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What If GM Did Go Bankrupt... How investors, customers, and suppliers might fare under Chapter 11
After weeks of listening to analysts and pundits beat the drum about the possibility of a General Motors Corp. (GM ) bankruptcy, Chairman and Chief Executive G. Richard Wagoner Jr. decided he had heard enough. On Nov. 16 he declared in an internal memo to his 325,000 employees that bankruptcy is "unnecessary." There is no plan to file for Chapter 11 protection, Wagoner said flatly, calling such an action "contrary to the interests of our employees, stock- and bondholders, dealers, and our suppliers and customers."
In other words, Wagoner was calling bankruptcy unthinkable. And for a long time, that's exactly the way it seemed. GM has $34 billion in cash and could free up roughly $15 billion more selling various businesses. That alone should be enough to keep the company running for a few years. What's more, its cash-burn rate of $2 billion a quarter will slow down as a recent restructuring, which will eliminate nine factories and 30,000 workers over three years, takes hold.
But despite Wagoner's protestations, investors are clearly starting to ponder the unthinkable. The price of GM's credit-default swaps, which are insurance in case the carmaker can't pay back its loans, have soared in the past month. They now cost a premium of 12 percentage points of the value of the debt that they insure, four times what they cost in January. Few people believe that Washington would help bail out GM, as it did with Chrysler. Investors, suppliers, and employees, meanwhile, are starting to imagine how a GM bankruptcy would unfold and taking steps to defend themselves if it should happen. Some suppliers, for example, are trying to get shorter payment terms from GM in exchange for lower prices.
What would a GM bankruptcy look like? It probably would be the most massive Chapter 11 filing of all time -- a watershed moment in the history of American business, with far-reaching consequences for all of GM's stakeholders. While the direct impact on the national economy would be relatively modest, the Midwest would be hit hard by the combination of job losses at GM and its suppliers and benefits cuts for the company's retirees.
Plenty of observers believe that this suffering would be worthwhile, of course, if a stronger company emerged from bankruptcy. As airlines and steelmakers have done, GM could use Chapter 11 to rewrite union contracts, potentially enabling it to slash retiree benefits and close plants without having to pay furloughed workers. The auto maker could even dump tarnished brands and get bankruptcy court protection from dealer lawsuits. "Bankruptcy could do great things for GM," says William J. Rochelle III, a bankruptcy attorney with Fulbright & Jaworski LLP. But, of course, Chapter 11 is no sure bet. History is full of examples of companies that have emerged from bankruptcy simply to return in a few years. Here's a quick overview of how a GM bankruptcy might unfold for some of the key players:
Customers One big risk of a bankruptcy filing is that it would cast such a pall over GM that sales would plummet. Consumers will buy airline tickets from a bankrupt company, but cars are a long-term commitment. Many buyers would worry (unnecessarily, in all probability) that GM wouldn't be able to honor its warranties. No U.S. carmaker has filed for bankruptcy in decades. But retailers such as KMart (SHLD ) and Hechinger and carmaker Mitsubishi all saw sales fall when their financial problems became widely publicized, notes Thomas T. Stallkamp, former Chrysler (DCX ) president and now the industrial partner for private equity firm Ripplewood Holdings LLC.
To stem eroding market share, GM could eventually use the lower costs achieved through bankruptcy to drop prices and lure more buyers, says Diane C. Swonk, chief economist with Mesirow Financial Services in Chicago. But cutting prices further could just exacerbate GM's already severe revenue problems. Its per-vehicle revenue of $21,000 is $3,500 less than rival Toyota's.
Rental car companies, purchasers of about 15% of GM's volume, would get nervous, too. They often sell their used models back to the auto maker. They're worried they would have to liquidate the cars themselves if GM went bankrupt, says Maryann N. Keller, a longtime GM watcher who sits on the board of Dollar Thrifty Automotive Group Inc. (DTG ). And, of course, if the company's retail sales are down, the value of used GM cars would fall, too. "GM should do everything it can to avoid bankruptcy," says Keller.
Suppliers Big players like parts maker Tower Automotive Inc. and American Axle & Manufacturing (AXL ) rely on GM for a large chunk of their business. If its market share slid more quickly, they would suffer declines in revenue. The carmaker would try to keep the disruption to key business partners to a minimum, but many smaller parts makers could topple into bankruptcy, predicts Stallkamp. He says Ripplewood considered buying one thriving parts maker recently, a company with about $500 million in revenue. But it was too dependent on GM. If the auto maker stopped paying suppliers even just for a few weeks after filing, that company and a handful of others could end up in bankruptcy, he says.
That's why some parts makers are starting to open talks to get paid sooner. GM has already stretched payment terms out to two months in most cases. Suppliers are also trying to diversify their sales with other auto makers, relying less on a GM that will be downsizing for the foreseeable future.
Pensioners and Employees If GM went belly-up, retirees, workers, and taxpayers could all take a hit. Right now, its $90 billion pension fund is fully funded on an accounting basis. But the government-backed Pension Benefit Guaranty Corp., which acts as a safety net for corporate pension plans, says GM is underfunded by $31 billion.
How that would play out in a GM bankruptcy would be complicated. The PBGC could be on the hook for billions in pensions. The agency also could force the Detroit giant to keep funding its own pension plan even in bankruptcy -- though the company could make the case that it should pay less. Still, GM's 450,000 retirees would get hit: They may end up with smaller pension payouts, and their medical benefits, as well as the health-care plans of existing workers, would most likely be whittled back.
Investors GM's creditors would also stand to suffer. The company has $31 billion in long-term debt, most of it due in 2023 and beyond. Of $34 billion in cash, $15 billion is in a fund earmarked for health-care liabilities. Who knows how much will be left in a few years? Fitch Ratings analyst Mark Oline says GM will have to spend some cash to pay for its announced restructuring and could still have to pitch in to help its former auto parts arm, Delphi Corp. (DPHIQ ).
That raises the possibility that creditors won't recover their whole investment, as was the case in the bankruptcies of United Airlines (UALAQ ) and telecom firms Winstar and Teligent. By the time of a GM filing, however, many of the company's debt holders may be risk-savvy investors like Wilbur L. Ross. Turnaround whizzes like Ross buy distressed debt to get a voice in restructuring plans and then seek an equity stake when a company emerges from bankruptcy.
Stockholders, however, usually get wiped out. That fact may also play a big role in keeping GM out of bankruptcy. Even if it wanted to file, billionaire Kirk Kerkorian would do everything to fight the move. His 9.9% stake is already underwater by about $350 million. Kerkorian and other large shareholders -- many of whom have suffered longer -- could band together and force management to fix the business without bankruptcy. One source familiar with Kerkorian's tactics says he wants to see a deep restructuring plan done quickly, and outside of the courts.
That would be the best for all concerned, so long as the company faces up to the enormity of its current mess and executes a plan that finally stands a chance of working.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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posted
I would rather drive a Ford truck anyway. Those King Ranch's are NICE.
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so. Posts: 6949 | Registered: Apr 2004
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I understand why we allow shorts in the market. Why do we allow CDS's? Isn't that the equivalent of a side bet made by a bookie?
This is what I've wanted to know since learning of their preeminent position in our shakedown. Why, since learning how dangerous these derivatives can be, are we still issuing new ones?
GM will die a slow death. Chrysler will be first.
Ford will survive as the last of the big three.
This is my prediction.
-------------------- No longer eligible for government service due to lack of tax issues. Posts: 5178 | From: Up North | Registered: Dec 2005
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quote:I understand why we allow shorts in the market. Why do we allow CDS's? Isn't that the equivalent of a side bet made by a bookie?
As happens so often, a given thing--an act, a financial instrument, a trading strategy--starts out for one reason, then gets twisted or exploited subsequently...such that it invokes the law of unintended consequences.
For example, the Trust Indenture Act of '39 was described as a way to protect "the national public interest and the interest of investors in notes, bonds, debentures, evidences of indebtedness, and certificates of interest or participation therein. . ."
But when mortgage lending started turning to riskier, pooled "securitazion," the new strategy was backed by the act of '39, via a provision that investors (usually via a trust) were protected from the homeowner's deciding to seek loan modifications. In other words, they had "a lock." Further, the trustee doesn't service the loan; the servicer is a third party, who not only can't modify the terms but also actually gets *more* money if the homeowner gets foreclosed.
CDSs were "invented" in the late 90s as a method to protect credit risk. The market was in the billions, 800bb or 900bb...But then Gramm's bill of 2000 passed, removing them from regulation. After that, the market zoomed to the tens of trillion$...
Not saying they were a good idea in the first place, but without regulation they got really bad.
posted
Looks like it may be coming to a BK there own accountants are starting to say it is an option and may work
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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I read something today that some 23% of our glass produced goes to the auto business (maybe glassman knows exactly). Similar percentages with aluminium and steel, and something like 1 in 10 of Americans work in some way for the auto companies.... Big numbers.
Posts: 2634 | From: The highway | Registered: Feb 2004
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posted
yes highway you are right the ripple affect would be terrible
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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posted
The problem is that GM is not competitive. Having the taxpayer pump tens of billions of dollars into them is not improving their ability to generate a profit, it's only keeping a bad company artificially alive. The government needs to get serious with them and DEMAND that they lower their cost structure to the point that they are competitive. If the unions, retirees, company executives, dealers, etc are not willing to make SERIOUS concessions to allow their company to be profitable, then it will fail - it's just a matter of when.
Posts: 1577 | From: Ohio | Registered: Oct 2007
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quote:Originally posted by Propertymanager: The problem is that GM is not competitive. Having the taxpayer pump tens of billions of dollars into them is not improving their ability to generate a profit, it's only keeping a bad company artificially alive. The government needs to get serious with them and DEMAND that they lower their cost structure to the point that they are competitive. If the unions, retirees, company executives, dealers, etc are not willing to make SERIOUS concessions to allow their company to be profitable, then it will fail - it's just a matter of when.
You are a one track mind that was switched onto a sidetracked in the 19th century and there isn't even the where-with-all along the way for you to realize you are all alone because every one else recognized that track was a dead end.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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Try posting an intelligent response - JUST ONCE! Your gibberish never addresses the issue at hand, which is the possible bankruptcy of GM.
Posts: 1577 | From: Ohio | Registered: Oct 2007
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quote:Originally posted by Propertymanager: Bdgee,
Try posting an intelligent response - JUST ONCE! Your gibberish never addresses the issue at hand, which is the possible bankruptcy of GM.
Ok, suit yourself.
PM, you are a racial bigot. You are a social (I won't say Neanderthal, because they had sizable brains and it would be insulting to them to be cast in with your ilk) retard and an intellectual joke, void of any redeeming social value and a sorry waste of intelligent possibility or hope.
In short, you are an embarrassment to the human race. Evolution, as is the case with any probabilistic process, sometimes reverses itself, as your mere existence so aptly proves.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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quote:PM, you are a racial bigot. You are a social (I won't say Neanderthal, because they had sizable brains and it would be insulting to them to be cast in with your ilk) retard and an intellectual joke, void of any redeeming social value and a sorry waste of intelligent possibility or hope.
In short, you are an embarrassment to the human race. Evolution, as is the case with any probabilistic process, sometimes reverses itself, as your mere existence so aptly proves.
Point made! Your incessant gibberish has nothing to do with the issue at hand - a possible GM bankruptcy.
Posts: 1577 | From: Ohio | Registered: Oct 2007
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quote:Originally posted by Propertymanager: The problem is that GM is not competitive. Having the taxpayer pump tens of billions of dollars into them is not improving their ability to generate a profit, it's only keeping a bad company artificially alive. The government needs to get serious with them and DEMAND that they lower their cost structure to the point that they are competitive. If the unions, retirees, company executives, dealers, etc are not willing to make SERIOUS concessions to allow their company to be profitable, then it will fail - it's just a matter of when.
you can't even see anything for yourself.
you've been told GM is not competittive.
GM is competing against Toyota and losing, not by much tho, however, they are still the second largest car co in the world.
furthermore?
the very thing you claim is bad? govt subsidies? is HOW Toyota beat GM.. on every level from US State govts to the Japanese Govt, Toyota has recieved many subsidies that has given them an edge to get to number one, i've posted them here many times with links...
you listen to anti-labor bullchit talk and repeat it without thinking for yourself... it is a serious question to consider. CAN you even think for yourself? you haven't shown us that you can.
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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quote:PM, you are a racial bigot. You are a social (I won't say Neanderthal, because they had sizable brains and it would be insulting to them to be cast in with your ilk) retard and an intellectual joke, void of any redeeming social value and a sorry waste of intelligent possibility or hope.
In short, you are an embarrassment to the human race. Evolution, as is the case with any probabilistic process, sometimes reverses itself, as your mere existence so aptly proves.
Point made! Your incessant gibberish has nothing to do with the issue at hand - a possible GM bankruptcy.
I certainly know of the various opinions about whether or not GM should be shored up or allowed to fail, but I also certainly have no thought of wasting my time trying to converse responsibly about it with a nincompoop that is also a political retard. What possible gain would there be? Everyone already knows exactly what Fat Rush has told you to think on the topic and that you are compelled to obey his orders to the Party.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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posted
GM is failing because of what it did ten years ago. The cars produced were simply inferior to everything coming out of Japan, Germany, even Britain. Simply, GM is a plodding company who is incapable of reacting to consumer needs or wants. I don't know why... Could be just a company motto to produce cars of a certain type with limits on weight to power ratios... Dunno.. I just know they did it wrong. Look at Crysler for example. They introduced their 4500 pound flagship right smack dab in the middle of an oil run. Just plain stupid. Anyone with a brain knew oil was spiking or was going to spike... These are top level execs... They damned well better know what the oil market is doing and where it's heading... But no, they go out and introduce a whole line of vehicles that all weigh over 4000 pounds sporting the ridiculously indifferent "Hemi" that sucks gas down like Beege sucks back cheap whiskey.
Posts: 2965 | Registered: Aug 2005
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Ten years ago every enviromentally nervous lefty out there wanted GM, Ford, and Crysler gone... off the map. We can do it better they said.. These companies are holding us back... Those were the claims. Now that these idiotically run companies are on the ropes? The same ****ing people now want to spend billions to "get them through". Just too damned funny to watch as all these people change roles and chants with the assumption that no one remembers.
Posts: 2965 | Registered: Aug 2005
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posted
Actually, I'm quite particular about my whiskey. I rate the Black Jack that is so popular with the masses as just barely palatable.
"Ten years ago every enviromentally nervous lefty out there wanted GM, Ford, and Crysler gone... off the map. We can do it better they said.. These companies are holding us back... Those were the claims."
That is an absolutely certain false and ridiculous claim.
Seems to me you have chosen to ignore or to forget the previous bailout of Chrysler that was pushed for by those "leftys" and ended up making more than handsome profit for the Federal Government.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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posted
I don't for a moment think that GM or the other two crashing is a bad thing.. I do think the hysteria being pushed by government is aimed at allowing them to take over these companies. Just like what they are doing with banks and other financial industries. What we are seeing is the biggest government power grab in history... and not to shrieks of fear... But to thunderous applause. People really are ****ing morons.
Posts: 2965 | Registered: Aug 2005
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That is an absolutely certain false and ridiculous claim.
Seems to me you have chosen to ignore or to forget the previous bailout of Chrysler that was pushed for by those "leftys" and ended up making more than handsome profit for the Federal Government.
No didn't forget... Just further proves my point that the two party system exists in name alone.
Posts: 2965 | Registered: Aug 2005
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Yes, "What we are seeing is the biggest government power grab in history...What we are seeing is the biggest government power grab in history...People really are ****ing morons."
That's what I heard with that Chrysler bailout, the Lockheed bailout, and the Mexican auto bailout, too, each of which ended up with viable private major heavy industrial entities and a sizable profit to our Federal government. (And the same thing with the Savings and loan bailout.)
Maybe that, "People really are ****ing morons." needs to be applied to the opposite number?
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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"No didn't forget... Just further proves my point that the two party system exists in name alone."
Oh, I see, just chose to leave it out and allow the conclusion, via your claim, to be implanted that it never happened or if it did that it was fought by those "leftys". Is there a term for that sort of activity?
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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I just didn't bring it up beege.. It would seem you are the first to do so.. kudos for that. Truly a whiz you are at proving a point opposite your stance.
Posts: 2965 | Registered: Aug 2005
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posted
The point it the intent, rel. Either you forgot, didn't know, or you knew and were intending to mislead by implying the opposite of fact. You have said that you knew and that you choose to not bring it up.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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posted
Ummm.. no just didn't bring it up Beege.. Hardly a capitol offense. Especially since it merely enforces MY point. Thank you... again.. for making my point more accurate at the cost of trouncing your own. True generosity. Thank you Again May the blessings of Clinton always light your way.
Posts: 2965 | Registered: Aug 2005
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Poor Reaganite has lost it....doesn't even have any idea what the topic is or was....I guess we let it get out ahead of what Rush has had any chance to voice on and he doesn't have a clue to follow.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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quote:Originally posted by Relentless.: I don't for a moment think that GM or the other two crashing is a bad thing.. I do think the hysteria being pushed by government is aimed at allowing them to take over these companies. Just like what they are doing with banks and other financial industries. What we are seeing is the biggest government power grab in history... and not to shrieks of fear... But to thunderous applause. People really are ****ing morons.
here's why i am not screaming bloody murder right now relentless.
having grown up inside the beltway? i know personally many of the people that run the govt day in and day out..
i'm not talking about the politicians. i'm talking about people that are not particularly ambitious, and not particularly greedy. (the sword cuts both ways)..
they get paid less than private industry by a considerable amount, but they are fairly secure in their jobs... right now? nobody is very secure, but they'll be the last people to lose their jobs.
most of these people are not crooks, and they r are the real govt. they work for the taxpayers.and they KNOW IT the politicans come and go. but the civil servants show up every day for their whole career. there are bad apples no matter which barrel you look in, but the govt is not nearly as rotten as some want to beleive.
the politicians on the other hand are a bunch of crooks. and i totally agree with you that they are not to be rusted n matter what party they are in.
the problem i have is this, almost every major scientific advance in this country was subsidised at several levels by the govt.
every single patent obtained thru the University system was funded by state and federal cash giveaways. yes i acknowledge it's given away, but is has to be that way, because if they knew what they're doing? it would not be called research would it?.. private industry cannot afford to fund real pure research. there is no way to forecast the outcomes or the eventual profits.
most of them were directly subsidised in govt labs and GIVEN AWAY... it happens every day.
it's not glamourous, but i personally know people that have patents that are worth millions, but they collect a pittance. they traded the risk of private capital for the constancy of a govt paycheck and they did in fact make millions for aloto'people... they don't complain much(yes they are human,they do complain) they most certainly do not run around screaming for society to collapse the minute there party is no ti npower...
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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Yes very valid point, Glass. I'm merely suggesting that what we are seeing now is very much different from a research grant program. I guess my main gripe is that government can be a very noble thing... As it was laid out it should be of us for us... The grant programs for research is just one part of that. NASA would be another. What we are seeing in these bailouts is far from the design of the common and diligent government worker. This is the wet dream of the tyrants... Like Billary said: Never waste a crisis.
Posts: 2965 | Registered: Aug 2005
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i don't like the bailouts. i hate teh fact that we need them.
i am willing to consider that the crisis is and has been engineered by people aheckofalot smarter than Dubya.. Just by standing in front of the national TV cameras and saying we needed a bailout? Dubya made absolutely sure that no matter the real conditions of the economy? we needed one.
Paulson would be right in the middle of that vipers nest. Bush clearly stated that Paulson told him it was a bailout or a total collpase... that means we did collpase and we are simply trying to keep the water from coming above our mouth right now.
I fully agree that the poltiticians point fingers at each other and try to place blame in all kinds of totally ridiculous places like poor people -African American or white? they got shafted, and yes they have some fault, but it was never thier money that was loaned or insured, it was people that actually have money and wanted more who didn't care how they got it that did this.
the "moral hazzard" issue is always interesting and much more intricate than people want to accept. why is it that when we lower taxes and allow people more freedom to choose how the capital will be utilised that we crash the economy very soon after? because people in general do not make good choices.
IF it was true that low taxes were the best thing for the economy? i'd be all for it. i am happy to work my butt off at what i do. but i have to have people (customers) that feel as though they can afford to treat themselves or their frinds and family once in awhile...
so? i admit that i am following my self-interest in wanting th esytem to keep from collpasing if that means bailouts? than that's what it means.
did the "powers that be" create this? YES!!!! .. you bet. did they do it on purpose? i am always looking for the smoking gun, and i did find a few.
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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Close Window Chrysler faces July cash crunch even with more aid Saturday, March 14, 2009 DETROIT - Even if Chrysler LLC gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next, its chief financial officer said.
CFO Ron Kolka, in a brief telephone interview with The Associated Press, said the company planned for the $4 billion it received Jan. 2 to last through March 31. The company is talking with the Obama administration's autos task force about getting another $5 billion, and faces a March 31 deadline to complete its plan to show how it can become viable and repay the loans.
Kolka wouldn't say what would happen if the company doesn't get further government aid, saying only that he's not planning to run out of money.
Chrysler's viability plan submitted to the Treasury Department on Feb. 17, he said, calls for the additional government aid.
"Following that, the next critical low point in cash is July shutdown," he said Friday.
Automakers generally book revenue from a vehicle once it leaves the factory and heads for a dealership. But when it doesn't produce cars during the shutdown, the revenue stops flowing.
Kolka said Chrysler planned conservatively so the company can be viable even at the current U.S. industry annual sales rate of 9.1 million vehicles, the lowest level in 27 years.
Executives with Chrysler and General Motors Corp., which also is using government loans to stay out of Chapter 11 bankruptcy protection, met with the government task force on Monday in Detroit, visiting GM's tech center and a Chrysler pickup truck factory in the Detroit suburb of Warren.
The members, led by Wall Street financier Steven Rattner and Steelworkers union official Ron Bloom, asked probing questions of Chrysler executives, but didn't express doubts about the company's plans, Kolka said.
"They were not negative and they were not critical," he said. "They were asking the right questions."
Chrysler's plan submitted to the government has conservative assumptions about industry sales and per-vehicle pricing, and doesn't include the company benefiting from any potential uptick in per-vehicle pricing or a possible alliance with Italian automaker Fiat Group SpA.
Chrysler is in talks about Fiat taking a 35 percent stake in the Auburn Hills, Mich.-based automaker in exchange for its small-car technology.
Kolka also said Chrysler's tentative deal on labor cost concessions with the United Auto Workers union will comply with the terms of the government loans. The loan term sheets set targets for GM and Chrysler to make their total hourly labor costs equal to those of Japanese automakers with U.S. factories.
UAW workers at Ford Motor Co. have ratified contract changes that cut labor costs to $55 per hour including wages, pensions, retiree health care and other benefits. That's still about $6 more than the highest Japanese company.
GM and Chrysler have reached labor cost deals with the UAW but details haven't been released pending a vote by workers. Both companies are still negotiating changes in payments to a union-run trust fund that will take over retiree health care expenses starting next year.
The loan terms also set a target for Chrysler and GM to swap equity for 50 percent of the cash they were scheduled to pay into the trust funds.
Kolka said Ford's deal on the trust fund doesn't comply with the terms of the government loans and won't work for Chrysler. He said Chrysler and the UAW have agreed in principle to an equity swap, but the mechanics are still being negotiated.
Ford agreed to swap 50 percent of its payments for stock, with plans to issue more stock to the trust if the price falls.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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GM boss to step down at White House request Move comes day before Obama announcement on automaker restructuring The Associated Press updated 3:12 p.m. PT, Sun., March. 29, 2009 DETROIT - General Motors Corp. Chairman and CEO Rick Wagoner will step down immediately at the request of the White House, administration officials said Sunday. The news comes as President Obama prepares to unveil additional restructuring efforts designed to save the domestic auto industry.
The officials asked not to be identified because details of the restructuring plan have not yet been made public. On Monday, Obama is to announce plans to restructure GM and Chrysler LLC in exchange for additional government loans. The companies have been living on $17.4 billion in government aid and have requested $21.6 billion more.
Wagoner, 56, joined the company in 1977, serving in several capacities in the U.S., Brazil and Europe. He has been chairman and chief executive since May 1, 2003.
Obama said Sunday that GM and Chrysler and all those with a stake in their survival need to take more hard steps to help the struggling automakers restructure for the future.
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.
“They’re not there yet,” he said.
A person familiar with Obama’s plans said last week they would go deeper than what the Bush administration demanded when it approved the initial loans last year.
Wagoner’s departure indicates that more management changes may be part of the deal. Wagoner has repeatedly said he felt it was better for the company if he led it through the crisis.
Wagoner, in an interview with The Associated Press in December, declined to speculate on suggestions from some members of Congress that GM’s leadership team should step down as part of any rescue package.
“I’m doing what I do because it adds a lot of value to the company,” Wagoner said in a Dec. 4 interview as GM sought federal aid from the Bush administration. “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).”
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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posted
wagoner was an idiot and in the way he has made no progress to help GM and never put a plan to action just wanted more money.
If it was not for the tax payers and the government they would have been bk about 8 months ago.
IMHO when looking at there management and what has happened it is not fair to ford who would have gained market share if GM fell on its own.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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