GM CEO Rick Wagoner to resign

Discussion in 'American Cars' started by Aequitas, Mar 29, 2009.

  1. all over but from cnn, didnt see it here already but i suck




    As troubled automaker appeals for federal help, Rick Wagoner gives up top spot following years of losses and declining U.S. market share.
    By CNNMoney.com staff
    Last Updated: March 29, 2009: 7:45 PM ET

    NEW YORK (CNNMoney.com) -- General Motors Chief Executive Rick Wagoner will resign as part of the federal government's plan to bail out the struggling automaker, White House and GM sources told CNN Sunday.

    Wagoner's departure comes the day before President Obama is expected to announce the latest details of the government's plans for restructuring GM and Chrysler LLC, which have been pushed to the brink by huge losses and a sharp decline in sales.

    Fritz Henderson, the current chief operating officer, is expected to be named interim CEO of General Motors, according to two GM sources.

    A GM spokesman declined to comment.

    GM and Chrysler face a Tuesday deadline to prove to the Treasury Department that they can be viable in the long term. Without such a finding, the government can recall the $13.4 billion it has already lent to GM (GM, Fortune 500) and the $4 billion it loaned to Chrysler.

    Wagoner, a 32-year company veteran, has been CEO of General Motors since 2000. Prior to becoming CEO, he was chief operating officer and led the company's North American operations. He also served as chief financial officer from 1992 to 1994.

    A senior GM official official told CNN that the White House and its auto task force had "sent very clear signals" that the key to more help was "new leadership" and something that would help the administration see real change.

    General Motors has been hit hard as auto sales have plummeted. Sales have continued to tumble through the early months of this year, falling 40% across the industry and about 50% at GM and Chrysler.

    The companies and industry analysts have slashed their sales estimates for the year -- and that in turn has heightened the need for more loans to keep GM and Chrysler afloat.

    Last month, the two companies filed reports on their restructuring efforts. GM said it needed up to $16.6 billion more in loans. Chrysler asked for an additional $5 billion, and said it would need the money by the end of March to avoid running out of cash.

    The Obama administration had been widely expected to approve the requests. Obama has repeatedly spoken about the importance of saving the struggling auto industry, and on March 19, Treasury announced $5 billion in federal help for GM's and Chrysler's auto parts suppliers.

    --CNN's Kate Bolduan and John King contributed to this report. To top of page
    First Published: March 29, 2009: 6:01 PM ET
     
  2. This will change nothing.
     
  3. #3 jebbinksy, Mar 29, 2009
    Last edited by a moderator: Apr 25, 2016
  4. #4 ETB4U, Mar 29, 2009
    Last edited by a moderator: Apr 25, 2016
    But, how much of it was due to the current economic situation? He can't be blamed for that.

    As mentioned before, this will change nothing. Besides, the government does a shitty job of running itself, what makes anyone think they can do a better job of running a car company?
     
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  7. Glad the government found its scapegoat.
     
  8. If I were Rick Wagoner I would be so happy right now <A BORDER="0" HREF="http://www.supercars.net/PitLane?displayFAQ=y"><IMG BORDER="0" SRC="pitlane/emoticons/smile.gif"></A>
     
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  10. I wonder what kind of bonus he'll recieve...
     
  11. Last year, GM lost $31B. The year before that, it lost even more. $39B. The current economic situation only highlights the massive losses (in both revenue and marketshare) that GM has been incurring for many, many years.
     
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  13. in some fairness, he did improve the product lineup for GM drastically, was handed a company which people had lost faith in, and currently has landed the worst collapse in car sales pretty much ever.
     
  14. #15 Bishop Ghost, Mar 30, 2009
    Last edited by a moderator: Apr 25, 2016
    Obama Issues Ultimatum to Carmakers
    By SHERYL GAY STOLBERG and BILL VLASIC

    WASHINGTON � President Obama announced what amounts to a do-or-die ultimatum for the struggling automobile industry on Monday, laying out strict standards that the carmakers must meet to get more government aid and declaring that the industry must survive because it is �like no other, an emblem of the American spirit.�

    A failure of leadership �from Washington to Detroit� over the years has led the industry to the brink of collapse, the president said, and in more recent days both General Motors and Chrysler have failed to come up with plans adequate to justify the billions more in government help that they are requesting.

    �And so today, I am announcing that my administration will offer G.M. and Chrysler a limited period of time to work with creditors, unions and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success,� the president said at the White House.

    Speaking a day after the White House pushed out the chairman of G.M., Mr. Obama said Chrysler has been instructed to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.

    The president said he was designating Edward Montgomery, a former deputy labor secretary, to oversee the auto-recovery effort. His mission will be far-reaching, to cut through government red tape and identify initiatives to support those communities hit hard by the industry�s troubles.

    Other salient features of the latest plan to pull Detroit out of its decadeslong skid include a tax break, being started by the Internal Revenue Service at once, for auto purchases made between Feb. 16 and the end of 2009; incentives for people to turn in older, less fuel-efficient vehicles and buy more energy-efficient cars and government-backed warrants to assure customers that they have nothing to fear by buying a car from G.M. or Chrysler.

    While the president�s announcement embodies firm government control of the car industry, at least for the time being, he said, �These companies � and this industry � must ultimately stand on their own, not as wards of the state.�

    Mr. Obama said his administration has been working closely with the Canadian government, which was to announce its own �specific commitments� later Monday. Both G.M. and Chrysler have extensive operations north of the border.

    The concept of encouraging people to buy more fuel-efficient cars, which has been tried with considerable success in Europe, will require the cooperation of Congress. Mr. Obama said he would work with lawmakers to identify portions of the recently enacted multibillion-dollar stimulus package that could be trimmed to finance the purchase-incentive idea � and make it effective at once.

    General Motors, in a statement released after the president�s comments, said that over the next 60 days, the company would try to �address the tough issues to improve the long-term viability of the company, including the restructuring of the financial obligations to the bond holders, unions and other stakeholders.�

    �Our strong preference is to complete this restructuring out of court,� G.M. said. �However, G.M. will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process.�

    The president tried to project optimism as he summoned images of Detroit�s mighty past, even as he spoke of decades of complacency and problems left for another day �even as foreign competitors outpaced us.�

    �Well, we have reached the end of that road,� he said. �And we, as a nation, cannot afford to shirk responsibility any longer.�

    The president did not mention Ford, the other company in Detroit�s Big Three. While it has had problems, Ford has not yet found it necessary to seek government assistance.

    The president envisioned an auto industry much different, almost surely smaller, and more nimble. Yet in doing so, and voicing confidence that the industry can travel that road, he recalled an earlier Detroit that �built an arsenal of democracy that propelled America to victory in the Second World War, and that powered our economic prowess in the first American century.�

    The decision to ask G.M.�s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration�s determination to keep a tight rein on the companies it is bailing out � a level of government involvement in business perhaps not seen since the Great Depression.

    �This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company; rather, it�s a recognition that it will take a new vision and new direction to create the G.M. of the future,� Mr. Obama said.

    The president made clear that some form of bankruptcy, or something close to it � a quick, court-supervised restructuring, as officials described it in advance � could still be an option for G.M. or Chrysler or both. �What I am not talking about is a process where a company is broken up, sold off, and no longer exists,� the president said.

    Mr. Obama�s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration�s new plans for them, concluded that Chrysler could not survive as a stand-alone company.

    The report said the company would get no more help from the government unless it can finalize a proposed alliance with the Italian automaker Fiat by April 30. It must also reduce its debt and health care obligations.

    If a deal is reached between Chrysler and Fiat, the administration says it would consider another loan of $6 billion to Chrysler.

    G.M., on the other hand, has made considerable progress in developing new energy-efficient cars and could survive if it can cut costs sharply, the task force reported. The administration is giving G.M. 60 days to present a cost-cutting plan and will provide taxpayer assistance to keep it afloat during that time.

    Although some observers of the auto industry have attributed Detroit�s troubles in part to generous wages and health benefits for assembly line workers, the president made no mention of those factors. �The pain being felt in places that rely on our auto industry is not the fault of our workers, who labor tirelessly and desperately want to see their companies succeed,� he said. �And it is not the fault of all the families and communities that supported manufacturing plants throughout the generations.�

    Rather, he said, there has been a failure of leadership.

    Along with Mr. Wagoner�s ouster, the task force said most of the company�s board would be replaced over the next few months. In a statement Monday, Mr. Wagoner said he had been urged to �step aside� by administration officials, �and so I have.�

    His resignation is the latest example of the government taking a hands-on role in making major decisions at companies it is bailing out. The government has already pushed banks to make management changes and sharply reduce or eliminate their dividends, and it also is directing many of the decisions at the troubled insurance giant, American International Group, which is nearly 80 percent owned by the government after its rescue.

    In deciding to urge Mr. Wagoner to step down, the Obama administration seemed mindful of the public�s growing outrage over bailouts of private companies, as well as the bonuses paid to employees of A.I.G.

    Mr. Obama is well aware that he cannot afford to give the appearance of using tax dollars to reward executives who have done a poor job, and he began signaling as early as last week that he would take a tough stance with the automakers.

    The plan Mr. Obama announced on Monday will also include government backing of warranties for G.M. and Chrysler cars and trucks, to give consumers enough confidence to buy them, even if one or both are forced into bankruptcy.

    Mr. Wagoner has presided over a steep drop in G.M.�s domestic market share, which has led to tens of billions of dollars in losses. His critics have said that management�s failure to move aggressively to address the company�s problems contributed to its dire financial situation.

    G.M. and Chrysler have almost exhausted the combined $17.4 billion in federal aid they have received since December. G.M. has asked for up to $16.6 billion more, and Chrysler has requested another $5 billion.

    Bondholders are under pressure to convert two-thirds of the $27 billion owed them into G.M. stock, while the United Auto Workers union is being asked to substitute stock for 50 percent of their health care benefits for retirees. Both groups have resisted those changes.

    Administration officials say they have enough money to offer the assistance they envision under plans already approved by Congress. Even so, Mr. Obama may face skepticism on Capitol Hill and from the public.

    As part of the companies� original agreement for the loans, both were required to submit restructuring plans. Mr. Wagoner�s removal underscores how much more G.M. needs to cut than was proposed in the plan the company submitted.

    Administration officials stressed that the company needed a fresh approach and leadership changes; they said Steven Rattner, the former investment banker who co-chairs the auto task force, delivered the news to Mr. Wagoner.

    Frederick A. Henderson, G.M.�s president, will succeed Mr. Wagoner on an interim basis as chief executive; Kent Kresa, a board member, will assume the chairmanship. Members of the auto panel spoke with Mr. Henderson recently and came away with a favorable impression of him, people familiar with the panel�s discussions said.

    G.M. collapsed last fall when new-vehicle sales in the United States plummeted to their lowest level in 25 years. G.M. lost more than $30 billion in 2008, and has been subsisting on government loans since the beginning of the year.

    The administration briefed lawmakers on the plan Sunday night. Afterward, Representative Thaddeus G. McCotter, Republican of Michigan, whose district is just outside Detroit, expressed frustration over the ousting of Mr. Wagoner and with administration officials for not being clearer about the potential job losses that lie ahead.

    �Why would you ask Rick Wagoner to resign when you are giving G.M. 60 days to meet a new target, but you aren�t saying what the new goal is yet,� Mr. McCotter said in an interview.

    http://www.nytimes.com/2009/03/31/business/31auto.html?ref=global
     
  15. No kidding. That's one massive responsibility off his back.
     
  16. Like the Captain being thrown off the Titanic and landing in a life raft
     
  17. pretty much every automotive industry analyst says GMs days are numbered, one guy this morning said he wouldnt be suprised to see chevrolet and cadillac as the two remaining entities. We'll see just how bad it gets.
     
  18. How much of those "loses" were due to retooling factories to making improved product?
     
  19. It's funny. We all had a good laugh at how crap GMers like bob lutz did their job, but the moment the liberal government starts saying the same thing, people went into "your side of the fence, my side of the fence" black and white mode, taking a position on the side of private sector and GM execs for what seems no other reason than to not be on the side of the current government.

    people will go a long ways to justify their views/decisions/votes. they could end up trying to justify them the rest of their lives.
     
  20. Why don't you tell me? And tell me how many other companies lost BILLIONS of dollars annually "due to retooling factories to making improved product." If you want to bring up costs of retooling, you can also bring up the beneficial sales of its subsidiary Allison Tranmissions and majority stake in GMAC, which padded the losses in years past.
    Let's not lose sight of the facts: GM was bloated, with redundant product lines, and its lack of vision saw it get caught with its pants down with SUV's clogging dealer lots when oil went to $1xx/barrel. While Wagoner made some beneficial changes, he ultimately oversaw some pretty lame product decisions. It's not just the "current economic situation" that occurred while on his watch.
     
  21. honestly, the problem wasnt ever product for GM just before the economic collapse, it was the overhead costs. GM was moving plenty of cars and actually turning a good profit before all the shit went down. SUVs sold VERY well in the 90s, including hummer off the back of the Patriotic movement. GM basically made what people wanted to buy. Even their cars sold well despite not being of great quality. So really I dont know why exactly people think it was lack of product that made GM like this. Its true that Toyota passed up GM in the car sector, but a well managed company would not have to sell the same amount of cars as a competitor to turn a profit. that isnt why GM is failing. GM is failing because of a bloated UAW dinosaur that has been an albatross around Detroits neck for generations. It wasnt Rick's fault that GM agreed several decades ago to side with the UAW and give them everything they wanted. With a free flowing ample RandD funding, GM will show exactly what it IS capable of and thats producing some of the very best cars. GM has already shown glimpses that it can do this when called upon, but it can do this across the entire fleet if it has the funding to do it. That is really the only reason why Japanese companies have been able to do it. They never had to tack on 3k+ just to make overhead instead of funding RandD.
     
  22. It was Rick Wagoner's fault for not doing everything he could to get rid of those UAW contracts or going public about the faults of a union. What's the worst that would've happened.....a strike?

    Any way you paint this GM has been mismanaged. I've said this for years. GM needs Lee Scott as their new CEO, because GM's biggest problem is cutting overhead and wasteful spending. Those are two things that Lee Scott, more then anyone else, knows how to do.

    There needs to be a complete overhaul of GM's thinking and this is the first step to that happening.
     
  23. I agree w/SuprJames, when they signed the new UAW contract that had a "pay freeze" I knew they were sunk. They needed to CUT salaries, not agree to pay the same thing for years to come.
     
  24. The contracts were foolish. there's no doubt that it's part of the problem, but try not to politicise it and spin it off as the sole problem. the UAW didn't bully the CEO's around, who really believes that? <A BORDER="0" HREF="http://www.supercars.net/PitLane?displayFAQ=y"><IMG BORDER="0" SRC="pitlane/emoticons/grin.gif"></A> who's running this company again? I think a lot of you guys get this idea of some good fella union boss shoving around the poor meek CEO.

    Did GM get bloated? absolutely, but badge engineering doesn't cost much. what does is whole separate administrations for what are essentially the same cars. Guibo, you complained that there was a disparagy between what should have been the same cars, but I'd make the argument that that same disparagy exists between the same car of the same brand depending on the year, time of the year, or even the day it was assembled.

    GM shotcallers got it in their heads that this SUV thing would work out for them, the UAW, and the consumer and they were dead wrong. And for all the consumer demand for a more representative range, an essentially lower profit margin higher development cost demand, GM decided they'd rather attempt to support a worldwide multi billion dollar operation on soccer moms.

    In review, it's not just the UAW. It's
    1: top-heavy administration
    2: poor choices in labour contracts
    2: failure to sell enough cars to support 1 and 2 for the last 20 years (imo quality related), and complete failure to even produce desirable cars for the last 10. (after quality improved)
     

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