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New GM CEO Confirms More Cuts Are Coming

Fritz Henderson vows to get the job done "in or out of court."

by on Mar.31, 2009

The aura of confidence projected by Henderson belies the enormity of the task in front of him.

An aura of confidence projected by Henderson belies the enormity of the task in front of him.

General Motors CEO Fritz Henderson in his second day on the job held a news conference that reaffirmed his commitment to “go deeper and go faster” in preparing a revised viability plan with “a clean balance sheet” that will pass muster with the President’s Auto Task Force. If not, Henderson said “we will do it in court.”

He acknowledged the sweeping criticisms of the President and the U.S. Treasury Department as “painful,” but quickly added that “we got it” and sketched in broad outlines the areas of the strategy that need improvement by June first. 

More job cuts and plant closings will be required, and bondholders and retirees will see commitments made to them by GM trimmed or eliminated. The decision on the sale or closing of Hummer will be made shortly. Saturn’s future remains in doubt beyond 2011, but Henderson said that it is still being studied with no immediate need to take action. Few details emerged, as Henderson said he was not going to conduct negotiations in public that are properly done at the bargaining table. 

Henderson also claimed not to be concerned about his own future beyond 60 days, “I don’t really worry too much about that,” he said. “If we get our job done it’s going to be okay,” he added. In a press briefing yesterday, Robert Gibbs, the President’s Press Secretary, denied that Rick Wagoner’s resignation as GM’s chairman was a quid pro quo for the continuation of aid. He also refused to speculate on what happens to Henderson or GM beyond the current 60-day deadline. 

Treasury is in the process of appointing two directors to the board of General Motors Acceptance Corporation, and is expected to have a significant, if not dominant role, in the remaking of the GM board of directors so that a majority of its members are new by the August meeting. Henderson now has the unenviable task of reporting to two constituencies – the changing GM board, with its new interim chairman, Kent Kresa, and Treasury through its Auto Task Force, headed by Steve Rattner and Ron Bloom. Treasury continues to be involved with any GM decisions that involve taxpayer funding on a “daily basis.”

Henderson said that the need for further cash is being evaluated, and would not say how much more liquidity from U.S. taxpayers would be needed during the next two months. The need for the $2 billion in support that was skipped in March and the $2.6 billion requested for April are still being evaluated. He would not say when taxpayers could expect to see repayment of the loans.

The aura of confidence projected by Henderson during his first leading role belies the enormity of the labors in front of him and his management team that has careened and crashed through an unending series of emergencies.  Henderson worked for virtually his entire career for Rick Wagoner, and he did not really say what would be different now that he is boss in spite of multiple questions on the topic.

Perhaps the biggest issue in getting through the next two months is the core problem of fleeing customers. It’s lights out, if an even worse sales collapse occurs than GM is currently enduring as car buyers shun its brands. The President’s warranty program announced yesterday will be of some, as yet unknown, help. GM also announced — just prior to Henderson speaking — that it will start a plan called “GM Total Confidence,” that it says protects a customer’s paycheck, investment and vehicle for 24 months.  (more…)

General Motors CEO and Chairman to Resign

Rick Wagoner is stepping down at GM, while Peugeot-Chairman ousts its CEO.

by on Mar.29, 2009

GM CEO Rick Wagoner, (r) and Bob Nardelli testifying before Congress. Is Nardelli out like Wagoner?

Rick Wagoner, (r) and Bob Nardelli (c) of Chrysler before Congress. Is Nardelli out like Wagoner?

While an official announcement is not expected until sometime Monday, General Motors Chairman and CEO, Rick Wagoner, is expected to resign after eight years as head of the struggling automaker at the direct request of the White House. That, insiders report, was the last remaining obstacle before President Barack Obama would approve a second round of federal loans needed by the automaker if it hopes to survive the current U.S. automotive sales slump.

The news, which was apparently first leaked out of the White House on Sunday afternoon, came as a setback for Wagoner, who said, just last week, that he had no plans on resigning, and that the GM Board of Directors supported him.

GM officially refused to comment since the announcement hasn’t been made, saying only “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.” (more…)

Chrysler Canadian Restructuring Talks Remain Deadlocked on Eve of Loan Decision

Neither union nor management gives as deadline nears.

by on Mar.29, 2009

By signalling it is going to help Chrysler, the U.S. government has made it more difficult for obtaing concessions.

By clearly signalling it is going to help, the U.S. government has actually made it more difficult for Chrysler to obtain concessions needed for viability.

While the U.S. industry and associated pundits were transfixed by the apparent decision of the Obama administration to force out Rich Wagoner, CEO of General Motors, to give it political cover for an extension in loans, Chrysler and the Canadian Auto Workers remained locked in an intense battle over the company’s future. A Chrysler negotiator reiterated over the weekend that it needed more concessions from the CAW, which has said talks have broken down.

“We all recognize that we are in unprecedented times as it relates to the global economy and current financial crisis, which has a direct impact on the automotive industry. After several days of bargaining in good faith, Chrysler and the CAW have not reached an agreement that closes the competitive gap with other automobile manufacturers in Canada to ensure Chrysler’s immediate viability,” said Al Iacobelli, Chrysler’s top labor negotiator.

“The Company has been very clear in its Canadian Government testimony and position with the CAW: We must close the competitive gap of $19 an hour immediately. Although we made progress toward closing the gap, significant issues related to the existing ‘pattern’ remain on the table. These are not normal business circumstances and all Chrysler constituents have been asked to break the pattern – employees, retirees, dealers, suppliers and others. These requests have been made to all of our constituents, including the CAW, to ensure Chrysler’s viability,” he said.

CAW President Ken Lewenza had no immediate comment on the Iacobelli’s comments. The talks have been particularly tense because the CAW has made an issue than $30 million in bonuses Chrysler Vice Chairman Tom LaSorda has collected in the past two years both from Daimler AG and from Cerberus. Other Chrysler executives also have collected substantial “retention” bonuses while the company has suffered financially and thousands of employees both in the U.S. and Canada have been laid off. (more…)