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GM Chief Wagoner Agrees To Resign

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By KEN BENSINGER and PETER NICHOLAS

Los Angeles Times

Published: March 30, 2009

WASHINGTON - Pilloried and vilified, Rick Wagoner has agreed to step down as General Motors Corp. chairman and chief executive as part of a White House plan to provide more aid to U.S. automakers.

The tack suggests a hard-nosed approach from the Obama administration toward the automakers, bondholders and the UAW, all of whom have yet to reach agreements on key concessions, despite months of talks.

The move will be followed today by President Barack Obama announcing his plan to restructure the nation's auto industry, a plan that will demand further sacrifices from the automakers. Bankruptcy would still be possible if the automakers fail to restructure.

The Obama administration plans to give General Motors enough government aid to restructure during 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 plan also includes government backing of warranties for GM and Chrysler vehicles to give consumers confidence in their cars and trucks.

As part of that plan, Wagoner was asked to leave GM. No indication was given that similar leadership changes would be asked of Chrysler.

Not since President Franklin Roosevelt considered taking control of Ford Motor Co. in 1943 from a failing Henry Ford has the federal government pushed for such sway in the management of Detroit's automakers.

Wagoner, who has been the company's top executive since 2000, has come under increasing fire over the past year as GM's financial condition has deteriorated. In his eight years at the helm, GM has lost $68 billion and the company's stock value has declined 95 percent.

"From the government's perspective, they had to show a visible form of sacrifice," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., and the son of a former GM president.

Industry experts credit Wagoner with pushing through profound reforms and a landmark labor agreement at the 100-year-old company, but he may have moved too slowly.

"If you can criticize Rick, it's that he was incremental by nature," said Jeremy Anwyl, CEO of automotive research site Edmunds .com. "Step by step they were moving forward, but they ran out of time."

"I think the need for something symbolic was pretty strong, and this certainly qualifies," Anwyl said.

Although GM declined to comment Sunday, in a conference call to Michigan lawmakers Obama said GM President and Chief Operating Officer Frederick "Fritz" Henderson will run the company on an interim basis.

Henderson, a GM veteran who has led the automaker's European and Chinese operations, has been carrying out the company's restructuring on a day-to-day basis and knows the leaders of Obama's auto task force.

GM has received $13.4 billion in government loans and Chrysler has survived on $4 billion in aid. The automakers have been hard-hit by the economic downturn and the worst decline in auto sales in 27 years. In progress reports filed with the government in February, GM asked for $16.6 billion more and Chrysler wanted $5 billion more.

But the officials said the Obama plan would not go that far, instead providing short-term aid in exchange for significant sacrifices.

The officials said the administration did not view Chrysler to be viable as a stand-alone company. Under the plan, the government would provide up to $6 billion to forge the alliance between Chrysler and Fiat, but if the companies failed to reach a deal or find an alternative plan for viability, Chrysler would not receive additional federal aid.

Fiat executives have talked to the White House auto task force about a proposal to acquire a 35 percent stake in Chrysler in exchange for small car technology, transmissions and other items that Chrysler has valued at $8 billion to $10 billion.

General Motors, meanwhile, would have a limited window to work with the United Auto Workers union, bondholders and other stakeholders and would receive an undisclosed amount of "interim financing" over 60 days to restructure. The officials said the administration would determine how much GM would need in "permanent capital" during the 60-day period.

If GM failed to reach the concessions needed, some type of bankruptcy could be used at the end of 60 days, the officials said.

The administration planned to send a team to Detroit to help with the restructuring during the next 60 days. With Wagoner's departure, new management would be decided by General Motors' board of directors in consultation with the government.

Information from The Associated Press, The Detroit News and Detroit Free Press was used in this report.

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