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Obama on Automakers' Viability Plans: FAIL

Charles Krome
by Charles Krome
March 31, 2009

It really shouldn't come as a surprise that Pres. Barack Obama gave failing marks to 's and 's viability plans. Despite much sound and fury, both General Motors and Cerberus/Chrysler kept things pretty much business as usual, even in the highly unusual state of the market.

Yes, GM made massive cuts to the size of its operations, chopping away freely at programs and people, but the company didn't do too much in the way of changing how it does business. And from where I'm sitting, Cerberus didn't do much of anything one way or another, content to try to 'deal' its way to success with a partner such as Fiat.

The end result? Let's do this backward (you know, just like the industry would). , but one in which the Italian automaker would have to take less than the 35% stake in Chrysler that's currently on the table '” at least for now. Ye olde Presidential Task Force on Automobiles simply doesn't think Chrysler can survive on its own, but, on the other hand, it doesn't want too much taxpayer money to get into Fiat's coffers.

Frankly, this looks to be 'game over' for Chrysler as we know it.

, reflecting the PTFOA's confidence in at least certain parts of the General's vehicle lineup and its global 'success.' And to kick things off in the right direction for GM, the government kindly 'invited' GM's CEO and Chairman Rick Wagoner to step down.

I'm a little confused, though, why he's being replaced with another GM lifer, Fritz Henderson, if the problem was that Wagoner was too much part of the status quo to push things along fast enough.

But anyway, this is where we really zero in on the problem. As I've mentioned in the past, I strongly believe that Wagoner and the people at GM (and and Chrysler) gladly would have remade the business if they could have. But doing so takes the cooperation of a whole lot of other stakeholders, including union members, dealers, bondholders, etc., etc. If not their cooperation, at least their inability to fight the changes.

And when you read between the lines of Obama's comments from this morning, you get the feeling that he realizes this. This, of course, would provide the ability for the kinds of wholesale, unilateral changes that would force an extreme makeover onto the U.S. auto industry.

To every person out there who has complained about the way 'Detroit' does business, you're about to find out how hard and painful real change really is. But, being optimistic, I'm also going to say to those who always resisted change, you're about to find out just how good things can be after you do it.


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