Obama Tells Automakers to Change or Else

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WASHINGTON - President Obama is giving General Motors and Chrysler a blunt message: You must change in order to survive.

The President warned the automakers that if they don't change dramatically, they won't get any more government money. But both companies will get a little more time to come up with a plan acceptable to the administration.

The announcement comes after the White House forced GM CEO Rick Wagoner to step down Sunday.

Click play for more analysis with Frank Micciche of the New America Foundation, following Jennifer Wishon's report.

"This is not meant as a criticism of Mr. Wagoner, who has devoted his life to this company; rather it's a recognition that it will take a new vision and new direction to create the GM of the future," Obama said Monday. 

Obama insisted that the government has no intention of running GM. He said his administration is committed to the survival of an auto industry, even as it now dictates the terms of government help.

"But we also cannot continue to excuse poor decisions," he said. "And we cannot make the survival of our auto industry dependent on an unending flow of tax dollars."

No More Tax Money Unless...

Neither General Motors' nor Chrysler's submitted plans for restructuring were good enough for the government.

That means no more loans to help the struggling automakers unless they can come up with a feasable plan to compete in the market.

"We think we can have a successful U.S. 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," Obama said on CBS's Face the Nation.

Chrysler and GM have already received a combined total of $17.4 billion. f they want more -- and they do -- they'll have a small window of time to convince Washington they're worth saving.

GM now has 60 days to restructure. And the administration has given Chrysler 30 days to work out merger talks with the Italian automaker Fiat.

Deadlines, Last-Minute Efforts

The deadlines are a last-minute effort to buy them more time to restructure or force the companies into bankruptcy.

The auto industry has been hit hard in this recession with the worst decline in auto sales in 27 years.

To prod potential buyers, the Obama administration is unveiling a new plan to back GM and Chrysler with government-backed warranties.

The White House also says it's time for sacrifices to be made across the board: from management to labor, creditors to suppliers and even the local dealer.

But in an already weak economy, that kind of news is getting harder to take.

A fight broke out between two employees at a GM car lot in western Michigan when the dealer announced it was going out of business and laying off its 30 employees.

"Don't you have the right to be a little bit mad when somebody says, 'Hey we're all done'?" a frustrated worker asked.

Later this week, automakers will release their sales numbers for March. Analysts are forecasting that Detroit and foreign carmakers will post severe declines over last year, adding even more pressure on an already hurting -- and critical -- sector of the economy.

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Jennifer Wishon

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