TEXT OF STORY
Steve Chiotakis: As we start the week, General Motors is short one CEO. Rick Wagoner has agreed to step down, soon to be replaced by GM’s Chief Operating officer, Fritz Henderson. All that as the Obama administration prepares to announce more aid for the struggling auto industry. Here’s Marketplace’s Jeremy Hobson.
Jeremy Hobson: One main challenge facing GM is its legacy costs. Trying to get the United Auto Workers union to take company stock in exchange for major cutbacks in retiree health care.
Auto Industry analyst Erich Merkle says the Wagoner ouster is just the latest attempt to do that.
Erich Merkle: Politically, it could help the restructuring process, but the only way that it would is it would say, “look, management is giving. Here’s the example and now the UAW and the bond holders, you’re going to be giving, too.”
Still, he says, any CEO is going to have a difficult time getting concessions out of various stakeholders. The White House is offering 60 days of additional operating money for the new phase of restructuring. And in a new twist, bankruptcy appears to be a real possibility.
President Obama is expected to announce today that the government will back warranties for GM and Chrysler vehicles.
The argument against bankruptcy has been that no one will buy a car from a bankrupt company.
In New York, I’m Jeremy Hobson for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.