I guess going begging in a corporate jet leaves a lasting impression. General Motors CEO Rick Wagoner was forced to resign by the Obama administration today, as part of the massive amount of strings attached to automaker bailout money.
http://www.politico.com/news/stories/0309/20625.h…
While I think Wagoner's resignation is long overdue, it is a little troubling that it had to come at the behest of the government. This is taking the executive compensation issue to a whole new level.
Does Obama really believe that the U.S. auto industry, with its bloated pension requirements, deeply-entrenched unions, and blatant inability to compete on a global scale is actually worth saving? Can't we just let anything die anymore?
Have any of you been to Michigan lately? It's no wonder the kids are volunteering for the military. Baghdad is safer than Flint, Pontiac, or Detroit these days. Just stick a fork in it, for crying out loud.
Wagoner was a terrible, terrible CEO who was stuck in the "old days" mentality of GM.
The rest of the board should go along with him, because little has changed at the company despite the obvious (downward) direction it has been heading. What's sad is Obama had to do the board's job for the shareholders.
It's time for GM and Chrysler to file for bankruptcy.
I agree, these guys need to file and get it over with.
Agreed, these guys should have filed long ago. It is time for the government to recognize the difference between stabilizing a market (credit) and messing with a market (automotive)
With the credit markets in their current state, is filing for bankruptcy really an option? Wouldn't the end result be a liquidation?
Another question- I've heard arguments in favor of a sort of "pre-packaged" bankruptcy scenario. Does that idea have any legs if the government helps to facilitate the move and provide some kind of support in helping an automaker enter into a standard Chapter 11 and emerge as a going concern?
One option would be for the government to subsidize debtor in possession (DIP) financing for the companies to have an orderly bankruptcy. It's clear the companies in their present form will never be viable businesses.
I'm going to be a little contrarian here and suggest that GM is making great cars these days.
GM has a lot of problems and any number of those may be Rick Wagoner's fault. You don't have to know very much about the auto industry to know that GM is in bad, bad shape.
But I find it frustrating when people write off GM as being unable to build competitive cars. From the Chevy Malibu, to the Traverse/Outlook family of crossovers, the Pontiac G8, the entire Cadillac family and the full size pickups GM is building a lot of absolutely terrific automobiles. I would argue that GM builds a competitive model in almost every space in which it competes.
Ten years ago this wasn't true. And public perception seems to still be that the American car manufacturers are building unreliable and inferior cars. Which is unfortunate.
I would also argue that since purchasing Hummer, GM has gotten most of the really big strategic decisions right: the sale of GMAC when it happened, the heavy push into electric etc. GM and Ford to me (very much unlike Chrysler) were companies that were headed in the right direction before the start of this recession.
Finally I will add sometimes when confidence is lost, change is needed at the top just for change's sake. I think this might be what the Obama administration was thinking.
Who cares if they are making great cars? That has very little to do with whether they are a viable business. Their margins on those cars are too small to support their bloated organizational structure and accumulated obligations. Writing GM off has nothing to do with the quality of their product, and everything to do with whether the cost of bringing that product to market outweighs the value that product represents
Suscipit et est omnis vel. Laudantium quia et aliquid occaecati ullam velit vero et.
Qui iste ipsum modi qui dolor explicabo magni. Atque quidem eos sit reiciendis. Natus et molestiae quo. Aut perferendis voluptates vitae cupiditate. Et voluptatem adipisci cupiditate eos nihil nulla accusantium.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...