WASHINGTON (Reuters) -- General Motors CEO Rick Wagoner will resign under pressure from the Obama administration as the government prepares to announce Monday a second bailout for the company and Chrysler LLC.
Wagoner, a career GM executive and CEO since 2000, is stepping down as the top U.S. automaker struggles with a recession-fueled sales implosion that has pushed GM and many of its suppliers and dealers to the brink of failure.
Editor Note: click here to view source article
"For them to change captains right in the middle of the rapids is not something GM would have done, but now (President Barack) Obama or (Treasury Secretary Timothy) Geithner can say, ‘We've asked them to make the ultimate sacrifice,’"
said Aaron Bragman, an analyst with IHS Global Insight.
GM would not confirm Wagoner’s resignation or any White House role in it. A White House official, who spoke anonymously because the resignation had not been announced, said it was done at the request of the administration.
No Word on Wagoner Successor
There was no word from the government or others with knowledge of the situation on the timing of Wagoner's departure or who would replace him.
Fritz Henderson, GM's chief operating officer, is the No. 2 executive at the automaker and widely considered to the leading internal candidate as Wagoner's successor.
Obama last week cited mismanagement "over the years"
for some of the auto industry's severe financial problems, a point that stung Wagoner since his counterparts at Ford Motor Co., Alan Mulally, and Chrysler LLC, Bob Nardelli, are relative newcomers brought in from outside the industry.
GM has lost about $82 billion since 2004 as its problems mounted in the U.S. market. GM has lost about 95 percent of its share value since Wagoner took over as CEO.
Wagoner was in Washington on Friday to meet with the White House-appointed task force on auto restructuring. Obama is expected to announce that panel's recommendations on Monday.
GM has failed to clinch needed concessions from bondholders that government officials had set as targets to justify further aid.
Together, GM and Chrysler have asked for another $22 billion in government loans to ride out a global sales slump and the weakest U.S. market for new cars in almost 30 years. Ford, which is also struggling, is not seeking federal help.
Obama said earlier today that GM and Chrysler have not done enough to save themselves since being granted a $17.4 billion bailout in December. GM has received $13.4 billion and seeks as much as $16.6 billion more; Chrysler has accepted $4 billion and says it needs an additional $5 billion.
"They're not there yet,"
Obama said in a taped interview on the CBS-TV news program "Face the Nation."
"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 ... much more lean, mean and competitive than it currently is,"
"That's going to mean a set of sacrifices from all parties involved -- management, labor, shareholders, creditors, suppliers, dealers. Everybody's going to 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,"
GM and Chrysler have run through most of the initial bailout and are at risk of bankruptcy without immediate help.
Chrysler, which is also pushing to complete a tie-up with Italy's Fiat SpA, has said it needs additional funding as soon as Tuesday to avoid a cash crisis.
But neither automaker has finished the cost-cutting overhaul dictated by the terms of the auto industry bailout launched by the Bush administration that set a deadline of March 31 for determining whether the companies can be saved.
Analysts say that presents a dilemma for the Obama administration. GM and Chrysler employ almost 160,000 U.S. workers and allowing the automakers to fail would cause widespread hardship, especially in the industrial-belt Midwest, at a time when the economy remains mired in recession.
As confidence has grown that the White House will not push the car companies into bankruptcy, it has also become more difficult to clinch cost-saving deals both GM and Chrysler need to reach with creditors and the United Auto Workers union.
GM and Chrysler have won pending contract concessions from the United Auto Workers intended to bring factory labor costs in line with those of Japanese automakers, led by Toyota Motor Corp., that have operations in the United States.
But GM and Chrysler have failed to meet other targets set for them by the government in December. In particular, talks intended to cut debt at both companies have failed to produce results over the past six weeks.
GM has been negotiating with its bondholders to reduce by two-thirds the roughly $27 billion in debt that they hold. GM and advisers to its bondholders have exchanged proposals on a debt restructuring, but have made little progress toward a deal.
After GM reported a $15.5 billion loss in the second quarter of last year, the automaker's leading outside director, George Fisher, made a rare public expression of confidence and said that the board still believed Wagoner and his management team were "the right guys" to lead GM.
Automotive News | March 29, 2009
While researching the Rick Wagoner Resignation story, I found the following interesting photos, you can click on each of them to open up the full size image file:
Editor's Note: The people above must be aware of GM's retribution tactics applied to those that criticize the General in any way!
Editor Note: The above must have been the all time most brilliant automotive CEO decision... Sell your captive finance company to the people that own your competition!
Editor Note: Does the above image answer the question of who's up next to run GM?