Chrysler's Nardelli responds to Auto Task Force
No mention of GM's Wagoner in a statement issued by the boss man at ChryslerThe appointment of an 'Auto Task Force by the US Treasury and President has been welcomed by the Chairman and CEO of Chrysler, Bob Nardelli.
An appointment of a team or an individual (the 'Car Czar' rumoured since late last year) was expected and the newly-installed President Obama appears to be shaking things up. Confirmation yesterday that he had insisted GM CEO Rick Wagoner leave his position in exchange for GM's government aid is the most telling example (more here).
In an interview with the Carsales Network in January (more here), Wagoner appeared to be hoping that the Auto Task Force could resolve some of the healthcare issues facing GM. The US government doesn't see that as part of the Task Force's job description. It's been reported by America's ABC News -- and picked up by website Jalopnik.com -- that Wagoner qualifies for US$20 million in retirement benefits.
Jalopnik also outlined the 'Obama plan' in some depth, highlighting the president's 'warranty commitment program' as the crux of the plan. This ensures that vehicles purchased new from GM and Chrysler will continue to be covered for the duration of their warranty, whatever may happen in the meantime. The plan also allows Ford an option to take part, although the US administration is not forcing Ford's hand on this point, since the car manufacturer has undertaken its own restructuring to stay afloat without government assistance.
There's good news for Chrysler. The company gets US$6 billion up front and the administration is actively encouraging the car maker to ally itself with Italian conglomerate, Fiat.
There's bad news for GM. With monies already paid by the government, the only concession in the new plan is that GM has 60 days to settle differences with stakeholders and the UAW (United Auto Workers). If the corporation cannot manage both those items on the agenda, there'll be no option other than bankruptcy proceedings.
According to the government's viability study for GM, the car company had not complied with conditions laid out in the 'Loan and Security Agreement' between the two parties. Those conditions, to be met by March 31, concerned the company's industrial relations and "the commencement of a Bond Exchange". Since these conditions had not been met, the government is arguably within its rights to deliver the latest ultimatum.
By the usual standards of government communiqués, the Viability Study is blunt. The summary paragraph is nothing if not a frank assessment of the company's future outlook:
- In short, while the Company has made meaningful progress in its turnaround plan over the last few years, the progress has been far too slow, allowing the Company to continue to lag the best-in-class competitors. As a result, the President's Designee has found that General Motors' plan is not viable as it is currently structured. However, because of GM's scale, franchise and progress to date, we believe that there could be a viable business within GM if the Company and its stakeholders engage in a substantially more aggressive restructuring plan.
Elsewhere, the communiqué mentions pejorative phrases like "optimistic assumptions" to support the government's view that GM is still failing to meet obligations to itself and its stakeholders.
Overnight, Nardelli issued a statement, which we've reproduced in full at the bottom of this article. He basically welcomes the president's announcement of the Task Force and the subtext expresses relief that the Task Force is not standing in the way of the pending alliance with Fiat (more here).
Here's Nardelli's statement in full:
- Today marks an important milestone for Chrysler LLC. We are encouraged by the commitments of the Administration, U.S. Treasury and President's Auto Task Force to the American automobile industry and Chrysler's viability, with a Fiat alliance.
Please see our Editorial Guidelines & Code of Ethics (including for more information about sponsored content and paid events). The information published on this website is of a general nature only and doesn’t consider your particular circumstances or needs.
