DETROIT – General Motors Corp. Chairman and CEO Rick Wagoner will step down immediately at the request of the White House, administration officials said Sunday. The news comes as President Barack Obama prepares to unveil additional restructuring efforts designed to save the domestic auto industry.
The officials asked not to be identified because details of the restructuring plan have not yet been made public. On Monday, Obama is to announce measures to restructure GM and Chrysler LLC in exchange for additional government loans. The companies have been living on $17.4 billion in government aid and have requested $21.6 billion more.
Two people familiar with the plan said Sunday that the Obama administration would give GM enough government aid to restructure over the next 60 days, while Chrysler will get up to $6 billion and 30 days to complete an alliance with Italian automaker Fiat SpA. The officials spoke on condition of anonymity because they were not authorized to make details public.
Wagoner's departure indicates that more management changes may be part of the deal, but it is still unclear who will be in charge of GM. The automaker recently promoted Fritz Henderson, its former chief financial officer, to become president and chief operating officer. Many in the company thought he would eventually succeed Wagoner.
Detroit-based GM issued a statement Sunday saying that the company expects the administration to make an announcement about the automaker's restructuring soon but that "it would not be appropriate for us to speculate on the content of any announcement."
A person familiar with Chrysler's management said the company has been given no indication that the government will require any changes at the Auburn Hills, Mich., company, which has been led by former Home Depot CEO Robert Nardelli since August 2007. The person also spoke on condition of anonymity because Obama's plan has not been made public.
Wagoner, 56, has repeatedly said he believed it was better for him to lead GM through its crisis, but he has faced sharp criticism on Capitol Hill for what many lawmakers regard as years of missteps, mistakes and arrogance by the Detroit Three automakers.
Wagoner joined GM in 1977, serving in several capacities in the U.S., Brazil and Europe. He became president and chief executive in 2000 and has served as chairman and CEO since May 2003.
Wagoner, in an interview with The Associated Press in December, declined to speculate on suggestions from some members of Congress that GM's leadership team should step down as part of any rescue package.
"I'm doing what I do because it adds a lot of value to the company," Wagoner said in a Dec. 4 interview as GM sought federal aid from the Bush administration. "It's not clear to me that experience in this industry should be viewed as a negative, but I'm going to do what's right for the company and I'll do it in consultation with the (GM) board (of directors)."
Auto industry analysts credit Wagoner with doing more to restructure the giant automaker than any other executive. But given that he has been at GM's helm for so long, many of his critics say he moved too slowly to take on the United Auto Workers and shrink the company as its market share tumbled.
"Given the history, a change in management could hardly hurt and might do some good," Sen. Charles Schumer, D-N.Y., said Sunday.
Among his biggest accomplishments as CEO, Wagoner presided over a landmark contract agreement with the UAW in 2007. In that four-year agreement, the automaker successfully transferred nearly $50 billion in health care liabilities to the union as it sought to reduce labor costs, especially huge liabilities to retirees.
In 2004, Wagoner sought to reduce GM's brands by shutting down the Oldsmobile line of cars — a costly project because it required huge payouts to dealers. He also sought to streamline the company by selling the company's defense unit to General Dynamics Corp. for $1.1 billion in 2003. He has also reduced the company's work force by tens of thousands and closed factories around the country.
But Wagoner's critics say GM relied for too long on sales of pickup trucks and sport utility vehicles for its profits and was unprepared for a drastic market shift when gasoline prices hit $4 per gallon last year.
During the Congressional debate over whether to give GM and Chrysler loans last year, many lawmakers criticized Wagoner, including Sen. Chris Dodd, D-Conn., chairman of the Banking Committee.
Dodd accused automakers' top management of having a "head-in-the-sand" approach to problems and said Wagoner "has to move on" as part of a government-run restructuring that should be a condition of financial life support for the auto industry.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Sunday that Wagoner's departure gives the government a rationale to provide additional aid to the automaker. He was not surprised by the move, but said he is disappointed because he considers Wagoner a capable leader.
"I think that as a condition for further government support, this helps give them a little cover with the public," Cole said. "Essentially he's taking one for the team."
Cole noted that other automakers have been shaking up management as well. Toyota Motor Corp.'s president, Katsuaki Watanabe, recently said he would be stepping down as the Japanese automaker weathers financial difficulty. Also, France's biggest carmaker, PSA Peugeot-Citroen, abruptly ousted CEO Christian Streiff on Sunday, saying "exceptional difficulties" confronting the auto industry require new management at the top.
In the financial sector, where the overwhelming majority of government bailout money has been directed, some corporate leaders found their days numbered. The CEOs of mortgage giants Fannie Mae and Freddie Mac were forced out after the government took over the companies in the fall. Robert Willumstad, the former CEO of American International Group Inc., left the company in September, just a day after the government pumped $85 billion into the insurer to keep it from going under.
The terms of Wagoner's departure are unclear. However, GM disclosed in its annual report last month that it cannot make severance payments to Wagoner or other senior executives under the terms of its governments loans. Wagoner is eligible to retire under GM's salaried employee and executive retirement plans, but the amount he would receive is unclear.
Nardelli's departure is less likely than Wagoner's because Nardelli is "relatively new" to the automaker, with less than two years at the helm, Cole said.
GM and Chrysler were required by the Bush administration to get major concessions from debtholders and the United Auto Workers, with a deadline of March 31 for signed contracts. But very little headway was being made with either party this weekend as they awaited Obama's announcement.
Members of Obama's auto task force have said bankruptcy could still be an option for GM and Chrysler if their management, workers, creditors and shareholders failed to make sacrifices. Both companies are trying to reduce their debt by two-thirds and convince the United Auto Workers union to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care costs. The deals also call for executive pay cuts and labor costs that are competitive with Japanese automakers with U.S. operations
No comments :
Post a Comment