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Paul Sancya / AP General Motors Chairman and Chief Executive Rick Wagoner. |
In one fell swoop, the White House has made it clear it will re-make America's largest auto maker from the top down.
This goes way beyond dumping the CEO of a company gasping for air.
This is the start of the Treasury Department actively changing who and how GM operates.
So what happens next for GM?
Here's my take on the biggest questions swirling around GM.
- Wagoner out/Henderson in
The White House asked GM chairman and CEO Rick Wagoner to step down. Call him a political sacrificial lamb if you want, but the White House is sending a strong message that GM needs a new approach, new ideas, and new leadership. Fritz Henderson has long been considered Wagoner's heir apparent so his move to the top job is not a surprise. He's also a long time GM executive who was the architect of the company's recent restructuring plans. It brings up the question as to whether he is an interim CEO to get GM through this re-structuring or if he will keep the job long term.
- How active will the White House be in re-shaping GM?
Very active. Put it this way, the White House says it will have people in Detroit working to make GM leaner, more efficient, and likely a more conservative company. Don't be surprised if GM cuts more plants and sheds even more brands as Washington strips this company down to a more manageable, and hopefully, more profitable level.
- Will GM go into bankruptcy?
Maybe. The White House says it may consider a "quick rinse" pre-packaged bankruptcy that would let the government use the bankruptcy code to eliminate costly liabilities. That's code for Washington telling GM bond holders, "You better agree to cut the company's debt even further or we'll force that to happen in bankruptcy court." There is a lot of saber rattling in that threat aimed at GM bond holders, but it is also a very real threat.
- Will GM become smaller?
Probably. I expect the White House to pursue a Toyota-type strategy (similar to what Ford is doing) of paring the company down to three brands (Chevy, Cadillac, GMC) and focusing on a more limited line-up of vehicles. Also, the government will back GM developing more fuel efficient models like the Chevy Volt.
Read More From Our Other Bloggers:
- Kneale: Sacrificing GM's Wagoner, and Fearing Obama
- Wells: Forget The Bailout, Where Are The Car Buyers?
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