Monday, March 30, 2009

GM CHAIRMAN FORCED OUT BY OBAMA

Rick Wagoner
Mr Wagoner has headed GM since 2000

The chief executive of struggling US car company General Motors has been ordered to step down by President Barack Obama.

Rick Wagoner will leave immediately, a government official confirmed.

Mr Obama is preparing to outline terms for offering more help to GM and fellow car giant Chrysler.

The two firms have already received $17.4bn (£14.4bn) in bail-outs. Chrysler has requested a further $5bn while GM says it needs $16.7bn more.

Reports have suggested that a frustrated Mr Obama will reject GM and Chrysler's turnaround plans as unrealistic, raising the risk of the carmakers' bankruptcy.

Obama: Car industry 'must do more'. Courtesy of CBS 'Face the Nation'

The auto task force appointed by Mr Obama released two reports on Monday on the financial health of both carmakers, saying that Chrysler was "not viable" in its current form.

It demanded a merger with Italy's Fiat or another carmaker if Chrysler was to survive and said the Obama administration would only provide the company working capital for the next 30 days.

It also said that it would pledge to fund GM's operations for the next 60 days only, requiring the carmaker to come up with another plan detailing further restructuring.

"While Chrysler and GM are different companies with different paths forward, both have unsustainable liabilities and both need a fresh start," the task force said.

"Their best chance at success may well require utilising the bankruptcy code in a quick and surgical way."

In an interview with US broadcaster CBS, President Obama said the firms must do more to justify further aid, saying "they're not there yet".

"We think we can have a successful US auto industry," the president said.

"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."

GM plans to axe 47,000 jobs and Chrysler 3,000, as well as shedding a number of car models.

The job cuts would take place by the end of 2009 and are the largest work-force reduction announced by a US firm in the current downturn.

Mr Wagoner, 56, has headed GM since 2000, after first joining the company in 1977.

Fritz Henderson, the GM president and chief operating officer, will replace Mr Wagoner.

The news comes as France's biggest carmaker, Peugeot Citroen, sacked its chairman Christian Streiff, citing "extraordinary difficulties" in the automotive industry.

In December, GM had said it would cut the number of plants from 47 in 2008 to 38 by 2012, but now plans to close a further five factories, which would leave it with 33 facilities.

GM cars at showroom
GM has seen sales fall sharply in the US

The carmaker's brands would also be reduced from eight to four - Chevrolet, Buick, Cadillac and GMC.

GM and Chrysler received their first bail-outs at the end of last year, warning that without the support they risked financial ruin.

Ford, the third of the "Big Three" US carmakers, has yet to require any bail-outs, but says it may need funds in the future.

GM, Ford and Chrysler have all seen sales fall sharply in their home market.

BBC NEWS REPORT.

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1 Comments:

Blogger Bluegrass Pundit said...

GM and Chrysler's plans are not viable. They never will be to the UAW decides to play ball. Bluegrass Pundit

11:33 am  

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