by Mark Silva
President Barack Obama has made a certain calculation about the futures of General Motors Corp. and Chrysler Corp.
GM can rebuild. Chrysler can not make it on its own.
"President Goodwrench,'' they're calling him at MSNBC.
"We cannot, we must not, and we will not let our auto industry simply vanish,'' the president said this morning, in announcing that he is giving both ailing automakers more time to come up with viable plans for their futures.
Yet Obama is offering GM one thing: 60 more days of unspecified financial assistance from the federal government, while demanding that it get its plans together, while insisting that GM Chairman and CEO Rick Wagoner step aside, as he has agreed to do at the insistence of the Obama administration.
And he is offering the smaller Chrysler another: A shotgun marriage with Fiat. If the American and Italian automakers can forge a path together in the next 30 days, the Obama administration holds out as much as $6 billion in aid to help them along.
In the pursuit of federal aid for American enterprises that "cannot afford to fail" in the midst of the worst recession in decades - mega-insurer AIG and some of the biggest banks, for instance, and GM - the White House has concluded that Chrysler is not among them. But the auto industry is.
" This industry is, like no other, an emblem of the American spirit, a once and future symbol of America's success,'' Obama said today in an address from the White House.
" It is what helped build the middle class and sustained it throughout the 20th Century. It is a source of deep pride for the generations of American workers whose hard work and imagination led to some of the finest cars the world has ever known. It is a pillar of our economy that has held up the dreams of millions of our people. But we also cannot continue to excuse poor decisions...
"And so today, I am announcing that my administration will offer GM and Chrysler a limited period of time to work with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success....
"What we are asking is difficult. It will require hard choices by companies,'' the president said. "It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts. Only then can we ask American taxpayers who have already put up so much of their hard-earned money to once more invest in a revitalized auto industry.
"But our auto industry is not moving in the right direction fast enough to succeed,'' he said.
" While GM has made a good-faith effort to restructure over the past several months, the plan they have put forward is, in its current form, not strong enough,'' he said. "However, after broad consultations with a range of industry experts and financial advisors, I'm confident that GM can rise again, provided that it undergoes a fundamental restructuring.
"As an initial step, GM is announcing today that Rick Wagoner is stepping aside as chairman and CEO. This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company. Rather, it's a recognition that it will take a new vision and new direction to create the GM of the future.
"My administration will offer General Motors adequate working capital over the next 60 days,'' he said. "During this time, my team will be working closely with GM to produce a better business plan.
"They must ask themselves: have they consolidated enough unprofitable brands? Have they cleaned up their balance sheets or are they still saddled with so much debt that they can't make future investments? And above all, have they created a credible model for how to not only survive, but succeed in this competitive global market?
"Let me be clear: the United States government has no interest or intention of running GM. What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company.
"The situation at Chrysler is more challenging,'' he said. " It is with deep reluctance but also a clear-eyed recognition of the facts that we have determined, after a careful review, that Chrysler needs a partner to remain viable. Recently, Chrysler reached out and found what could be a potential partner - the international car company Fiat, where the current management team has executed an impressive turnaround. Fiat is prepared to transfer its cutting-edge technology to Chrysler and, after working closely with my team, has committed to building new fuel-efficient cars and engines here in America...
"Still, such a deal would require an additional investment of tax dollars, and there are a number of hurdles that must be overcome to make it work. I am committed to doing all I can to see if a deal can be struck in a way that upholds the interests of American taxpayers.
"That is why we will give Chrysler and Fiat 30 days to overcome these hurdles and reach a final agreement - and we will provide Chrysler with adequate capital to continue operating during that time,'' he said.
" If they are able to come to a sound agreement that protects American taxpayers, we will consider lending up to $6 billion to help their plan succeed. But if they and their stakeholders are unable to reach such an agreement, and in the absence of any other viable partnership, we will not be able to justify investing additional tax dollar to keep Chrysler in business.''
Comments
Now it becomes a countdown - fair or unfair - to full government ownership of GM. You don't oust the CEO without generating that speculation.
http://www.political-buzz.com/
Posted by: matt | March 30, 2009 11:42 AM
Looks like Obama has turned out to be an automobile expert.
Wonder if he can solve the high union wage mess with out disrupting his union core????
Posted by: Inky | March 30, 2009 11:49 AM
By giving Chrysler a deadline and holding a gun to its head, Fiat has inadvertently gained the upper hand in any negotiations.
The concept should be familiar should be familiar to anyone involved in recent international events, or visited a car showroom.
Posted by: Kenny Bunkport | March 30, 2009 12:10 PM
When the auto industry has huge overheads for health insurance for the thousands of personnel , and even more for retirees that are receiving health benefits. It is no wonder their businesses can't make a decent profit. Their saddled with billions of dollars from a health industry, that have questionable practices. Isn't that why we voted for President Obama , to bring in a single payer health care system? Not with what we are going to get--auditors, not doctors in wealthy insurance companies dishing out limited services. Being a moderate voter I think one of the most important issues to get Americans back to work is Health care? Large and small businesses in this America have to negotiate with the middle man--Insurance companies!
They are the inter-mediator, we can well do without? If car manufacturing companies didn't have to pay extra for health care for it's hundreds of thousands of workers. Then we would be on a level-playing-field, with our foreign competitors who are subsidized by their governments? Why is it European countries like France, United Kingdom have a single payer system through the government that--WORKS! The usual critics have everything to gain, and so much more to lose--they will put every obstacle in the way of Universal health care. Before Britain was invaded by immigrants under the European Common Market, my family had excellent Social health care.
Every employer and every worker paid into the system and the outcome insured you of hospitalization, doctor visits, specialists, eye and teeth care. Then of course the majority of upper class Americans don't like the idea, because they can well afford the co-pays, premiums that the insurance companies add to their exorbitant fees. But then they get the best service, including home visits. The mechanics of health care in the US is no different to England's, including sitting in the waiting room and seeing the physician. If you needed to see a specialist you was referred by letter. The Democrats will state they are working for the American people, but for some that's an outright fallacy? It's unlikely we will never get rid of the greedy insurance companies--until we have taxpayer Campaign contributions for many corrupt politicians. Same with E-Verify for US Workers, because big business didn't like being cut off from cheap illegal labor. Of course the special interest lobbyists, will distort the truth to get voters to deny the 47 uninsured Americans (NOT ILLEGAL ALIENS) peace of mind--for--OUR--families and children.
Posted by: Brittancus | March 30, 2009 12:19 PM
Maybe we should hold Obama the Unqualified to 3 months or resign too! What an idiot!
Posted by: Darkwater | March 30, 2009 12:58 PM
The intent for this is to keep the American auto industry from failure.
Well how is fusing Chrysler with Italy's Fiat going to do that?
How is merging the Italian auto industry with the American auto industry "saving the American auto industry?"
I don't understand.
Posted by: candid | March 30, 2009 12:59 PM
Obama is a moron. What an incredible ego he has. STAY OUT OF it, dope! Stop trying to take our country and socialize it. Actually, I think Obama is jumping thru Socializm and going right for Communism.
The government run companies are the worst: the DMV, the corrections department, the post office, the IRS, the court systems. You name it: if it runs poorly and has grumpy workers who don't do much - it's government run. Why would we want more of these kinds of companies?!
Posted by: SARA | March 30, 2009 1:17 PM
Has govt. EVER managed anything successful??? The answer is NO! Now Comrade Hussein is hiring and firing CEO's? I can think of a few in the govt. that I would like to fire right now: Pelosi, Reid, Dodd, Frank, Emmanuel, Gibbs, and last but not least Hussein himself for incompetence. 2010 will be a great year to get rid of many of these clowns who will be held accountable for their actions: Dodd is the first on the chopping block. Can't wait. Even though I'm from Chicago, I will be contributing towards his competitor's campaign. And I will bring others with me. He MUST GO!!!! Accountability first! Comrade Hussein couldn't even get a botanical garden going on the south side of Chicago let alone solve the problem of the U.S. auto industry. It is pretty simple--make a decent reliable affordable car and secondly cut your labor costs and everyone from UAW gets a 401K like the rest of us and that goes for the federal govt. as well. Get rid of the unions, they have done nothing except harrass, breed corruption, and cost businesses loads of money. They served their purpose long ago now they are just a justified mob.
Posted by: Jo | March 30, 2009 1:52 PM
Folks, take a step back and consider this: The Prez is firing private business owners.
They used to call that fascism.
It is very, VERY bad... on the scale of civilizational collapse. I know that most of you refuse to entertain such thoughts, but we're back to historical times now. Everything will NOT just work out.
Posted by: Fairly Certain | March 30, 2009 1:57 PM
Obama, who doesn't know a manifold from a center fold, now thinks he can run a mega-billion dollar auto company. Why won't any in the media ask him for his qualifications in what he's doing? Did he even ever change a tire on a car? Welcome to Socialism 101. The Soviets would be proud.
Posted by: Danforth | March 30, 2009 2:03 PM
Wow, you are all so positive about his plan, I don't think there is anything I can add. MORONS. The sky is falling, the sky is falling!!! Oh no, and it's all Obama's fault. IDIOTS, grow a brain
Posted by: Sean | March 30, 2009 2:33 PM
Why would anybody need to know how to change a tire in order to decide whether a company deserves tax-payer dollars ?
Posted by: Mika | March 30, 2009 3:15 PM
I will NEVER but a GM or Chyrsler product. Both are now WELFARE cars and I won't support the welfare state more then I'm forced to.
They got my tax dollars but they'll never get my sales dollars. I will NOT support a socialist government.
Posted by: Chicago Al | March 30, 2009 3:18 PM
Chrysler and Fiat? I personally won't be running out to buy one. Past attempts to merge failing automakers with Europeans (American Motors and Renault, Daimler-Chrysler etc.) seems to result in poor quality, expensive products that the public doesn't want.
Don't forget that GM and Ford are shedding their European divisions (Saab, Jaguar etc.) as fast as they can. Sorry, Chrysler is DOA.
Posted by: Otis | March 30, 2009 3:19 PM
Sean: his plan is to socialize America. What's to be positive about? This isn't about GM, it's about AMERICA. Do you want the government to run everything? Fire anybody? Be all in everyone's business? Don't you know that the norm for all economies is to go thru ups and downs? This is a downturn....and it will improve to an upturn. That is unless the government insinuates itself into every part of our lives first. Look at England. Are they better off for doing all the things Obama and his merry men (and Pelosi, of course) are doing? He's doing EXACTLY what they did years back, and now they are screwed. So, who's the idiot, Sean? Seriously - this isn't about politics or Democratic or Republican anymore. This is about AMERICA. It's real.
Posted by: SARA | March 30, 2009 3:21 PM
It's funny to think that people actually believe Obama is the one who is going to be running the companies. By himself. He does have people working for him who are experts in the field, you know. But you probably won't believe it and just call him a socialist, communist, or fascist.
Posted by: MR FACE | March 30, 2009 3:25 PM
Has govt. EVER managed anything successful???
Posted by: Jo | March 30, 2009 1:52 PM
Funny how you see losing 33% of your market share and losing 98% of your stock value all the whilesucking in 25 million a year........competent. I see why you must be a republican.
Posted by: bill r. | March 30, 2009 3:37 PM
By giving Chrysler a deadline and holding a gun to its head, Fiat has inadvertently gained the upper hand in any negotiations.
The concept should be familiar should be familiar to anyone involved in recent international events, or visited a car showroom.
Posted by: Kenny Bunkport | March 30, 2009 12:10 PM
By giving Chrysler a dead line this throws the ball to Fiat for a bargain.. Humm wonder what stock holder is behind this???
This is interesting.
Posted by: Inky | March 30, 2009 3:57 PM
Mr. Obama should remember that he is President, not King.
Posted by: Terry | March 30, 2009 4:05 PM
Now that we can see the full Obama mindset unleashed, who can blame the voters who were turned off by the excesses of the GOP which "out-corrupted" the Democrats and lost control of Congress. That may be a mouthful, but it sure as hell is a rational explanation of what is going on today in Washington. This is a runaway train and no opposition to stop it.
All of you lemmings who didn't know better and gave the Dems the landslide mandate had better start wondering where your $$$ for retirement will come from. The next thing that will go will be the programs for IRA's and SEP's.
Posted by: Oak Park Lefty | March 30, 2009 5:16 PM
Serves us all right for bringing in the rice burners into the country. If we put a stop to that back in the 80's then the American car companies will still be alive.
Posted by: No Wonder | March 30, 2009 5:25 PM
It’s actually a bit ironic that Fiat should come up in all of this. Fiat was the company that set up shop manufacturing cars in the Soviet Union back in the late ‘60s. Until the collapse of the Soviet Union those factories turned out only a few models. It is truly a wonder that, as late as 1992, one could still see people in the former Soviet Union driving around in newly manufactured 1967 model Fiat Coups. Yes, indeed, innovation was non-existent there while the government controlled the economy and held the people under their thumb. Be careful what you ask for.
Posted by: John W. | March 30, 2009 5:53 PM
President Goodwrench? How about President Badpliers!
Posted by: DaveB | March 30, 2009 6:00 PM
* * * * *
Posted by: MR FACE | March 30, 2009 3:25 PM
.
So what? Even if Obama has other people - experts as it were - to help him run these companies, how does that lessen justification for the labels “socialist” or “fascist”? Hitler and Stalin both had their “experts” to help run and control industry for them. What earns Obama and his administration these labels is the fact that Obama has injected the government into the market as a player like never before.
Posted by: John W. | March 30, 2009 6:02 PM
Just saw the clip of this yahoo "standing behind" GM warranties. It looked like a spoof!
I would have laughed if this had shown up in a film!
Posted by: Fairly Certain | March 30, 2009 6:44 PM
To all those railing against government incompetence and accusing the White House of a socialist revolution, let's review how we got into this predicament: Privtate enterprise screwed up.
The government didn't intervene until in the Wall St. morass or the quagmire afflicting Detroit until the disgraced management of the automakers, the major banks and the investment housing came to Washington frantically pleading for a hand-out.
So please come up with something more productive to say than the pat, prehistoric shibboleth about government being bad and the free market being virtuous.
And, Jo, if it the resolution to the automakers problems were as simple as you say
("make a decent reliable affordable car and secondly cut your labor costs and everyone from UAW gets a 401K like the rest of us and that goes for the federal govt. as well.") don't you think that would have been accommplished by now?
Everyone knows that this is what needs to happen. The dilemma is how to acheive that with so many different parties (shareholders, workers, creditors, taxpayers) jockeying to protect their own interests.
Posted by: Truthsquad | March 30, 2009 6:51 PM
Why is a lawyer who never tried a case, qualified to say who should lead an auto company?
Posted by: ejhickey | March 30, 2009 7:14 PM
Can you say socialism?
Posted by: Conservative | March 30, 2009 7:37 PM
How about President Dipstick?
.
Has president dipstick ever worked for a for-profit company?
Sean - you were right - there is nothing you can add.
.
Billy - sounds like Franklin raines to me.
Posted by: Terry | March 30, 2009 7:51 PM
1. Terming our president "Comrade Hussein" is offensive and speaks volumes of your implicit bigotry. I am not surpised.
2. Although I empathize with many of your fears that this may be a step too far, no one has had the good sense to acknowledge that he is trying to do something to fix the situation. If Obama sat back and let the natural market figure itself out, as it so colorfully has done this year, you would all be yammering about his inactivity.
Posted by: truth | March 30, 2009 8:32 PM
& down stocks go. Cut taxe's; makes people want
to work. Stimulus this!
Posted by: Steven | March 30, 2009 8:50 PM
Mr. Obama should remember that he is President, not King.
Posted by: Terry | March 30, 2009 4:05 PM
Wish this was true.
Posted by: Inky | March 30, 2009 9:05 PM
I have to wonder if the people complaining loudly about the firing of Mr. Wagoner are on another board posting about how angry they are that AIG is getting all that bonus money. This is the US government acting like the majority shareholder it is. GM management got their company into this mess, and came to the government begging for money to get them out. You don't get to use somebody's money without them having a say, which is exactly what happened here. (If you recall, GW Bush required the head of AIG resign and replaced him with someone he felt was appropriate--where was your outrage then?)
If you want to save GM, buy their cars. Otherwise, don't whine as they go into bankruptcy because nobody is buying from them.
Posted by: Bill | March 30, 2009 10:53 PM
SARA - The US is already a Socialist Country - it didn't take Obama to bring it to us, but it did take Obama to make you realize it.
Where was the Socialist rhetoric when Bush was borrowing from Communist China to redistribute some wealth in the form of $300 & $600 tax stimulus?
Posted by: Swampy | March 30, 2009 11:03 PM
Obama is incredible. He knows that only the US government has the power to get United States automakers restructured to be able to make high mileage cars that don't depend on gasoline for power -- and merging Chrysler ith Fiat is brilliant since we need an infusion of brainpower from designers and engineers from companies in countries which have traditionally outstipped us in miles per gallon and ergonomics. I have about thrown up looking at the American favorite car --the SUV; I disliked having to climb up to ride in them but two of my children's chose to buy SUV's so I sometimes ride in them) -- I also hated the fact that the US automakers got around the mileage requirements passed into law by making SUV's which had truck bodies (because trucks were exempt from the mileage requirements)...Now I hope with automaker restructuring something else can be designed that provides room for the feet and size for the fat yet is fuel efficient -- is it possible -- it better be!
Posted by: Nan T | March 31, 2009 1:49 AM
Swampy - While it's true that Roosevelt started much of this socialism thru the welfare program, and many Presidents including W have continued some isolated things that would be classified as socialist......our government has never so aggressively pursued socialism as Obama & his merry men are now. Seriously, it's beyond socialism, getting so close to Communism. (When we can only get deductions for charitable contributions to the government sponsored churches, you'll know we are there!)
Swampy, this isn't about GOP and DEM. It's about America. Free Enterprise. Rise and Fall economics. Opportunities. Capitalism. Freedom. Don't let politics get in the way of remembering what made America great. Let's not go the way of England....and the USSR...
Posted by: SARA | March 31, 2009 4:43 PM