Washington says automaker’s restructuring plans aren’t viable; GM’s Wagoner forced out, Chrysler given 30 days to seal deal with Fiat or it will be allowed to fail.
President Barack Obama is expected to give General Motors one more chance to restructure with taxpayer help, but the administration plans to pull the plug on federal aid for Chrysler unless it can seal a partnership with Italian carmaker Fiat within 30 days, according to senior administration officials.
The president’s task force on the auto industry has concluded that neither company has a credible viability plan, and both automakers need a
That’s why Obama pushed for the resignation of GM Chairman and CEO G. Richard Wagoner, which was announced late Sunday. GM director Kent Kresa will take over as interim chairman, and Wagoner’s No. 2, Frederick (Fritz) Henderson, will become chief executive. Those changes could be temporary, however. Administration officials signaled that the majority of GM’s board will be replaced in the coming months.
In a statement, Wagoner said he was asked to step aside Friday in a meeting with administration officials, and he agreed. He expressed confidence that GM’s restructuring will succeed under Henderson. “GM is a great company with a storied history. Ignore the doubters because I know it is also a company with a great future.”
The auto industry worldwide has struggled through the global economic slowdown, with sales expected to drop by up to 30% this year.
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General Motors and Chrysler have been particularly hard-hit. Wagoner is not the only CEO to get the boot: the supervisory board of PSA Peugeot Citroen ousted CEO Christian Streiff on Sunday. Managing board member Roland Vardanega will act as interim chairman until June, when Philippe Varin takes over. Varin is the former CEO of the steelmaker Corus.
Thierry Peugeot, chairman of the supervisory board and a member of the family that controls the company, said, “given the extraordinary difficulties currently faced by the automotive industry, the supervisory board decided unanimously that a change in the senior leadership position was necessary.”
Sourced via forbes.com