Wagoner = Wa-goner! (GM CEO Steps down at Obama's behest)

[MKSheppard]

Link

The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.

On Monday, President Barack Obama is to unveil his plans for the auto industry, including a response to a request for additional funds by GM and Chrysler. The plan is based on recommendations from the Presidential Task Force on the Auto Industry, headed by the Treasury Department.

The White House confirmed Wagoner was leaving at the government's behest after The Associated Press reported his immediate departure, without giving a reason.

General Motors issued a vague statement Sunday night that did not officially confirm Wagoner's departure.

"We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement," the company said.

The surprise announcement about the classically iconic American corporation is perhaps the most vivid sign yet of the tectonic change in the relationship between business and government in this era of subsidies and bailouts.

Wagoner has been CEO for 8 years and at GM for more than 30. It is not yet clear who would replace him, or what role the administration would play in that process. GM has received $13.4 billion in government aid, and has been seeking $16.6 billion more.

Industry sources had said the White House planned very tough medicine in Monday's announcement, which turned out to be an understatement. And it went to the very top. The measures to be imposed by the government will have a dramatic effect on workers, unions, suppliers, bondholders, shareholders, retirees and the communities where plants are located, the sources said.

GM and Chrysler have to prove their viability as a condition of a federal bailout released under former President George W. Bush, and both have asked the current administration for more money. Ford has not sought federal funds because it had secured a line of credit just before money dried up.

Obama said Friday in an interview with CBS’s “Face the Nation,” broadcast Sunday, that the carmakers were going to have to do more.

There's been some serious efforts to deal with a combination of long-standing problems in the auto industry,” the president told host Bob Schieffer. “What we're trying to let them know is that we want to have a successful auto industry, U.S. auto industry. 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.

“And that's gonna mean 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."

Schieffer followed up: “But they're not there yet.”

Obama added: “They're not there yet.”

The Obama administration calls its task force “a cabinet-level group that includes the secretaries of Transportation, Commerce, Labor and Energy. It will also include the chairman of the President’s Council of Economic Advisers, the director of the Office of Management and Budget, the EPA administrator, and the director of the White House Office of Energy and Climate Change. The Task Force will be led by Treasury Secretary [Tim] Geithner and [National Economic Council] Director Larry Summers.”

The panel’s chief adviser is Steven Rattner, a well-known investment banker and former New York Times reporter.

Obama's move against Wagoner hearkens back to September 2008 when President Bush's Treasury Secretary, Hank Paulson, insisted that AIG CEO Robert Willumstad step down as part of an $85 billion bailout of the insurance giant. Paulson installed in his place Edward Liddy, a former Allstate executive. The AIG bailout has since grown to about $170 billion and Liddy has faced calls for his resignation in the wake of reports about hundreds of millions of dollars-worth of bonuses the firm agreed to pay to employees.

[Phantasee]

Why are they doing this to an automaker when they've not been doing much to the financial companies?

[Qwerty 42]

Why are they doing this to an automaker when they've not been doing much to the financial companies?

From what I understand, financial lobbyists are making it difficult to get any aid to the automakers.

[Phantasee]

That's just another reason to start sacking bank and other financial company CEOs. They're hampering the US's ability to save it's manufacturing sector (because what else is there besides automakers anymore?).

[Questor]

That's just another reason to start sacking bank and other financial company CEOs. They're hampering the US's ability to save it's manufacturing sector (because what else is there besides automakers anymore?).

Off-hand, I know we make airplanes.

Edit: This is not meant to imply that Detroit is not a big part of our manufacturing sector, but just to point out that there are other (smaller) areas.

[Phantasee]

The aerospace industry doesn't employ nearly as many people as the automakers, AFAIK. Although if Boeing or Lockheed were in trouble, it'd be important to help them out too. Banks do not provide nearly as many jobs as 'real' industries do.

[Ma Deuce]

That's just another reason to start sacking bank and other financial company CEOs. They're hampering the US's ability to save it's manufacturing sector (because what else is there besides automakers anymore?).

In fairness, Bazooka Hank did make AIG's CEO resign when they got their first bailout (as well he should have), but this is pure politics: Wagoner was hardly a perfect CEO, but in truth he did many things right (such as putting actual car guys like Bob Lutz and Ed Welburn in charge of product development rather than bean-counting MBAs that typically filled those roles since the days of Roger Smith), unlike with AIG's previous boss. This disaster was probably inevitable before Wagoner even became GM's CEO, but whether his fault or not it happened on his watch, so he had to fall on his sword for it. As a practical matter however this changes nothing, since his likely successor (Fritz Henderson) isn't likely to do things much differently than Wagoner.

'Course, if Wagoner has to resign, then by all rights Ron Gettelfinger should as well, but nobody in a Democratic administration would dare hold the UAW accountable for it's sins. Additionally, I cannot fathom why Bob Nardelli is still being allowed to head Chrysler, or why he was even hired in the first place given his history at Home Depot.

[aerius]

Why are they doing this to an automaker when they've not been doing much to the financial companies?

Because the Goldman-Sachs mafia owns & runs the entire US Treasury department. Seriously. Every key member in Treasury is either a former GS exec or worked in close partnership with a GS exec. The previous Treasury head was a GS CEO, the current Tres. Sec. is a protegé of Robert Rubin, yet another GS exec. Larry Summers, another key guy in the mess (and a former Tres. Sec.) is also a Rubin protegé. It's not a coincidence that GS always gets the best part of the deal whenever there's a bailout going down, everytime there's a bailout a shitload of money always finds its way to GS via derivatives contracts and other hidden conduits. Take AIG for instance, GS got ~$13 billion of that bailout from the back door. They ended up with the largest chunk of the money used to bailout AIG.

BTW, ever wonder why the Canadian economy is going to shit, and we're making the exact same fuckups as the US? You guessed it, the Bank of Canada governor is a GS chucklefuck. Of course Harper isn't helping either.

---

Getting back on topic, congratulations Obama, you've pretty much guaranteed that GM will fail, and by fail I mean Chapter 7 liquidation. Wagoner along with Lutz are the key guys responsible for trying and getting a good ways along on turning around GM and getting it competitive again. The CTS, Solstice, new Malibu, the Volt coming out next year, and other key cars in GM's product line have their fingerprints all over them, they were largely responsible for getting these cars developed and pushed through. And you sacked him. Good work dumbass.

You know what you need to do? You need to put a bullet through Gettelfinger's head and completely break the UAW. It's the UAW (and CAW) which keeps fucking up the contract negotiations which prevent GM from restructuring and getting a viable business plan. But it doesn't matter now, GM's going to go under anyway and leave all those union leechfucks out of a job, so sucking union cock ain't gonna do shit in the long run. Throw the union under the bus already, then go ahead and do the same to the entire financial industry. They all need to go play sink or swim.

[The Duchess of Zeon]

The ironic thing is that it's progressively looking like Chrysler has a better chance of surviving than GM, which can't get any of its shit straight and now is going to have to go through a change in leadership at the worst possible time. The main problem is that the parts' supplier companies would have to literally be nationalized and run as government concerns to keep the entire auto industry (including the import factories) in America from completely dying if GM goes under.

[Ma Deuce]

Getting back on topic, congratulations Obama, you've pretty much guaranteed that GM will fail, and by fail I mean Chapter 7 liquidation. Wagoner along with Lutz are the key guys responsible for trying and getting a good ways along on turning around GM and getting it competitive again. The CTS, Solstice, new Malibu, the Volt coming out next year, and other key cars in GM's product line have their fingerprints all over them, they were largely responsible for getting these cars developed and pushed through. And you sacked him. Good work dumbass.

Like I said, if Henderson takes over I don't see him doing things much differently since he was in many ways Wagoner's protoge. Hell, he's basically been running the company already since the auto crisis started while Wagoner was busy with politics in Washington.

On the other hand, since Obama thus far has consistently demontrated an appalling ignorance of what really ails the auto industry (though that's hardly uncommon in Washington these days), I wouldn't put it past him to not to appoint some political hack "outsider" to run GM.

[LMSx]

Additional info:
Link

Feds declare GM, Chrysler not viable, refuse more aid
Kevin G. Hall | McClatchy Newspapers

last updated: March 30, 2009 12:09:24 AM

WASHINGTON — President Barack Obama on Monday will reject requests for almost $22 billion in new taxpayer bailout money for General Motors Corp. and Chrysler, saying the car makers have failed to take steps to ensure their viability.

The government sought the departure of GM chief Rick Wagoner and said the company needed to be widely restructured if it had any hope of survival. It said it would provide the company with 60 days operating capital to give it time to undertake reforms.

The government will grant Chrysler 30 days operating funds, but said it must merge with another carmaker in order to remain viable. Talks with Italian carmaker Fiat are underway.

The administration also announced a warranty guarantee plan that administration officials hope will give consumers enough confidence that they will continue to buy the companies' vehicles.

GM and Chrysler have already received $17.4 billion in government rescue money. The two companies faced a Tuesday deadline for the government to approve plans they'd submitted weeks ago in hopes of persuading the Obama administration that they could remain in business anad deserved additional money.

But the decision from Obama was no.

The administration, however, did not demand repayment of the earlier loans. It also did not completely slam the door on the additional $21.6 billion the carmakers sought, but sent the two back to the drawing board.

A senior administration official, briefing reporters late Sunday night on the condition of anonymity in order to speak freely, said Obama will call for more sacrifice from carmakers, their investors and automotive unions.

The official said there were encouraging signs that the Chrysler merger with Fiat will happen soon. The administration wants this deal to happen, but has tried to avoid too big a stake by Fiat for fear that taxpayers would be funding a foreign takeover.

Fiat will commit to produce fuel-efficient cars and engines in the United States, and will be limited to a 49 percent stake until all taxpayer loans have been repaid. There are no expected leadership changes at Chrysler, given the ongoing merger talks.

Another senior administration official, also demanding anonymity, denied that the administration required Wagoner's ouster. But officials acknlowledged they wanted a fresh start at GM and Wagoner agreed to step aside. Other executives are also expected to depart.

The government laid out its case against the companies in two extraordinary documents that assessed their management structure, distribution systems, manufacturing capabilities and products _ none of which drew much praise.

The government's assessment of Chrysler's prospects was particularly damning.

It noted that none of Chrysler's current models were recommended in a recent article by Consumer Reports and that every one of its brands ranked in the lower quartile for quality in an assessment by J.D. Power.

It said the company is too dependent on its truck and SUV business and had only a 3 percent share of the small-car market, even though that segment makes up 21 percent of car sales overall. Noting that Chrysler's strength is in trucks, SUVs and mini-vans, all vehicles with relatively low fuel efficiency, the government said it was unlikely Chrysler would be able to meet new government standards for fuel consumption.

GM, too, was criticized for being dependent on the sale of trucks and SUVs for its revenue.

The quality of its products also was a concern. While GM has worked hard to improve quality, "lingering consumer perception is that GM makes lower-quality cars . . . which in turn leads to greater discounting, which harms GM’s price realizations and depresses profitability."

The government also said that GM had not done enough to rid itself of underperforming dealers and that its large number of vehicles were a distraction to its management.

The government offered a bleak assessment of the prospects for GM's much heralded Chevy Volt electric car, noting that GM was a full generation behind Toyota in "green powertrain development."

"While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become commercially viable," the government assessment said.

Given all that, the government assessment found that GM's proposed plan was too optimistic in foreseeing "only a very moderate decline" in market share. GM’s market share in the United States stood at 45 percent in 1980, dropping to 36 percent by 1990 and 29 percent in 2000. Today, GM’s share of the U.S. automarket is approximately 22 percent.

Still, the report concluded that the company can be saved if it undertakes major restructuring. “It is strongly believed, however, that such a substantial restructuring will lead to a viable GM,” the report said.

In their briefing for reporters, administration officials said GM has made no progress in talks with its bondholders. It has about $35 billion in debt, $27 billion of it unsecured and at risk if GM is forced to file for bankruptcy. GM was expected to reduce that amount to $9 billion through a voluntary exchange of bonds for new shares of GM stock.

Bondholders have instead sought government help, officials said, suggesting they are betting that there won’t be a bankruptcy. Officials, however, did not rule out the possibility of a so-called surgical bankruptcy under which GM could be sent into protection from creditors for a 30-day period after most details had been worked out in advance.

Under normal circumstances, banks would provide the long-term financing to help the two carmakers restructure but these are not normal times. In fact, banks have received hundreds of billions of taxpayer dollars to stay afloat and the government is the only game left in town.

Chrysler is a smaller company than GM yet it owes banks more than $8 billion and these financially weakened banks are not in a forgiving mood.

Wagoner’s departure from GM is surprising given that he has been the public face of the struggling carmaker and has worked at GM at home and abroad since 1977, rising to CEO in 2000.

Wagoner's long tenure saw days of glory, but GM was caught flatfooted as its fleet was heavy with trucks and sports utility vehicles that got weak fuel mileage as rising gasoline prices sent consumers looking for more fuel-efficient vehicles. GM was last profitable in 2004.

Most of the banks receiving government assistance have replaced their top officials, and the administration gains a measure of political cover for its rejection of the auto bailout by bringing in a new team of leaders.

In an interview with the CBS Sunday morning show Face the Nation, Obama hinted that changes were coming for the carmakers.

“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 told host Bob Schieffer, who asked if the carmakers were there yet. “They're not there yet.”

[Crossroads Inc.]

Ladies and gentlemen... A moment of silence please for the Death of the American car Industry...

Not that most of us saw this coming a long... LONG time away

[Ender]

On the other hand, since Obama thus far has consistently demontrated an appalling ignorance of what really ails the auto industry (though that's hardly uncommon in Washington these days), I wouldn't put it past him to not to appoint some political hack "outsider" to run GM.

Yeah, but I hardly see anyone pointing to the fact that demand for their number one product essentially evaporated over night, so Obama is hardly alone in that regard. Instead each side likes to grab onto the issues of their fixed and variable costs to push their respective political agendas.

[Nephtys]

On the other hand, since Obama thus far has consistently demontrated an appalling ignorance of what really ails the auto industry (though that's hardly uncommon in Washington these days), I wouldn't put it past him to not to appoint some political hack "outsider" to run GM.

Yeah, but I hardly see anyone pointing to the fact that demand for their number one product essentially evaporated over night, so Obama is hardly alone in that regard. Instead each side likes to grab onto the issues of their fixed and variable costs to push their respective political agendas.

Because politically he can't exactly break up the UAW nearly as easily as removing CEOs, of course.

[KrauserKrauser]

$22 billion for the American car industry? Sure sounds like chump change compared to the amount of money being constantly tapped into the AIG / Financial industry IV.

Obama is definitely not making many friends when it comes to his priorities in spending.

[Sephirius]

Obama is definitely not making many friends when it comes to his priorities in spending.

Sure he is. But those people are probably too busy swimming in pools of money made entirely of bailout mone- er, 'executive bonuses' to care about the auto industry.

[KrauserKrauser]

Not that I believe the GOP has a candidate that would be able to honestly capitalize on it, but his approach smacks more of Hoover than FDR on the handling of the financials. His decisions are definitely not translating into "friend of the common man" IMO.

[aerius]

The government offered a bleak assessment of the prospects for GM's much heralded Chevy Volt electric car, noting that GM was a full generation behind Toyota in "green powertrain development."

Holy shit they're fucking retards, the Volt is a full generation behind Toyota? It's the other way around, the Volt is a full generation ahead of everything else. And these are the idiots advising the government, no wonder everything's so fucked up.

[Thanas]

The government offered a bleak assessment of the prospects for GM's much heralded Chevy Volt electric car, noting that GM was a full generation behind Toyota in "green powertrain development."

Holy shit they're fucking retards, the Volt is a full generation behind Toyota? It's the other way around, the Volt is a full generation ahead of everything else. And these are the idiots advising the government, no wonder everything's so fucked up.

I haven't been able to keep up with the developments on that front, can you give me some more info about the Volt and the advantages over the Prius or the european hybrids in development?

[FireNexus]

The volt is designed with no direct mechanical connection of the engine to the wheels. The engine's sole purpose is to charge the batteries, which themselves can be plugged into the wall and run for about 40 miles before the engine turns on. This is more efficient because the engine can, when it runs, always be at maximum efficiency.

Additionally, it's significantly cheaper (not to mention much easier on the environment) to use the grid power to drive your car than it is to charge the batteries with the engine. That 40 miles the car is capable of going without using gas covers the daily commute of most motorists. There's also been talk of using smart grid technology to sell the electricity bought at night back to the electric company during the day at a profit, but I've always been a little skeptical about the usefulness of that feature.

[The Kernel]

The government offered a bleak assessment of the prospects for GM's much heralded Chevy Volt electric car, noting that GM was a full generation behind Toyota in "green powertrain development."

Holy shit they're fucking retards, the Volt is a full generation behind Toyota? It's the other way around, the Volt is a full generation ahead of everything else. And these are the idiots advising the government, no wonder everything's so fucked up.

Read the quote, it says that GM green powertrains are a generation behind Toyota which is true when you compare shipping models like the Saturn Green Line is/was. The Chevy Volt doesn't enter into it as it is not a shipping design that has been market proven and won't have a material impact on GMs financials anytime soon. And the fact that the hybrid market is losing momentum doesn't help either. And by the way, Toyota ALSO has a plug-in hybrid that is in the late development stage and is offering dealer installed plug-in hybrid kits that come with a full warranty and are shipping TODAY.

As to everyone blaming the government for not propping up GM...I have got to ask what is everyone thinking here? Is it the government's fault that GM is in this position? No, it's decades of mismanagement and inability to compete with foreign carmakers that has led to this.

Sure the economic downturn hit GM in the gut, but companies like Toyota who have been hugely profitable before the recession are more than equipped to weather this storm. They are sitting on piles of cash and they aren't seeing anywhere near the losses that GM is facing.

GM in particular but the American car industry in general has been suffering for a long time, it was only the SUV and truck craze of the 90's and early 2000's that kept them relevant as long as they have been. Looking at GM's product line, I see a slew of uninspiring sedans and coupes that can't compete with the Toyota, Honda and Nissan offerings, nor can their luxury brands offer much competition to German automakers.

Part of it is product glut. GM has the following brands that are still around:

• Buick
  Cadillac
  Chevrolet
  Daewoo
  GMC
  Holden
  Hummer
  Opel
  Pontiac
  Saab
  Saturn
  Vauxhall

Why exactly does GM need this much glut? What the hell is the difference between a Pontiac, Buick, GMC or Chevy? Toyota for example maintains three brands: Toyota, Scion and Lexus which each have distinct pieces of the market (Entry level, Normal, Luxury) and thus a right to exist. Honda and Nissan don't even have the low end brand and instead just have a luxury and normal brand.

Anyone blaming the government for this happening to GM needs to wise up. GM has been a pig for decades and may no longer be a viable company at all, and if so they should be taken out back and shot. No one likes lost jobs, but propping up a company which has failed to produce a coherent plan for reorganization besides "GIVE ME BILLIONS!" isn't going to help the taxpayers.

[Illuminatus Primus]

So the solution is to let American manufacturing collapse, and why? Because they don't have as many boys in the Treasury Department? What is the magic plan for restarting the speculation train that the financials have produced to justify an endless credit line?

[The Kernel]

So the solution is to let American manufacturing collapse, and why? Because they don't have as many boys in the Treasury Department? What is the magic plan for restarting the speculation train that the financials have produced to justify an endless credit line?

No, the solution is to do exactly what the government did which is play hardball with these people. I have no issue bailing out Detroit on the condition that they provide a viable plan to clean themselves up.

After the first bailout GM promised big changes but then came back with a half hearted plan that included cutting just a couple of their worst brands and some token concessions from the UAW. The fucking company is on its ass and GM execs were acting like all they had to do was make the appearances of getting the company to work and then rely on the government for billions. Worse yet, they dragged the issue to the public with shamelessly threatening bankruptcy if they didn't get more money.

Hopefully this latest development will get the message across that GM needs to think about a plan that will outright dissolve a good fraction of the company, totally rewrite their labor contracts, kill most of their active brands and terminate thousands of employees. It's going to suck, no one likes it, but if that's what they need to become viable then that is what they need to do.

[KrauserKrauser]

totally rewrite their labor contracts, and terminate thousands of employees

Laugh for the day. Thanks much.

Obviously it's the company's fault that the UAW is making token changes. Rewriting the labor contracts and terminating thousands of "hard working" UAW employees? Man, you are a laugh riot. I think we'll see that as soon as the pics of Rush and Obama 69'ing on the presidential desk are released.

[The Kernel]

totally rewrite their labor contracts, and terminate thousands of employees

Laugh for the day. Thanks much.

Obviously it's the company's fault that the UAW is making token changes. Rewriting the labor contracts and terminating thousands of "hard working" UAW employees? Man, you are a laugh riot. I think we'll see that as soon as the pics of Rush and Obama 69'ing on the presidential desk are released.

Clearly you are an idiot, so I'll explain this simply: GM and the US Government CAN rewrite those contracts without the UAW via the instant bankruptcy option. The UAW contacts might have been impossible to change before, but when the entire company is on the brink of liquidation, there are other options.

EDIT: And if you think the UAW is the extent of GM's issues, then you are an even bigger idiot than I thought.