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New General Motors CEO Expands Restructuring

Henderson implicitly accepts President Obama's harsh criticism, but what's next at the failing automaker?

by on Mar.30, 2009


The party's over, now the real cutting, consolidation and closings begin at General Motors.

President and politician Obama went directly to the point during his auto industry announcement. The way the industry got to its latest crisis is because of management.

“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. And it is not the fault of all the families and communities that supported manufacturing plants throughout the generations. Rather, it is a failure of leadership – from Washington to Detroit – that led our auto companies to this point,” he said.

In a reaction to the President’s explicit criticism, newly appointed GM CEO Fritz Henderson said, “Over the next 60 days, we will work around the clock, with all parties, to meet the aggressive requirements that have been set by the Task Force, and to make the fundamental and lasting changes necessary to reinvent GM for the long-term.”

What this means is that there are more, many more cuts coming at GM. More brands will have to go. More operations will have to be eliminated in the U.S.

GM faces similar challenges and the same solutions in Canada and Europe, where skeptical national governments and the European Community central government have not committed to helping it. In fact, they have been  just as publicly critical of the ailing maker. Fritz Henderson was recently thrown out of a meeting with the patrician German economic minister Karl-Theodor zu Guttenberg and told not to come back until he had a better plan for Opel.

And within minutes of the of the President’s speech, Canada mirrored his position.

“The plans submitted by General Motors and Chrysler to the government of Canada, do not go far enough to ensure the long-term viability of these companies,” said Tony Clement, Canada’s industry minister. Like the U.S., Canada will provide some short-term financing until a better plan is arrived at.

The question is what can GM do to make its already heavily reworked plan better?