DETROIT – Well, no doubt you’ve all heard by now that Rick Wagoner is the ex-chairman and CEO of GM. He was asked to step down by the White House. Fritz Henderson, who was COO, now steps into CEO position. Kent Kresa, who has been on the board of directors since 2003, now becomes interim chairman. I’d say, look for most of the board to get sacked and replaced with fresh blood.
What’s going on? Here’s my read. President Obama said he is going to support the domestic auto industry, even though a strong majority of the American people are dead set against giving more money to the industry. Republicans are against it and so are many Democrats. So the President needs political cover and firing Rick Wagoner makes the President look decisive and in control. That makes it easier to support the industry. And, that will also make it easier for the Administration to force the United Auto Workers union to agree to more concessions.
And then there’s Chrysler. The Administration is giving Chrysler 30 days to finalize a merger with Fiat, and get rid of almost all of its debt. If Chrysler fails to do that the government will not give it any more money and will force it to go straight into liquidation. Meanwhile, Chrysler says it is still far from reaching an agreement to cut $20 an hour from its labor costs with the Canadian Auto Workers union. Tomorrow is the deadline to reach an agreement with the CAW and if it fails to do so, Chrysler says it is pulling all of its manufacturing operations out of Canada.
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