Billionaire investor Wilbur Ross supports the Obama administration’s auto policy.
Ross, who owns auto parts maker International Auto Components, told CNBC he approves of the Obama moves forcing GM chief executive Rick Wagoner to resign and pressing Chrysler to partner with Fiat.
“This sends a very clear message to labor and creditors that the government isn’t kidding around,” Ross says.
“This isn’t going to be a little patch job. They want a rapid pace of change. They want very deep restructuring. And they’ll do whatever it takes to make that happen.”
Ross is confident that that the government will be able to convince bondholders to convert their debt to equity. He also thinks it will be able to force labor to make concessions.
“This is the best shot GM has to fix itself very quickly,” Ross says.
“It’s clear the government felt that things weren’t being done fast enough under Wagoner. It’s also clear the government felt that three years is too long to turn it around. And finally it’s clear that it had to be fixed even in the context of lower sales than were put forward in GM’s forecast.”
Other experts also support the moves, especially Wagoner’s ouster.
“It’s very hard for the government to write a big check without giving some evidence of change,” says John Casesa, managing partner of consulting firm Casesa Shapiro, tells Bloomberg.
“This will give the government moral authority with other stakeholders to make them sacrifice.”
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