Posted on 30 Mar 2009
President Barack Obama said General Motors Corp. and Chrysler LLC must survive without becoming "wards of the state" and the companies have one last, limited chance to "fundamentally restructure."
After his administration forced GM Chief Executive Officer Rick Wagoner to resign and pressed Chrysler to form a partnership with Italy’s Fiat SpA to get more taxpayer aid, Obama today said that company creditors, shareholders, workers, dealers and suppliers will be expected to make more sacrifices.
“We cannot, we must not, and we will not let our auto industry simply vanish,” the president said at the White House, announcing new and final deadlines for the No. 1 and No. 3 U.S. automakers to remake themselves. “But we cannot continue to excuse poor decisions. And we cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars.”
If plans for automakers fail, the administration is prepared to let them slide into a structured bankruptcy that he said would make it easier GM and Chrysler to clear away old debts and emerge as smaller, leaner operations.
The administration forced the resignation of Wagoner before announcing its conditions for continued support. Fritz Henderson, GM’s president and chief operating officer becomes CEO. GM also is replacing most of its board and must increase reliance on producing more fuel-efficient vehicles, under findings of the administration’s auto task force. Chrysler CEO Robert Nardelli was allowed to keep his position.
“This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company,” the president said. “Rather, it’s a recognition that it will take new vision and new direction to create the GM of the future.”
GM will get “adequate working capital” over the next 60 days, during which time the administration’s auto task force will work with the company to assess whether the company has consolidated enough brands and its debt load.
Obama said conditions at Chrysler are “more challenging,” and a review of the No. 3 automaker shows “that Chrysler needs a partner to remain viable.”