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div class=”track”img alt=”" src=”http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/12703?ns=guardianpageName=Business2CAutomotive+industry+2928News2CGeneral+Motors2CCredit+crunch+292CCredit+Crunch2CBusiness+Markets28Content+type2FBusiness2FBusiness28Tone2FAutomotive+industry2F28Content+type7C11920447C” width=”1″ height=”1″ //divpBarack Obama demands radical reform, and quickly, as he delays a decision about more cash for struggling carmakers/ppstrong/strongstrong/pp/strongPresident Barack Obama raised the possibility that two of Detroit’s teetering carmakers could be forced into bankruptcy today, blasting General Motors and Chrysler for failed leadership, unrealistic business plans and a slow rate of reform./ppThe White House earlier ordered the resignation of GM’s veteran boss and instructed cash-strapped Chrysler to surrender its independence to Italy’s Fiat./ppObama announced tax incentives for Americans to buy new cars, but delayed a decision on $21bn (£15bn) in extra bailout money from the public pocket, demanding far more radical reform proposals from the carmakers within weeks./ppFlanked by his economic advisers in the foyer of the White House, the president delivered a cutting diagnosis of the motor industry’s financial crisis, declaring that combined losses of $54bn last year were the result of “a failure of leadership from Washington to Detroit”./pp”We’ve seen problems papered over and tough choices kicked down the road, even as our foreign competitors outpaced us,” said Obama in a televised address. “We, as a nation, cannot afford to shirk responsibility any longer.”/ppA combination of fierce Asian competition, an evaporation of bank financing for car buyers and a collapse in consumer confidence has hammered Detroit’s “big three” – GM, Ford and Chrysler. An estimated 400,000 jobs have been lost among motor manufacturers, dealers and suppliers over the last three years./ppObama said that motor manufacturing was “an emblem of America’s spirit” and a “source of deep pride” on which the nation was built. He pledged: “We cannot, we must not and we will not let our auto industry simply vanish.”/ppUrging the American public to rally round, he compared the havoc wreaked by the car industry’s financial meltdown to a natural disaster in America’s midwestern industrial heartland: “While the storm that has hit our auto towns is not a tornado or a hurricane, the damage is clear and we must likewise respond.”/ppThe harsh tone of the administration’s message stunned both Wall Street and Detroit, sending the Dow Jones Industrial Average down by 300 points in early trading. It dismayed workers and politicians in Michigan who saw the looming prospect of even deeper job losses, factory closures and cuts to benefits./ppGM’s long-serving chief executive, Rick Wagoner, became the first victim of the hardline approach as he was forced to quit, ending his 31-year career at the company. He was replaced by GM’s chief operating officer, Fritz Henderson, with a former Northrop Grumman boss, Kent Kresa, chairing a new board./ppThanking employees for their commitment, Wagoner issued a statement saying: “GM is a great company with a storied history. Ignore the doubters because I know it is also a company with a great future.”/ppThe treasury described GM’s existing recovery plan as “not viable” and gave the firm, which owns brands such as Vauxhall, Chevrolet and Cadillac, just 60 days to produce a “credible” strategy which is likely to involve an increase to the 47,000 job losses already envisaged./ppFor Chrysler, however, the prognosis was worse. The taskforce concluded that the ailing company, which employs 38,000 people in the US but lost $8bn last year, had no future as a standalone business and must pursue a wide-ranging alliance with Fiat. The treasury said it would only support Chrysler for another 30 days. But if it can conclude a deal with Fiat, it will get a fresh $6bn loan from taxpayers’ funds./ppStressing that the firm already has the framework of a deal with Fiat in place, Chrysler’s chief executive, Robert Nardelli, reassured customers and suppliers that it would be “business as usual” over the next 30 days./ppIn his speech, Obama appeared to prepare the ground for bankruptcy, saying that a chapter 11 filing for either GM or Chrysler would “make it easier to clear away old debts weighing them down,” and that it need not involve years of court procedures./ppBankruptcy would allow the courts to intervene in difficult talks with unions and creditors. GM’s bondholders, who are owed $27bn, have proven particularly unwilling to exchange their debt for equity, believing that the company’s shares are worth little./ppExperts believe that protection from creditors is an increasingly likely option. Craig Fitzgerald, an automotive analyst at Plante Moran in Michigan, said: “It’s possible that this can’t be done outside bankruptcy.”/ppHe said the administration’s message to the companies’ management was blunt: “You have not moved swiftly enough or boldly enough and you are part of the problem.”/ppBetween them, GM and Chrysler have already received $17.4bn of emergency loans from the federal government. But GM has asked for a further $16.6bn and Chrysler, which is owned by the private equity company Cerberus, wants another $5bn to restore stability./ppIn Detroit, there were murmurings of discontent at the treatment of Wagoner, a popular figure. Thaddeus McCotter, a Republican congressman for the Detroit area, asked why the bosses of Wall Street banks had been allowed to keep their jobs despite losing billions: “When will the Wall Street CEOs receiving funds summon the honour to resign? Will the White House ever bother to raise this issue? I doubt it.”/ppUnions face the prospect of further belt-tightening in wages, healthcare and retirement benefits. On the shop floor, morale is at rock bottom. George Windau, a skilled mechanic of 32 years’ standing who works at Chrysler’s Jeep factory in Toledo, Ohio, told the Guardian: “People are frightened to death. They don’t think it’s fair. Everyone’s searching for some explanation of how we got into this situation.”/ppWindau was unimpressed by the president’s call for more radical cutbacks: “His heart may be with us but he really doesn’t understand that we’ve been giving concessions in every contract negotiation of the last 30 years. Each one has been worse than the one before.”/pdiv class=”related” style=”float: left; margin-right: 10px; margin-bottom: 10px;”ullia href=”http://www.guardian.co.uk/business/automotive-industry”Automotive industry/a/lilia href=”http://www.guardian.co.uk/world/barack-obama”Barack Obama/a/lilia href=”http://www.guardian.co.uk/business/generalmotors”General Motors/a/lilia href=”http://www.guardian.co.uk/business/chrysler”Chrysler/a/lilia href=”http://www.guardian.co.uk/business/credit-crunch”Credit crunch/a/lilia href=”http://www.guardian.co.uk/world/usa”United States/a/li/ul/divdiv class=”terms”a href=”http://www.guardian.co.uk”guardian.co.uk/a copy; Guardian News Media Limited 2009 | Use of this content is subject to our a href=”http://users.guardian.co.uk/help/article/0,,933909,00.html”Terms Conditions/a | a href=”http://www.guardian.co.uk/help/feeds”More Feeds/a/divp style=”clear:both” / pa href=”http://feedads.googleadservices.com/~at/Ts_DMPb0XtIJMCg9N5Bu_0UrVnQ/a”img src=”http://feedads.googleadservices.com/~at/Ts_DMPb0XtIJMCg9N5Bu_0UrVnQ/i” border=”0″ ismap=”true”/img/a/p

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pDETROIT – span class=yshortcuts id=lw_1238380551_0General Motors Corp/span. Chairman and span class=yshortcuts id=lw_1238380551_1CEO Rick Wagoner/span will step down immediately at the request of the White House, administration officials said Sunday. The news comes as span class=yshortcuts id=lw_1238380551_2President Obama/span prepares to unveil additional restructuring efforts designed to save the domestic auto industry./p pThe 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 span class=yshortcuts id=lw_1238380551_3Chrysler LLC/span 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./p pWagoner’s departure indicates that more management changes may be part of the deal, but it is still unclear who will be put in charge of GM. The automaker recently promoted Fritz Henderson, its former span class=yshortcuts id=lw_1238380551_4chief financial officer/span, to become president and chief operating officer. Many in the company thought he would eventually succeed Wagoner./p pDetroit-based GM issued a statement Sunday saying only that the company expects a decision by the administration soon but that it would not be appropriate for us to speculate on the content of any announcement./p pA 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 chief Robert Nardelli since August 2007. The person also spoke on condition of anonymity because Obama’s plan has not been made public./p pWagoner, 56, has repeatedly said he felt it was better for the company if he led it through the crisis, but he has faced sharp criticism on Capitol Hill for what many lawmakers regard as years of missteps, mistakes and arrogance by the Big Three automakers./p pWagoner 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./p pObama said Sunday that GM and Chrysler and all those with a stake in their survival need to take more hard steps to help the struggling automakers restructure for the future. In an interview with CBS’ Face the Nation broadcast Sunday, Obama said the companies must do more to receive additional financial aid from the government./p pThey’re not there yet, he said./p pA person familiar with Obama’s plans said last week they would go deeper than what the span class=yshortcuts id=lw_1238380551_5Bush administration/span demanded when it approved the initial loans last year./p pWagoner, in an interview with The Associated Press in December, had declined to speculate on suggestions from some members of Congress that GM’s leadership team should step down as part of any rescue package./p pI’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)./p pWagoner has been credited by auto span class=yshortcuts id=lw_1238380551_6industry analysts/span with doing more to restructure the giant bureaucratic 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 far too slowly to take on the span class=yshortcuts id=lw_1238380551_7United Auto Workers/span and shrink the company as its market share tumbled./p pWhile GM has improved its cars in the last two years, critics say the company relied for too long on sales of pickup trucks and span class=yshortcuts id=lw_1238380551_8sport utility vehicles/span for its profits and was unprepared for a drastic market shift when span class=yshortcuts id=lw_1238380551_9gasoline prices/span hit $4 per gallon last year./p pDuring the Congressional debate over whether to give GM and Chrysler loans last year, many lawmakers criticized Wagoner, including Sen. span class=yshortcuts id=lw_1238380551_10Chris Dodd/span, D-Conn., chairman of the Banking Committee./p pHe 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./p pspan class=yshortcuts id=lw_1238380551_11David Cole/span, 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./p pI 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. /ppCole noted that other automakers have been shaking up management as well. He pointed to span class=yshortcuts id=lw_1238380551_12Toyota Motor Corp/span., whose president, span class=yshortcuts id=lw_1238380551_13Katsuaki Watanabe/span, recently said he would be stepping down as the Japanese automaker weathers financial difficulty. Also, span class=yshortcuts id=lw_1238380551_14France/span’s biggest carmaker, PSA Peugeot-Citroen, abruptly ousted span class=yshortcuts id=lw_1238380551_15CEO Christian Streiff/span on Sunday, saying exceptional difficulties confronting the auto industry require new management at the top. /ppCole said 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. /ppMany GM executives likely will be disappointed at Wagoner’s departure, Cole said. /ppThey had great affection for Rick — someone that’s fair, that acts like a coach, that holds people’s feet to the fire but has a good understanding of human behavior, Cole said. /ppGM and Chrysler were required by the span class=yshortcuts id=lw_1238380551_16Bush administration/span to get major concessions from debtholders and the span class=yshortcuts id=lw_1238380551_17United Auto Workers/span, 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. /ppMembers 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 span class=yshortcuts id=lw_1238380551_18United Auto Workers union/span to accept shares of stock in exchange for half of the payments into a union-run trust fund for span class=yshortcuts id=lw_1238380551_19retiree health care/span costs. The deals also call for executive pay cuts and labor costs that are competitive with Japanese automakers with U.S. operations. /ppBondholders have been reluctant to accept the cuts, saying they’re being required to sacrifice more than others, but they have been reviewing a recent offer by GM. The union has agreed to other terms of the loans, including work rule changes and reducing total hourly labor costs at U.S factories to a level comparable with Japanese automakers. /pp___ /ppAssociated Press Writer Ken Thomas reported from Washington, D.C. span class=yshortcuts id=lw_1238380551_20AP Auto Writer/span Dan Strumpf contributed from New York./p

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© 2009 Cable News Network LP, LLLP. Two tornadoes touched down in Mississippi before dawn Thursday, damaging at least 60 homes, emergency officials said.

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copyright © 2009 Dow Jones & Company, Inc. General Motors said 7,500 of its U.S. hourly workers accepted buyout offers, as the auto maker continues to shrink its operations amid heavy losses and a global slump in demand.

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