GM chief to quit under Obama auto plan

Sunday, March 29, 2009 at 9:29 PM Posted by Beijing News


White House officials pressed GM head Rick Wagoner to leave the company, as they drafted President Barack Obama's plan to aid struggling US automotive industry, a senior administration official told AFP.

"Administration officials did ask Mr. Wagoner to step down and he agreed to do so," a senior White House official said.

Wagoner's announced ouster one day before Obama spells out his plan for the future of the crippled auto sector, comes with General Motors and Chrysler teetering on the edge of bankruptcy and seeking another 21.6 billion dollars in government loans.

The official said that Wagoner's departure was not a "quid pro quo" for receipt of a fresh infusion of federal funds.

"To characterize it Wagoner's departure as as a quid pro quo would not be accurate. It was not as if an ultimatum was issued," the official said, adding however that the top GM executive was strongly encouraged to leave.

As Obama prepared to announce his new plan at 11:00 am 1500 GMT on Monday, he made it clear he felt GM and Chrysler had not yet done enough to restructure their companies and earn billions more bailout dollars.

"They're not there yet," Obama told CBS television Sunday.

"We think we can have a successful US auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is."

Both companies have warned they are teetering on the edge of bankruptcy and cannot survive without another 21.6 billion dollars in government loans.

An Obama task force has been working to resolve the woes of the auto industry, a key pillar of the US economy that has been hit hard by plunging global cars sales amid the economic downturn.

And one plank of the reform would appear to be the resignation of GM chief Wagoner, according to US media reports Sunday.

General Motors and Chrysler have asked for another 21.6 billion dollars in US aid on top of the 17.4 billion in emergency loans approved in December as they struggle to survive.

Ford, the other member of Detroit's Big Three, has said it has enough cash to survive the downturn without government aid.

GM and Chrysler must come up with viability plans to show the path to profitability, requiring deeper job cuts, new agreements with unions to slash costs and acceptance by bondholders of a plan to cut the automakers' debt.

"There's been some serious efforts to deal with a combination of long-standing problems in the auto industry and the current crisis, which has seen, you know, the market for new cars drop from 14 million to nine million," Obama said Sunday.

But he added that to ride out the crisis there had to be "sacrifices from all parties involved, management, labor, shareholders, creditors, suppliers, dealers.

"Everybody's going to have to come to the table and say it's important for us to take serious restructuring steps now in order to preserve a brighter future down the road," the president said.

"We want to play a significant role in revitalizing America's economy and re-establishing its technology leadership."





Lions enjoy the sun in their enclosure at a zoo, March 29, 2009. REUTERS/Ali Jarekji

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