Rick Wagoner steps down, viability plan ruled not viable - Pontiac G8 Forum: G8 Forums - G8Board.com
 
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post #1 of 4 (permalink) Old 03-30-2009, 07:25 AM Thread Starter
Alexander Haig
 
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Rick Wagoner steps down, viability plan ruled not viable

In a surprise set of actions over the weekend Rick Wagoner was forced by the White House to step aside, basically "get out from behind the wheel of this bus and step in front of it", according to one industry commentator.
http://www.msnbc.msn.com/id/29946290/


The White House will announce today that the viability plans submitted by both Chrysler and GM are not good enough to warrant more bailout money. ChryCo has been given 30 days to fish (with Fiat) or cut bait (be sold piecemeal for chum)
http://www.msnbc.msn.com/id/29944834

Meanwhile GM has 60 days to get their **** in order or be forced into bankruptcy, and probably not the good version. The White House is laying 100% of the blame for the automakers' current mess entirely on actions or inactions of the former administration, which this pundit deems an irresponsible, unnecessary, and entirely wrong accusation.
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post #2 of 4 (permalink) Old 03-30-2009, 07:28 AM Thread Starter
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GM boss steps down at White House’s request

Move comes before Obama announcement on automaker restructuring

Video






updated 6 minutes ago

DETROIT - Time and time again, General Motors Corp.’s board of directors reaffirmed its support for Chairman and CEO Rick Wagoner, even as the company piled up billions of dollars in losses and begged for government loans to stay alive.
But Wagoner is now a high-profile casualty of government intervention, forced out as part of the Obama administration’s sweeping last-ditch effort to save the century-old auto giant.
Wagoner, 56, who spent 32 years with GM working all over the world, stepped down effective immediately, the company said in a statement early Monday. He was replaced as CEO by Fritz Henderson, the company’s vice chairman and chief operating officer.

GM board member Kent Kresa, a former chairman and CEO of Northrop Grumman Corp., was named interim chairman and said new directors will make up the majority of GM’s board when a new slate is nominated for election at the company’s annual meeting in August.
“The board has recognized for some time that the company’s restructuring will likely cause a significant change in the stockholders of the company and create the need for new directors with additional skills and experience,” Kresa said in a written statement.
The management shake-up, according to several industry analysts, shows that the administration is serious about forcing GM to change more quickly and dramatically than it did during Wagoner’s nearly nine-year tenure as CEO.
Jeremy Anwyl, chief executive of the automotive Web site Edmunds.com, called the move “political theater” to appease an increasingly bailout-weary public.
“American taxpayers are not happy,” Anwyl said. “But this way you’re able to point to Rick and say he’s gone, and that creates an environment where the loans become politically palatable.”
Interviewed Monday on NBC’s “Today” show, the governor of Michigan said Wagoner is a “sacrificial lamb.”
Governor Jennifer Granholm noted that Wagoner has worked for GM for more than 30 years and was trying to turn the company around. She said that Wagoner agreed to step aside for the good of the carmaker and its workers.
By all accounts, Wagoner made progress in fixing GM. While CEO, he cut its U.S. work force from 177,000 to roughly 92,000 today.
Wagoner also closed factories; shed the unprofitable Oldsmobile brand; globalized GM’s engineering, manufacturing and design to save billions; and led a resurgence in quality and performance of its long-neglected cars. In 2007, the company reached a landmark agreement with the United Auto Workers that shifted massive retiree health care costs to a union-run trust and ushered in a $14-per-hour wage for new hires, about half that of a current laborer.
But critics, including many members of Congress, say Wagoner moved too slowly, failing to cut enough of the company’s huge health care and pension costs, and relying too long on high-profit pickup trucks and SUVs as gas prices rose and the market shifted toward smaller vehicles.
In the past four years, GM has piled up $82 billion in losses.
Still, Wagoner had the company moving in the right direction, Anwyl said.
“Was he moving fast enough or bold enough? Obviously, in light of what we know today,” Anwyl said, “the answer would be no.”
While ousting Wagoner, the Obama administration made no management changes at Chrysler LLC, which also is getting government loans. Chairman and CEO Robert Nardelli has only been in charge there since August 2007.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Wagoner’s departure probably will have little impact on GM’s restructuring efforts because Henderson was the heir-apparent in GM’s succession plans.
“I don’t think you would see any shift or significant change at all with Rick’s leaving. I think the course that they’re on, they’re on,” he said.
Video

Mich. governor on auto bailouts
March 30: TODAY’s Matt Lauer talks to Michigan Gov. Jennifer Granholm about GM CEO Rick Wagoner’s decision to step down and whether carmakers should get more financial help from the government.
Today show

Wagoner became GM’s face to the public during a disastrous November appearance before Congress to request assistance. He was lampooned on NBC’s Saturday Night Live after being torn apart by lawmakers for flying to Washington in a corporate jet and offering vague, rambling answers to their questions.
“Given the history, a change in management could hardly hurt and might do some good,” Sen. Charles Schumer, D-N.Y., said Sunday.
Wagoner’s ouster came just before President Barack Obama planned to announce what Chrysler and GM must do to get government loans beyond the $17.4 billion they have already received.
Several senior administration officials said GM will get enough government aid to restructure over the next 60 days, while Chrysler will get up to $6 billion and 30 days to complete an alliance with Italian automaker Fiat SpA. If Chrysler fails to reach a deal with Fiat or another partner, the government won’t provide any further financing, likely sending the company into liquidation.
The officials spoke on condition of anonymity because they were not authorized to make the details public.
Wagoner, a former Duke University basketball player, joined GM in 1977, serving in several capacities in the U.S., Brazil and Europe. He became president and chief executive in 2000 and has served as chairman and CEO since May 2003.
In a December interview with The Associated Press, he declined to speculate on suggestions that he step down.
“I’m doing what I do because it adds a lot of value to the company,” Wagoner said. “It’s not clear to me that experience in this industry should be viewed as a negative, but I’m going to do what’s right for the company and I’ll do it in consultation with the (GM) board (of directors).”
Wagoner isn’t the first CEO to lose his job as part of a government bailout. The CEOs of mortgage giants Fannie Mae and Freddie Mac were forced out after the government took over the companies in the fall. Robert Willumstad, the former CEO of American International Group Inc., left the company in September.
GM cannot make severance payments to Wagoner or other senior executives under the terms of its governments loans. The company said in its annual report this month that Wagoner is eligible to retire under GM’s salaried employee and executive retirement plans, but the amount he would receive was unclear.

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Obama denies bailout funds for automakers
Fate of Hummer to be decided by Tuesday



GM and Chrysler were required by the Bush administration to get major concessions from debtholders and the United Auto Workers, with a deadline of March 31 for signed contracts. But very little headway was made in the negotiations this weekend as the parties awaited Obama’s announcement.
Wagoner said in a statement early Monday that he was asked to “step aside” during a meeting with Obama administration officials on Friday, and he consented.
He called Henderson an excellent choice to lead the company and thanked employees around the world.
“GM is a great company with a storied history,” he said. “Ignore the doubters because I know it is also a company with a great future.”
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post #3 of 4 (permalink) Old 03-30-2009, 07:36 AM Thread Starter
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Obama denies bailout funds for automakers

White House says neither GM nor Chrysler submitted acceptable plans







updated 43 minutes ago

WASHINGTON - The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants.
President Barack Obama and his top advisers have determined that neither company is viable and that taxpayers will not spend untold billions more to keep the pair of automakers open forever. In a last-ditch effort, the administration gave each company a brief deadline to try one last time to convince Washington it is worth saving, said senior administration officials who spoke on the condition of anonymity to more bluntly discuss the decision.
Obama was set to make the announcement at 11 a.m. (1500 GMT) Monday in the White House's foyer.



In an interview with CBS' "Face the Nation" broadcast Sunday, Obama 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.
Fiat alliance?
Frustrated administration officials said Chrysler cannot function as an independent company under its current plan. They have given Chrysler a 30-day window to complete a proposed partnership with Italian automaker Fiat SpA, and will offer up to $6 billion to the companies if they can negotiate a deal before time runs out.
If a Chrysler-Fiat union cannot be completed, Washington plans to walk away, leave Chrysler destined for a complete sell-off. No other money is available.
For GM, the administration offered 60 days of operating money to restructure. A frantic top-to-bottom effort began Sunday after CEO Rick Wagoner resigned under pressure from the White House.
Fritz Henderson, GM's president and chief operating officer, became the new CEO, a Treasury Department source said. Board member Kent Kresa, the former chairman and CEO of defense contractor Northrop Grumman Corp., will be interim chairman of the GM board.
One official said a majority of the GM board was expected to step down.
Obama advisers saw public outrage come to an ugly head in recent weeks, as populist anger escalated over bonuses paid to American International Group executives. They realized Americans are frustrated with the economy and its business leaders; they also said they would not invest one dollar more than was necessary to keep the companies alive and would walk away if it looked impossible.
Officials said GM had not made good on promises made in exchange for $13.4 billion in government loans, although there are no plans to call in those loans.
Administration officials still believe GM's chances are good, given its global brand and its research potential. Officials say they are confident GM can put together a plan that will keep production lines moving in the coming years. They planned to send a team to Detroit to help with that restructuring.



Chrysler, meanwhile, has survived on $4 billion in federal aid during this 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. The White House balked and instead started a countdown clock.
Administration officials acknowledged the short turnaround time was harsh; one described it as a nanosecond in a business cycle.

Two people familiar with the plan said officials will demand further sacrifices from the automakers and bankruptcy would still be possible if the automakers failed to restructure. Those officials spoke on condition of anonymity because they were not authorized to make details public.
Administration officials said they hoped large-scale bankruptcy could be avoided, especially if it might be stretched over many years. Any efforts to use the bankruptcy courts would have to be targeted and aggressive and must not prolong a restructuring process, they said.
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.


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.
An exasperated administration official noted that the companies had not done enough to reduce debt; in some cases, it actually increased during this restructuring and review process.
In February, GM said it intended to cut 47,000 jobs around the globe, or almost 20 percent of its work force, close hundreds of dealerships and focus on four core brands — Chevrolet, Cadillac, GMC and Buick.
In an effort to bolster consumer confidence, Obama planned to announce government backing of warranties for GM and Chrysler vehicles. An administration official said there is no price tag yet associated with that promise.
Aides note that Obama inherited the auto mess from his predecessor, President George W. Bush.



Under the terms of a loan agreement reached during the last administration, GM and Chrysler are pushing the United Auto Workers 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.
Little progress has been made between the companies and the union.
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post #4 of 4 (permalink) Old 03-30-2009, 07:38 AM Thread Starter
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HUMMER Alive Or Dead by Tuesday

updated 54 minutes ago

DETROIT - By Tuesday, General Motors Corp. will have to decide whether its struggling Hummer brand will die a quiet death or live on with a new owner.
The wounded automaker has told the federal government that it will make the decision to jettison or sell Hummer by the end of the first quarter as part of a plan to justify the government loans on which it is living.
GM says it's still talking to several possible buyers, and many of Hummer's dealers nationwide are hoping that someone, perhaps a Chinese automaker, will come to their rescue and buy the brand, which traces its roots to rugged vehicles used for transporting soldiers.



The automaker has told dealers it will make an announcement about the brand's future on Tuesday, but until then, GM will say only that it's still negotiating with some interested parties.
"We are cautiously optimistic," about a sale, said GM spokesman Nick Richards, adding that the companies with which GM is talking are from "all different parts of the world."
Hummer dealers, many of whom sell other brands such as Cadillac, are hoping for a sale and trying to concentrate on customer service. GM put the Hummer brand up for sale in June of last year, and dealers have been in limbo ever since.
Ed Williamson, owner of Williamson Cadillac Hummer in Miami, says GM has told him only that an announcement is coming Tuesday, but he's optimistic someone will buy the brand, perhaps to use the dealer network to distribute other models not currently sold in the U.S.
"My understanding is that they've got more than one candidate," he said. "One of the best assets as part of this sale is the dealer body, 160 of the best dealers in the country," he said.
But Erich Merkle, an independent auto analyst in Grand Rapids, Michigan, said that despite the deadline, Hummer's situation isn't much different than it was when GM announced the sale in June.
"I don't know what's going to make it look more attractive as time goes by," Merkle said, adding that the dealer network isn't large enough to be attractive to a foreign buyer.
Hummer's relatively poor fuel economy could hurt GM's ability to meet stricter government fuel efficiency standards that go into effect for the 2011 model year, he said.
GM has been living on $13.4 billion in government loans and has requested $16.6 billion more. Chrysler LLC, it's Detroit-area counterpart, has borrowed $4 billion and is seeking another $5 billion.
Both face a Tuesday deadline to submit completed restructuring plans to the government to justify the loans and prove they can become viable and repay the money.
President Barack Obama is set to announce a plan Monday for the government to provide more money in exchange for tough concessions from union workers, bondholders and others.
Under a viability plan filed with the government in February, GM also plans to sell off Saturn and Sweden's Saab, as well as make Pontiac a niche performance brand. By trimming the brands, GM would focus on Buick, Chevrolet, Cadillac and GMC, spending less on product development and marketing.
More than 90 percent of GM's revenue minus variable costs comes from the four core brands, the company has said.
GM said in its viability plan that Hummer, Saab and Saturn combined post an average annual loss of $1.1 billion before taxes. It did not break out the Hummer loss.
Hummer sales were down 51 percent last year compared with 2007 as gasoline prices rose above $4 per gallon. In January and February, even with gas around $2 per gallon, GM sold only 2,275 Hummers, down 65 percent from the same period last year, according to Autodata Corp.
The H3, the only 2009 model rated for gas mileage by the government, gets 18 miles per gallon on the highway and 14 miles per gallon in the city when equipped with a five-cylinder engine. Hummer also sells the larger H2.
Hummer has always been a niche brand, with U.S. sales reaching a peak of 71,524 in 2006. By comparison, Toyota Motor Corp. sold more than 20,000 Camry models in February alone.
Paul Adkins, general sales manager of Independence Hummer in Charlotte, North Carolina, said new Hummer sales have started to rebound a bit recently with used sales holding their own or increasing month to month.
Until the announcement, all he can do is keep selling and focus on customer service, said Adkins, whose dealership sells only Hummers.
"We can take it day by day, business as usual," he said.
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