Obama Backs GM, Chrysler; Wants More Restructuring

March Ends with a Flurry of Activity in Washington as President Obama and his advisers make continued demands on General Motors Corp. and Chrysler LLC to justify the use of taxpayer dollars to keep the auto makers afloat.

On March 30, Obama lays out a sobering survival plan for GM and Chrysler, blaming the auto makers' woes on failed leadership but offering additional government support and suggesting they could successfully reinvent themselves to make the U.S. the world leader in building the cars of tomorrow.

Obama warns the potential turnarounds at GM and Chrysler will come with a price. In return for 60 days of sufficient operating capital, GM must take broader restructuring steps. Rick Wagoner steps aside as chairman and CEO. Fritz Henderson moves from president and chief operating officer to CEO of GM, while board member Ken Kresa assumes the temporary role of chairman.

The president blames management at GM and Chrysler for contributing to 400,000 auto industry jobs losses this year and leaving the auto-centric state of Michigan with one in 10 people unemployed.

“There is little I can say to subdue the anger or ease the frustration of all whose livelihoods hang in the balance because of failures that weren't theirs. But there is something I want everybody to remember,” he says.

“Remember that it is in times precisely as these, in moments of trial and moments of hardship that Americans rediscover the ingenuity and resilience that makes us who we are and made the auto industry what it once was and what it will be again.”

Wagoner leaves GM after just over eight years as CEO and seeing GM lose more than $80 billion since 2005. The auto maker last turned an annual profit in 2004. During Wagoner's tenure, its market capitalization, or the market value of the company's outstanding shares, has plummeted 95%.

Obama's plan for Chrysler leaves Robert Nardelli as chairman and CEO, but suggests a proposed merger with Italy's Fiat Auto Group represents the sole means of survival for the auto maker. The government will provide Chrysler with $6 billion in taxpayer loans, which comes on top of the $4 billion it received earlier this year, if it seals the partnership. Obama gives Chrysler and Fiat 30 days to marry.

Suppliers Tense as GM, Chrysler Fight to Stay Afloat
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