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 Rick Wagoner has been forced out of GM. Photograph: Rebecca Cook/Reuters Barack Obama has forced the chief executive of General Motors, Rick Wagoner, to resign in a move that has fuelled fears that America's carmaking industry could be forced into bankruptcy. Wagoner confirmed this morning that he stepped down after the Obama administration threatened to withhold more bailout money for the struggling US carmaker. He has been replaced by Fritz Henderson, the company's chief operating officer. "On Friday I was in Washington for a meeting with administration officials," said Wagoner. "In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have." Wagoner's departure comes as Obama is set to announce further actions to restructure GM and Chrysler later today. Both companies could be pushed into bankruptcy. In a hardline stance that has taken industry experts both in Washington and Detroit by surprise, the administration's car industry taskforce told GM and Chrysler that their recovery plans submitted last month "did not establish a credible path to viability" and were "not sufficient to justify a substantial new investment of taxpayer resources". With a new chief executive and half of its board involuntarily replaced, GM has been given 60 days to come up with a more aggressive proposal in co-operation with a team of US treasury officials who will base themselves in Detroit. Chrysler, meanwhile, is being administered its last rites as an independent entity. The government has concluded that it is simply "not viable as a standalone company" and that its best chance of survival is to develop an alliance with Italy's Fiat, which is considered strong in smaller, more fuel-efficient cars. The taskforce has given Chrysler just 30 days to strike a deal with Fiat, with an incentive of $6bn (£4.2bn) of public funds if a satisfactory collaboration is agreed. There was a stark warning for both GM and Chrysler that unless they deliver radical reforms within the government's tight timetable, they will be forced into bankruptcy. In a statement, the Treasury taskforce said: "Their best chance at success may well require utilising the bankruptcy code in a quick and surgical way." GM and Chrysler have received more than $17bn in emergency loans from the US treasury and are asking for another $20bn. Ford, the other member of Detroit's Big Three, thinks it can get through the downturn without government aid. GM warned at the start of March that it could go bust within 30 days without government help. Despite this, Wagoner has resisted filing for bankruptcy protection, arguing this would destroy any remaining confidence among GM's dealers and consumers. GM also announced it had appointed Kent Kresa, the chairman emeritus of Northrop Grumman and a GM director, as interim chairman. Wagoner, 56, has led the biggest US carmaker for the last eight years. He became chief executive in 2000 and also assumed the role of chairman in 2003. He has spent his entire 32-year career at the company, having joined GM's treasury department straight after leaving Harvard university with an MBA in 1977. The new chief executive, Henderson, 50, became GM's president and chief operating officer last year, having previously served as vice chairman and chief financial officer. Wagoner described Henderson as an "excellent choice" and said he stood ready to support him and Kresa "in every way possible". "Having worked closely with Fritz for many years, I know that he is the ideal person to lead the company through the completion of our restructuring efforts. His knowledge of the global industry and the company are exceptional, and he has the intellect, energy and support among GMers worldwide to succeed," said Wagoner. The government's decision to force Wagoner to leave the helm at GM has proven controversial. Thaddeus McCotter, a Republican congressman from Detroit, asked why the bosses of bailed-out Wall Street banks had been allowed to keep their jobs: "When will the Wall Street CEOs receiving funds summon the honour to resign? Will this White House ever bother to raise the issue? I doubt it." Under pressure from the US administration, GM said it intended to nominate a list of directors for the next annual meeting, with a majority of new candidates. "The board has recognised for some time that the company's restructuring will likely cause a significant change in the stockholders of the company and create the need for new directors with additional skills and experience," it said. Yesterday, Obama made it clear he felt GM and Chrysler had not done enough to restructure their companies. "They're not there yet," he told CBS television on Sunday. "We think we can have a successful US auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is." By John Crawley WASHINGTON (Reuters) - Rick Wagoner, late of General Motors, never saw the ax coming. When he arrived at the Treasury Department for a meeting last Friday with Obama administration's autos task force, he was a 32-year GM veteran and a chief executive carrying the weight of the company's wrenching restructuring on his 6-foot-4 frame. Pressure for him to quit last fall when he first approached Washington for a bailout had faded. But Wagoner's plan for a GM turnaround and a $16 billion bailout was rejected in the meeting and the company where he spent his entire professional life fell off his shoulders. "In the course of that meeting, they requested that I step aside as CEO of GM, and so I have," Wagoner said in a message posted on the automaker's Website early Monday. A majority of GM's board will also be replaced. Wagoner stepped into the afternoon air jobless. He could not be reached Monday for further comment. Wagoner has become the most-recognizable casualty of a once vaunted industry brought to its knees by a confluence of disastrous circumstances that coincided with the later years of his tenure. Some of the wreckage was out of Detroit's control, but some of it -- as President Barack Obama has said -- was self inflicted. "Yes, we were surprised," Fritz Henderson, Wagoner's former top deputy and now his replacement, said of the task force rejection of the company's plan that he helped construct. Henderson said emotions for many people in the GM community over Wagoner's ouster has ranged from shock to sadness to pride. "He was asked to step aside and he did because he felt that was one of the requirements in order to move forward," Henderson said in a conference call with reporters. "I think the organization is quite sad about that but our job is to move forward and get the job done," Henderson added. Obama last week cited years of corporate mismanagement as a factor for the U.S. auto industry's decline. Wagoner presided over GM's rapid deterioration in the past five years. While the remark raised few eyebrows and some references were made to the entrenched Wagoner, many industry insiders believed he had begun to mute critics and was moving GM in a new direction. At the very least, he was not resisting change. "This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company," Obama said in a speech laying out an restructuring strategy he promises to aggressively pursue. "It's a recognition that it will take a new vision and new direction to create the GM of the future," Obama said. Lawmakers who spoke with Obama said he was "matter-of-fact" about the decision to seek Wagoner's resignation. "The president said he had decided to do that. He wasn't asking for opinions," said U.S. Sen Carl Levin, a Michigan democrat. "There wasn't much point in arguing whether it was fair or unfair, wise or unwise." Wagoner's counterparts at Chrysler, Bob Nardelli, and Ford Motor, Alan Mulally, are relatively new to their jobs and both recruited from other industries. "We are left to look back and say that Wagoner's appointment as both chairman and CEO in 2003 was little more than an act to ensure the dynasty of GM boardroom arrogance and failure continued," said Howard Wheeldon, senior strategist at brokerage BGC Partners. Wheeldon said Wagoner's departure had been all but inevitable since the automaker sought government funds. At the time of the company's $13.4 billion bailout last fall, Sen Christopher Dodd, chairman of a committee overseeing corporate rescue funds, had publicly called for Wagoner to step down. (Reporting by John Crawley; Editing Bernard Orr)
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