Washington D.c., (PressExposure) March 31, 2009 -- Rick Wagoner who was CEO (Chief Executive Officer) of General Motors Corp. for eight years, has been forced to resign by Obama's task force, after failing to come up with a plan to restructure the ailing company, and Kent Kresa will succeed him as chairman.
The task force singled out Wagoner's failure to win concessions from bondholders, something which it considers to be an essential step in ensuring the company's future viability.
GM has experienced over $82 billion in losses during the last four years and recently ceded it's long held title of 'World's Top-Selling Carmaker', to Toyota Motor Corp.
Wagoner's exit caps an unsuccessful five-month push to win a further $16.6 billion in new U.S. loans after already having received an initial installment of $13.4 billion.
He joined GM in 1977, but as CEO, he wrongly bet against gasoline-electric hybrid vehicles, and instead focused on hydrogen technology, meaning that GM didn't offer its first full-scale hybrids until 2007, which is a full decade after Toyota's 'Prius' debuted.
Wagoner gained notoriety a few months ago, after flying to Washington in a corporate jet on an aid seeking trip, and the administration now desires to be seen as unwaveringly firm in their dealings with the auto-giants, due to the unpopularity of the bail-outs.
John Casesa, who is a managing partner at the New York-based consulting firm Casesa Shapiro Group said, "This will also give the government moral authority with the other stakeholders to make them sacrifice. It's very hard for the government to write a big check without giving some evidence of change", and Jeremy Anwyl, the CEO of Edmunds.com in Santa Monica, California, commented, "The bailout loans aren't hugely popular and that's creating an issue for Obama, and one way to make the loans more palatable is to be able to say the person responsible is no longer with GM".
GM has already said it will shed around 47,000 jobs globally in 2009 and it plans to close five assembly plants.
The administration is expected to offer the company a further sixty days in which to come up with a plan that will make the cuts even deeper, and Fritz Henderson who is the new CEO will be responsible for both reducing the huge $16.6 billion which is presently being sought, and also gaining bondholders' approval for any future offering which will be on far less favorable terms than those that were required for the company to keep the first $13.4 billion in loans.