will cause a cascade of business failures that will make this look like the 1930s.
Posted by: SJC | 30 March 2009 at 11:07 AM
Bravo Obama for implying that management is responsible for the condition of Detroit rather than the UAW.
Your unions are confident that they will be rewarded for their support in the fashion to which they are accustomed. Of course your company will now to start working out the differences with the UAW in meaningful ways - $$$.
It was GM's fault for getting themselves in this position in the first place. They allowed the voters and politicians to pass laws that enable unions to stop all production at a Detroit plant until their demands are met.
Obama has every reason and obligation to step in and call the shots when he is beholding to the unions that have been forced to deal with these greedy auto companies.
GM's record on electric vehicles is notable, they tried with the special purpose EV1 10 years ago. Ten years later only Tesla is able to making an electric car (but UNaffordable).
But soon GM will have the showcase (but not moneymaker, semi-affordable) Volt and Toyota has the excellent (but not moneymaker after 10 years) Prius.
Posted by: ToppaTom | 30 March 2009 at 09:16 PM
"Obama to Provide Details on New Auto Aid on Monday.."
This seems to be the problem. He has addressed the nation, but has not had his team tell GM what they need to do to become "viable" 60 days from now.
No one can predict the sales picture in the near future, let alone years from now. So much depends on that, how do you gauge viability? Just cutting everything is sight will not bring about viability. It may however damage them beyond repair.
Posted by: SJC | 01 April 2009 at 11:15 AM