U.S. Moves to Overhaul Ailing Carmakers.

[elleng]

Source: NYT

'The White House on Sunday pushed out the chairman of General Motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.

The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out — a level of government involvement in business perhaps not seen since the Great Depression.

President Obama is scheduled to announce details of the auto package at the White House on Monday, but two senior officials, offering a preview on condition of anonymity, made clear that some form of bankruptcy — a quick, court-supervised restructuring, as they described it — could still be an option for one or both companies.

Mr. Obama’s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration’s new plans for them, concluded that Chrysler could not survive as a stand-alone company.'



Read more: http://www.nytimes.com/2009/03/30/business/30auto.html?hp

[tomm2thumbs]

1. wow - such specific instructions regarding Chrysler

not sure what to say about that, but they are being direct with them.

[Oerdin]

3. Not really.

Cerburus Capital (the owner of Chrysler) has already made an alliance with FIAT because none of the majors wanted to touch Chrysler especially as sales have fallen 60% due to the financial crisis. Ordering them to do something they're already doing is an easy way to appear to be in charge even if you aren't really deciding anything.

[elleng]

6. Or a way to confirm that what you're doing may be a good thing.

.

[TreasonousBastard]

2. What's the next step? Who do they have on tap who can...

actually run a huge manufacturing company?

An economist with a briefcase full of theories?

A financier who knows all about accounting but nothing about manufacturing, marketing or engineering?

A bureaucrat?

An admiral?

I've got a very bad feeling about this. What do they know that we don't?

On edit-- TELLING Chrysler to make the deal with Fiat? Feeling their oats telling banks to merge, now they're telling manufacturers to merge? And with a foriegn company?

[Oerdin]

4. Let's face it.

Wagner was a pretty crap CEO. They all knew the truck & SUV boom wouldn't last but he ignored GM's car line up so when gas prices went up last year GM was left with nothing decent to sell. Then Wagner sat on his hands for 6 months without reacting to the downturn (he should have laid off workers to save cash at the first sign of a big fall in orders) but Wagner waited until the company was virtually broke before he took action. That's not engaged management and right now GM needs a head who is on the ball and very engaged.

[primavera]

12. My thinking as well

Frankly, I think the public has drunk too much corporate Kool Aid about the unique qualifications needed to run a major corporation. While I don't mean to suggest that any fool can do it, how great a job have these supposed superstar CEOs with their billion dollar compensation packages done? Yet we seem to be ready to believe that the only way to find a qualified person to undertake an admittedly challenging task is to offer billions to one unique individual. Well, we've been trying that for years and does it look like they've done an especially good job? Maybe "some economist with a briefcase full of theories" or "some government bureaucrat" could do the job as well. Could they do any worse? :shrug:

[elleng]

5. Who was in the 'auto fix' group?

Maybe we'll learn more useful stuff tomorrow (today.)

[Brucie Kibbutz]

7. Frederick Henderson

"Using the threat of withholding additional loans, the task force forced GM Chief Executive Rick Wagoner to step down on Sunday. He will be replaced by Frederick "Fritz" Henderson, currently GM's chief operating officer".

http://online.wsj.com/article/SB123838449463268709.html?mod=googlenews_wsj

Never heard of him before some people on another forum mentioned he's the one who got promoted. They were of the opinion that he's about as incompetent as the guy he's replacing.

[TreasonousBastard]

8. If he's the COO, he's the guy who's been running things...

and there ain't no changes coming, even if he's an interim choice. Sounds like a dog and pony show is in the works, and we all get to wag our fingers while GM slowly drowns.

The AIG road show is winding down, so we get the GM Show and a whole new target for outrage.

Even their auditors don't know for sure, so who am I to say, but I wouldn't be a bit surprised if GM could run in the black if the gummint, or the union, picked up their health care costs.

(And why should anyone care what people on any forum have to say about qualifications-- unless it's a forum for retired manufacturing executives who ran profitable companies?)

[Brucie Kibbutz]

9. That certainly doesn't bode well.

Sounds like they're still committed to the status quo. :banghead:

[saigon68]

10. GM is building 2 new plants

One in China

One in Brazil

Good thing the Company is too big to fail.

</sarcasm>

[Johnboi70]

11. I don't get it

People are ripping on Obama on this subject in another post. Does anyone actually read these articles?

[Brucie Kibbutz]

13. I think they are upset about the appearance of a double standard

This action by the administration certainly could end up helping GM by forcing them to make drastic changes. Somebody needed to crack the whip because according to the report submitted by the task force, GM had done little to address their problems. It looked to me like GM insisted on a few half measures instead of a new approach.

The double standard comes in when the administration clearly doesn't demand the same sort of sacrifices of their Wall Street masters. I can understand people being pissed about that.