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Wagoner: Capitol Hill Critics Are Mistaken

By    |   Wednesday, 19 Nov 2008 09:19 AM

General Motors CEO Rick Wagoner says much of the criticism piled on to the automaker CEOs testifying on Capitol Hill misses the mark.

GM, Ford, and Chrysler went hat in hand to Congress this week asking for $25 billion in new loan guarantees to offset a huge drop in sales due to the collapse in auto loans. They said that the car companies are in a hole not of their own doing but owing to the historic credit crisis and now the sharp recession the United States has entered.

Wagoner defends GM’s decisions of the last few years, a time when the automakers gorged themselves on fat profits by making gas-guzzling SUVs that Americans couldn’t buy fast enough during the boom. That image, and the idea that car companies are unwilling or unable to change, is mistaken, Wagoner says.

“Much has been said about the impact of the credit crisis on U.S. auto makers, and whether or not the government should assist the industry during this extraordinary financial turmoil,” Wagoner says.

“In these discussions, many critics simply ignore the substantial changes that U.S. auto companies have already made — changes much like those the critics are calling for as part of any aid package.”

GM has cut costs in the face of foreign competition, Wagoner asserts. He says the company has reduced its hourly workforce by more than half since 2000, while salaried employees fell to less than 30,000 from 44,000 and the executive suite shrank by 45 percent as well.

He pointed to a series of quality awards and highlighted cars like the Chevy Malibu, which gets 33 miles per gallon, as well as new hybrids and the electric-gas Volt, both due out in 2010 and American made.

“GM's commitment to these new products and technologies will help everyone. Consumers will benefit from lower fuel costs, our nation will use less imported petroleum, and our air will become cleaner,” Wagoner says.

GM also means competitive jobs, and jobs beyond Detroit, home of the Big Three automakers. GM, Ford and Chrysler last year purchased $156 billion in parts, materials and services, supporting jobs in all 50 states, he says.

“Take Kansas, for example,” Wagoner says. “GM assembles the Malibu and the Saturn Aura in Fairfax, Kan., making us a major employer there. The wages of our 2,500 workers flow into that community through spending on everything from mortgage payments to high-school bake sales.”

Top Republicans excoriated the auto CEOs during testimony, suggesting that giving them additional support would be good money after bad.

"I don't think they have immediate plans to change their model, which is a model of failure," said Sen. Richard Shelby, the senior Republican on the Senate’s banking committee.

"I think a lot of it will be life support," Shelby said. "I believe their best option would be some type of Chapter 11 bankruptcy ... These leaders have been failures and they need to go."

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General Motors CEO Rick Wagoner says much of the criticism piled on to the automaker CEOs testifying on Capitol Hill misses the mark.GM, Ford, and Chrysler went hat in hand to Congress this week asking for $25 billion in new loan guarantees to offset a huge drop in sales...
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2008-19-19
Wednesday, 19 Nov 2008 09:19 AM
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