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Episode 111 – Obama Fires Wagoner, PSA Fires Its Chairman, Chrysler Leaving Canada?

March 30th, 2009 at 12:00pm

Runtime 7:00

Rick Wagoner, the CEO of General Motors, is forced to resign by the President of the United States. Peugeot Chairman Christian Streiff was ousted by its board. Chrysler could be on the verge of closing its operations in Canada if it can’t reach a deal with the CAW. All that and more, plus a look at the redesigned 2010 Lexus RX crossover.

Transcript and Story Links after the jump . . .

Bombshell City, the CEO of General Motors is forced to resign by the President of the United States. Peugeot fires its chairman. And Chrysler could be on the verge of closing its operations in Canada.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Monday, March 30, 2009. And now, the news.

Well, no doubt you’ve all heard by now that Rick Wagoner is the ex-chairman and CEO of GM. He was asked to step down by the White House. Fritz Henderson, who was COO, now steps into CEO position. Kent Kresa, who has been on the board of directors since 2003, now becomes interim chairman. I’d say, look for most of the board to get sacked and replaced with fresh blood.

What’s going on? Here’s my read. President Obama said he is going to support the domestic auto industry, even though a strong majority of the American people are dead set against giving more money to the industry. Republicans are against it and so are many Democrats. So the President needs political cover and firing Rick Wagoner makes the President look decisive and in control. That makes it easier to support the industry. And, that will also make it easier for the Administration to force the United Auto Workers union to agree to more concessions.

And then there’s Chrysler. The Administration is giving Chrysler 30 days to finalize a merger with Fiat, and get rid of almost all of its debt. If Chrysler fails to do that the government will not give it any more money and will force it to go straight into liquidation. Meanwhile, Chrysler says it is still far from reaching an agreement to cut $20 an hour from its labor costs with the Canadian Auto Workers union. Tomorrow is the deadline to reach an agreement with the CAW and if it fails to do so, Chrysler says it is pulling all of its manufacturing operations out of Canada.

Rick Wagoner isn’t the only auto executive who lost his job this weekend, Peugeot Chairman Christian Streiff was ousted by the board. According to the AFP, the board replaced Streiff with Philippe Varin, who will take over on June 1. Streiff had been at his position for two years but the company lost $450 million last year and announced it will layoff 11,000 employees as well.

In other French auto industry news, Renault announced it will receive a 400 million Euro loan from the European Investment Bank. The money is part of 3 billion Euro package the EIB approved for the auto industry.

Finally, some fun stuff. After a decade of trying, Englishman Richard Jenkins has smashed the world land speed record for wind-powered vehicles. The BBC reports that his wild-looking carbon fiber car, called the Greenbird, clocked a top speed of 126.1 miles an hour on a dry plain in Nevada. It easily beat the previous record of 116 miles per hour that’s stood since 1999. Jenkins spent 10 years designing the Greenbird, which looks more like an airplane than a car. It’s the fifth wind-powered vehicle he’s built.

Coming up next, a look at the redesigned 2010 Lexus RX crossover, we’ll be back right after this.

It’s hard to believe that it’s been almost 12 years since Lexus introduced its first-generation RX crossover.

The roomy, car-based utility was one of the earliest to hit the market when it came out in 1998. It was an immediate hit too, helping grow Lexus sales by 60 percent!

Today, the RX is the brand’s best-selling product; a title the company expects the redesigned 2010 model to maintain. Not one to mess with success, Lexus took a somewhat cautious approach with its latest update.

One of the first things you notice about the new RX is that the styling is very similar to today’s model. This is because the company wanted it to look familiar to its very loyal customers. It’s also roughly the same size, but Lexus made it a tiny bit bigger in all the major dimensions.

Inside it’s a different story. The Lexus L-Finesse design language is pronounced. The dashboard has wild swoops and contours. It’s very different looking compared to its predecessor. Along with the redesigned interior there’s a brand-new user interface. The navigation system and other features are accessed through a console-mounted control knob, but don’t think it’s anything like BMW’s iDrive. Lexus didn’t make that mistake.

The ‘Remote Touch’ interface works just like a computer mouse and even offers haptic feedback to help you navigate through menus. It gives the control knob subtle resistance as you move the mouse cursor over items on the screen. It almost feels like the pointer dips into a little valley or something. It’s very slick and easy to use.

Tomorrow we’ll take a peek at some of the nuts and bolts mechanical aspects of the 2010 Lexus RX and we’ll look at some more of its innovative features, you won’t want miss it.

And that’s it for today’s top news in the global automotive industry. But don’t forget to join us again this Thursday evening for another live broadcast of Autoline After Hours. Jason Vines and Peter DeLorenzo will be back, talking about the bombshell that just hit GM. Thanks again for watching, we’ll see you tomorrow.

41 Comments to “Episode 111 – Obama Fires Wagoner, PSA Fires Its Chairman, Chrysler Leaving Canada?”

  1. pedro Fernandez Says:

    Folks, we’re heading into dangerous waters here, when an elected official meddles into the business of a private corporation, granted I think Wagoner was clueless into what to do, but the way I see it: GM is like the Titanic, minutes from hitting the iceberg and at the last minute the captain is replaced. It’s still gonna hit the iceberg

  2. Ricky Bobby Says:

    Can someone please point out where Chrysler said clearly and definably they will pull out of Canada?

  3. Don MacConnel Says:

    Great, our government can’t manage the financial services industry so now they’re experts on the automotive industry. More political tinkering with a key part of our economy while the Fanny May, Freddie Mac and AIG mess festers on backstage.

    I hope John is right about the reasons for Rick Wagoner’s departure but my sense is that it is just more administration showboating.

  4. bob betz Says:

    GIVE THE JOB TO BARBRA BOXER AND HER BERKLEY TRAINED STAFF. RENAME THE COMPANY GENERAL NO MOTORS,

  5. Andy Says:

    I wonder what kind of HUGE BONUS PACKAGE that Wagoner got in order to leave?

  6. G.A.Branigan Says:

    Wow,what a start to the week huh?I’m glad that wagoner is leaving GM,but I don’t like the way it was done,unless there is more to this then we know.By that I mean has he been arrogant and dismissive of the govt requirements for the loan? Lets face it,when you go hat in hand for a loan,you must meet the lenders standards.As for Chrysler,I think this gives them the ammo to get(possibly) the CAW and the UAW to give some more,at least down to the level of the Japanese transplants.If not,they are outta canada……..maybe heading to Mexico instead?At least this is now getting exciting and nearing a finish.

  7. Ken Says:

    I don’t see why Wagoner has to be the sacrificial lamb. GM has better products than ever under his leadership. It’s Obama’s job to fix the Bush economic mess, not to dictate who is in charge of GM. As for Chrysler, what makes anyone think Fiat can pull the company through when Daimler-Benz couldn’t? Why does Nardelli get to keep his job? Don’t stop here, let’s get rid of every top manager and board member in every financial company that received TARP funds.

  8. Ken Says:

    GM under Smith in the 80s. Now there was a mess.

  9. Landis Odoms Says:

    It seems Bob Lutz got out because he probably sensed this was coming. I am a big fan of GM, but I knew it was a matter of time before they went after Rick Wagoner. He won’t be the last person either. The government has to do something. It has to make up for how they handled AIG too.

    Let’s just hope that GM can indeed turn the ship around. I have a feeling under the” go further changes” recommended, Pontiac’s future may be in doubt again.

  10. Edwin Benson Says:

    Would someone please point me toward the clause in the Constitution that gives the President of the United States the power to fire the Chief Executive Officer of General Motors?

    I was scared when the loans were made. Now I am petrified.

  11. Ron Paris Says:

    News item: “GM CEO sacked by omniscient, power-mad executive branch who know everything there is to know about running a successful business enterprise.” Careful John, you just may get what you wished for here!

  12. G.A.Branigan Says:

    My last GM product was a 07 4×4 that I bought new.It was the single worst vehicle I have ever owned,bar none.As far as Chrysler is concerned,if they come to an agreement in the next 30 days,it’s liquidation time.I believe that Daimler COULD have helped Chrysler if it really made the effort.Who ran the company then?Dr.Z?

  13. pedro Fernandez Says:

    Oh no, G.A. you’re wrong, its all perception you see, because you have read all about GM quality issues, you just imagined your GM vehicle was bad, in reality, its just as good as the Asian brands. If that had been me, I would have sent Lutz and Wagoner a nice letter.

  14. Dan Clemons Says:

    I think GM can survive as a much smaller company if they can get UAW support. Ford has build quality, product, and good management so they will survive. The problem is that there are to many car companies and there are more on the way. It won’t be long before China will be selling us electric cars at Costco. We will be lucky to have two major American car companies in 2015. The UAW can save or kill the American automotive industry. Will they choose to save it?

  15. Jim Cole Says:

    My supervisor was let go last Tuesday, and now my Chairman\CEO is gone as well. In my opinion, this should not have happened to either of these two men. From my perspective, each one of these guys “earned” their pay checks…and did their jobs as best they could.

    I have worked (yes worked) for GM for 24+ years as a UAW represented employee. I am just one of the many, many GM employees who always tries to do a little more than I have to, and loves my job. My customers both inside of and outside of my company are very important to me.

    It is hard to listen to untruths about my company’s inability to build fuel efficient, quality products, that people want to drive, at competitive prices.

    The truth is that we do. Have we made mistakes? Of course we have, you can’t avoid mistakes when people are involved.

    Unfortunately, the truth also is that another company will always be able to build a product a little cheaper, and pay their workers a little less. They will be able to avoid the mistakes we made…because we made them first.

    But make no mistake about it. GM, Ford, and Chrysler are responsible for building the American Middle Class. And it is the American Middle Class…not the American poor, not the American rich…that made America a world power.

    If our own government keeps encouraging the outsourcing of American products and jobs, and keeps importing more than we are exporting…we risk giving away more to foriegn competion than just our textile, appliance, electronics, and automobile industries. We risk giving away our American way of life.

  16. G.A.Branigan Says:

    LOL,your right of course Pedro.Haha,that damned thing leaked so much it looked like an indoor swimming pool,and here in the pacific northwest,wintertime is rainy season.I’ve had it jump into 4 wheel high while going down the hwy at 65mph,all normal operations ;}> Once it even locked up in my driveway and had to be hauled 35 miles back to the dealership on a roll back.What a nightmare.In all fairness,I will buy another GM product….just as soon as hell has a NHL team.

  17. JIm Thykeson Says:

    Obama’s administration doesn’t understand the GM dilemma. You can’t have 20 new brands to compete with (that don’t pay retirement (legacy-costs) or take care of their workers after their work career is over. Plus if he would get that national health ins. it would free up GM from that huge burden. You want to see this ‘G-20′ go beserk, then go ahead and sink GM. Then Europe and the rest of the world will REALLY know this emporer has no clothes!

  18. Alex Kajdi Says:

    Rick Wagoner unfortunately could not read the writing on the wall as did Bob Lutz. Bob Lutz annouced his retirement because he knew that this was what the Administration going to do.
    Lutz being a military man understood that if you humilitate the top offices of an army the troops will fall in line. This was he Adminstrations game plan. Also, The Administration listens to the General Public.
    No more bailouts to a corporate dinosaurs. The General Public’s perception of General Motors is as a slow moving behemoth that is hard to change it’s ways of building subpar vehicles.
    All believed that under Wagoner’s stewardship,
    General Motors focused only on building large SUV’s and monster “Hummer” trucks which had great short term profits, but demonstrated a lack of vision, insight and ultimately spelled long term diasterous for the company, it’s workers and stakeholders.

    If Wagoner had only guided GM in championing the Electric Vehicle Technology with the EV1! They would be at the forefront of the “Green” revolution! I fear the the Volt and all future Voltec vehicles will never make it to production under this formerly proud American Brand(s).

    On the other hand, I loved your interview with Elon Musk of Tesla! Elon Musk is a true visionary. I think Elon Musk of Tesla should begin conversations with large metropolitan Saturn Dealers to create an EV dealer network. This makes sense since the original EV1 was badged as a Saturn, and GM is abandoning the Saturn Brand. Maybe the Administration and Dept. of Energy will loan money to Tesla as part of it’s “Green” initative.

  19. element-e Says:

    We are in uncharted territory here – with an elitist, contemptuous crowd of academics and manufacturing neophytes driving the bus – to where? I think the rough sledding has just begun. What’s next – as they rewrite the franchise laws, invalidate GM dealer franchises, and ignore due process, wiping out another $50B in value and force another 10,000 automotive people onto the dole.

  20. R. Falco Says:

    My current vehicle is a Chevrolet Silverado which I’ve had over 5 years now. I had one minor problem with the electronic throttle and a squeaky noise in one shock, which they immediately replaced. My Chevrolet truck before that was in the shop one time for a loose fitting over the 3 years I owned it.

    So, G.A. Branigan, I once owned a Ford Thunderbird, the only Ford I’ve ever owned and it was the single worst vehicle I have ever owned, bar none. No need to infer that an entire organization is inept because we got a bad vehicle is it????

  21. Terence Says:

    Wagoner was receiving $1 and gets the can. The bank heads are still employed AND doling out bonuses.

    Why doesn’t Obama have the honesty to tell the UAW directly, that they are through. A way of life and a standard of living are gone forever.

  22. Neddy Says:

    the EV1 was badged a GM only not a Saturn.

  23. craigerzgt Says:

    I also believe that Wagoner shouldn’t have been forced to resign, however I think that if this allows the Obama Administration to have more leverage in terms of handing out bailout money to GM, then I’m all for it. It also wouldn’t hurt to have some fresh blood in GM. Maybe get that Ed Welburn to be the new “car czar”? Something to think about.

    What do we know about this Fritz Henderson? How long has he been with the company, and what (if any) impact has he had on GM and/or the auto industry?

    As dangerously perilous as GM appears to be heading over the brink, I think Chrysler’s in even worse shape. I highly doubt that a Chrysler/Fiat merger would be properly done within 30 days, which means that there’s an almost-certain bankruptcy scenario for Chrysler, or a badly generated merger with Fiat which only prolongs Chrysler’s death.

    I just hope that, if/when this liquidation situation occurs, it doesn’t create a tidal effect of suppliers going Chapter 11, threatening the existance of GM and Ford even more.

  24. Dave E. Says:

    I don’t want to see anyone lose their job, but in Wagoner’s case it seems justified. He has let thousands of employees go and drastically reduced share holder value. It appears that Rick’s chosen path for success was bloodletting for a hemophiliac. I hope GM is able to recover from their current state.

  25. C-Tech Says:

    Before everyone blames the President for showboating, remember this is the man in charge (and spent many years in upper management) while GM lost about half of its market share and 50% of its shareholder value before the credit crunch and economic meltdown. How did he hold down the top spot so long?

  26. Wayne Says:

    If Chrysler does pull out of Canada, it will just prove the inept stupidity of their management. The Canadian operations are known for their efficiency and quality and this was one of the reasons the Windsor mini-van assembly plant has remained in operation while the plant in St. Louis was closed (labor issues at the St. Louis plant were apparently another issue??). I am sure Volkswagon will not be pleased either, as they had insisted on their version of the mini-van be assembled in Windsor.
    As for the negotiations with the CAW, in a recent interview, Buzz Hargrove, the retired president of the CAW, said that he was told by union negotiators that tentative agreements had been reached twice last week with Chrysler but at the last minute the company negotiators insisted on more and the agreements fell apart. There is some speculation that Chrysler officials suspected what was coming from Washington and were just using stalling tactics.
    The costs involved in closing the Canadian operations would also be inhibitive, especially with their finances in such a mess. I don’t think Chrysler can afford to close in Canada (but I may be wrong) and that the threats are just that in an effort to “scare” the CAW and Canadian governments involved into giving up more.
    I also wonder what will happen to Canadian sales of Chrysler products if they go ahead with their plans. I would never have a Chrysler product in my garage again if they did pull out. Both Honda and Toyota have built and expanded assembly plants in Ontario (although not unionized) so there must be advantages to locating here. Hopefully, both Chrysler and CAW negotiators can come to their senses, stop all the retoric, and get serious about what is at stake here. A lot of jobs depend on it.

  27. Richard Harold Says:

    GM is a shambles….it needed a company doctor years ago! Wagoner was making the right moves but far too late, too slowly and too conservatively…unlike Mulally at Ford.GM probably needs an outsider not a car guy to cut through the internal politics, to do the hard work on the company structure,processes and the rationalized brand management. The cars are getting there already.

  28. pedro Fernandez Says:

    John: do the big 3 ceo’s have the same power as let’s say the ceo from Hyundai? Because I remember when the latter declared a few years ago that Hyundai and Kia were going to become as good as their Japanese competitors, and by all accounts they have, so why haven’t these guys here been able to accomplish it?

  29. sam zuech Says:

    GM’s market share goes from 33 to 18 per cent under Wagoner and then you guys are defending him!
    How far does the ship have to sink before you GM apologists wake up? And that includes you John.
    I hope the Italians save Chrysler, after the Germans left the company in shambles. GM has been going down hill for 30 years and they never did see the writing on the wall, couple of years ago they were going to drop brands and consolidate their mfg process, just a bunch of hot air. Well the Eagle has landed and GM better shape up.

  30. Bill Murdock Says:

    Do you seriously think that an extremely liberal Administration and Congress will force the UAW to make concessions?

    If I was more of a cynic, I might look at these moves (ousting Wagoner, rejecting the companies’ restructuring plans) as steps toward nationalizing the industry. Are any of you guys thinking that might be a possibility?

  31. Chris Hail Says:

    And now the government will guarantee GM and Chrysler warranties. Doesn’t that make me feel secure!

  32. G.A.Branigan Says:

    The uaw/caw are doing their own grave digging,and I love it.They don’t want to make concessions,and I like that too.The uaw has had it better then anyone else for far too long.Let them enjoy themselves while they can.Bunch of overpaid babies whinning and snivilling about the concessions thsy are asked to make.Simple,do it and work,don’t do it and go hungry.I personally don’t frigging care.

  33. JFD Hamilton Says:

    John
    I don’t think it’s whether Mr. Wagoner was a good CEO or not but rather perception – perhaps if he had left 2 years ago GM’s detractors might have seen it as a positive move…too bad the next man isn’t Japanese, as Americans seem to consider another American less than trustworthy. How about this: have the new CEO picked on a reality TV show ?

  34. Jim Cole Says:

    G.A. Branigan: Do you always lump people into groups? If a Black man robs a store…do you profess that all blacks are thieves? If a Muslim commits an act of terror…do you profess that all muslims are terrorists?

    Are there some UAW/CAW workers who have bad work ethics that cause them to be overpaid? Absolutely. But name one industry that doesn’t have a few workers like that. I work with some damn good UAW workers at GM and we are compensated well for being good workers.

    If you must profess your opinions asigning guilt and blame…please do it in a way that speaks more to the problem, not to your obvious jealosy of unionized workers.

  35. G.A.Branigan Says:

    Jealous Of lazy overpaid auto workers? Are you nuts?Because I have a strong dislike for all unions right away I’m jealous? You people have been over paid over compensated for building some piss poor vehicles.And before you say something again,my wife and I have 2 brand new AMERICAN vehicles,not japanese or the like.I believe in AMERICAN vehicles,I just don’t believe in you union people.Jealous? Stop your damn whinning.

  36. jesse m. Says:

    Welcome to RUSSIA!!What nobody seems to mention is that one big problem with GM is that nobody buys their product at a point where they actually make a profit!!So all this posturing and feel good talk by emperor OBAMA and his merry band of followers is not going to help.Unless the y make an electric CORVETTE,I’m not buying an electric/green car ever!!Especially one that costs 40 grand like the VOLT.GM has been out of touch with the car buying market for a decade now.They are reaping the rewards of their ignorance.They should have filed chapter 11 BK long ago and moved on.Get rid of the dead weight UAW and get in line w/all the rest of the PROFITABLE/NOT LOSING THEIR SHIRTS car companies.Nobody gets it though,so it’ll be more of the same socialistic approach!!What’s AMERICA coming to???

  37. Ivan Sears Says:

    The new Lexus RX one knob does it all, might be intuitive, but it still appears, from my point of view, to promise quite a distraction of the driver while going down the road. I suppose it is possible to navigate through the system without watching the screen, but is it really. How many folks can drive a mouse without looking at the computer screen? Just a thought.

  38. G.A.Branigan Says:

    Mr.Falco,in the past I have had my share of problems with all the different brands of new vehicles that I have bought.GM was by far,for me,the worst of them,easily at that.But if it makes you feel better,my daughter and her husband LOVE their 3/4 ton silverado 4×4.

  39. LAZER MULE Says:

    Quote From above:
    Jim Cole Says:
    March 30th, 2009 at 1:43 pm

    I have worked (yes worked) for GM for 24+ years as a UAW represented employee. I am just one of the many, many GM employees who always tries to do a little more than I have to, and loves my job. My customers both inside of and outside of my company are very important to me.

    This is very good and encouraging to hear! I have been in and out of UAW plants for the last 20 years of my career as a non-union service and have experienced quite the opposite of what this gentleman states. Rather, I would hear things like “It’s not my job” or “I don’t really care”, and witnessed some pretty despicable acts.

    Now if this has turned around and this is the new way of the union, That is great and good to see.

  40. John McElroy Says:

    @ Pedro: The difference with Hyundai’s impressivie improvements in quality is that their executive in charge of quality reports directly to the CEO, not through engineering or manufacturing. That gives him the clout to get things done.

  41. glen kingswood Says:

    More fall out from the failed financial sector that has been devastating to the auto sector Washington has done a poor job that got to this mess.