Tag Archives: Chrysler

Can Chrysler be Saved?

According to David Olive at the Great Recession blogThe Chrysler/Fiat Partnership

It’s only a matter of time, but Chrysler will fail, this time for good.

There arguably was still a need for Chrysler the previous two times it dug a grave for itself and started covering itself with dirt. But no longer. Chrysler has outlived its usefulness, as its dwindling customer base makes clear. It will join Hudson, Pierce-Arrow and Studebaker down the memory hole. My best guess now is that the funeral will be in 2012, quite possibly sooner.

What matters about Chrysler’s government-assisted reorganization under creditor protection that was unveiled Thursday is solely that it spares Chrysler’s remaining workforce in Canada and the U.S. from joining the unemployment rolls at a time when an anemic economy cannot provide alternative jobs to Chrysler’s workforce.

But the Chrysler-Fiat alliance soon to emerge from bankruptcy will not revive along with the general economic recovery.

Chrysler was stripped of its engineering capabilities in new-product development by previous owner Daimler. And beyond the short-term government bailout funds from Washington, Ottawa and Queen’s Park, the culturally cumbersome Chrysler-Fiat entity will lack the money to be a viable competitor against a slew of rivals. Fiat is providing not a dime in capital for Chrysler’s revival. And the small-car technology Fiat is making available to Chrysler in exchange for 20 per cent of the "New Chrysler" is of dubious value, given Fiat’s dismal owner-satisfaction performance (worse even than Chrysler’s own abysmal customer-satisfaction ratings).

The Fiat subcompacts and minicars that we’re told are essential to Chrysler’s survival won’t arrive for years, since they and the Chrysler plants in which they are to be built need to be retrofitted to North America’s strict regulatory requirements. In the meantime, Chrysler will be stuck for several years with its incomplete product line. And those aging Chrysler products will be starved of the funds required to "refresh" them. 

It’s likely that the arrival of the Fiat small cars meant to plug the hole in Chrysler’s truck-and-SUV-heavy line-up will coincide with the anticipated assault on the North American market by far cheaper Chinese and Indian small-car models. The wide-open North American market is already crowded with Subarus, Suzukis, Kias and the small-car output of Toyota, Honda, Nissan, Ford, GM and even Daimler (Smart) and BMW (Mini Cooper). Fiat’s "help" will be too little, too late.

He does bring one possible idea, that is Chrysler as a mini-van company

As with the 500-channel media universe, the auto business is fragmenting into niches and niche players. In time we will have global firms that specialize in light and heavy-duty trucks and off-road vehicles, others in luxury, others in sports and roadster "performance" cars, others in plain-vanilla family people movers, be they crossovers, traditional sedans or minivans.

Chrysler can have a place in this new 21st-century industry, but only as a minivan producer and likely under a different name. The Chrysler name, sadly, has come to represent corporate brinksmanship rather than automaking.

If it weren’t for Chrysler’s "legacy" obligations to workers and retirees and the current rancid state of the economy, the firm’s obvious option to rebrand itself as "the minivan store" would now be taken. Chrysler did for a while successfully market its minivan operations with that name, which should be applied to the entire company, shorn of its other, non-viable operations. GM and Ford each have helpfully quit the minivan segment. A minivan-only firm – and this Chrysler remnant would be the only producer able to make that claim – would have to be the innovator in that sector to survive. And thus it would. 

Outside of the job losses and losses for it’s dealers, there doesn’t really seem to be a reason for Chrysler’s existence, it isn’t that large of a company any longer and what Daimler did to it was almost criminal.  While losing 58,000 jobs (plus related job losses at dealers and parts manufacturers) would be substantial, the steps the Obama administration and Fiat took this week seems to be only prolonging the suffering instead of dealing with the issue that Chrysler no longer makes enough new vehicles that are desired by the North American market to keep it viable.  I don’t see that changing anytime soon.

The Fiat Takeover of Chrysler

From David Olive over at the Great Recession blog has this great post on the Fiat takeover of Chrysler

fiat_logo_26_10_06 Just so we’re clear on the Fiat rescue of Chrysler that the White House is counting on:

Hell, if Washington is giving away a 20 per cent stake in Chrysler, give it to me. If Fiat won’t be taking on any of Chrysler’s debt and retiree obligations, and Washington is giving away Chrysler’s massive minivan plant in Windsor, one of the biggest – if not the biggest – vehicle assembly plant in the world, I’ll take it. The Jeep brand, free for the asking if your name is Sergio Marchionne? I’ve have some business experience – met a budget at a magazine I ran for a few years, operated a successful yard-maintenance business in my teens, bought a French-made Mercier racing bike with my paper-route earnings…(Fiat probably wants to buy Mercier, too.)

Man, somebody’s being played for a sucker here.

Working less, making less

From MSNBC

There were about 7.8 million part-time workers who would rather be working full-time as of January, according to the Bureau of Labor Statistics, a whopping 65 percent increase over a year earlier and about the same as the previous month.

The sharpest increase in the number of so-called “involuntary” part-time workers has come since the financial crisis hit full force in September, leaving many scared corporate executives anxious to save money wherever possible — including on payroll.

“Companies were very quick to pull the trigger on cutting everything,” said Ken Mayland, an economist with ClearView Economics.

A steep rise in the number of involuntary part-time workers is typical in any recession, because companies tend to cut workers’ hours before laying them off completely. This time around, economists say that, so far at least, the grim numbers aren’t really surprising given the state of the economy.

In fact, Di Natale said, the percentage of part-time workers who would like to be working full-time, currently at about 29 percent, is actually lower than during the height of the recession in the early 1980s.

Of course I read this in a wider context with the job cuts announced by General Motors and Chrysler

The GM job cuts include 10,000 salaried and 37,000 blue-collar positions, amounting to 19 percent of its current global work force of 244,500. A total 26,000 of the cuts will come from outside the U.S. The cuts would take place by the end of this year.

The new plan has the U.S. work force declining from about 92,000 hourly and salaried employees at year-end 2008 to 72,000 by 2012 — about a 20 percent cut.

GM Chairman and CEO Rick Wagoner said the plan submitted Tuesday is more aggressive than the one presented to the government on Dec. 2 because the global economy and auto sales have deteriorated in the time that has passed since then.

"Today’s plan is significantly more aggressive because it has to be," Wagoner told reporters. "We have taken stronger actions, we needed to."

Chrysler had 54,007 employees at the end of 2008, so Tuesday’s cuts would equal about 6 percent.
Auburn Hills, Mich.-based Chrysler said the economy and the market for new cars has deteriorated significantly since its initial request. Chrysler said it now projects that automakers will sell 10.1 million vehicles in the U.S. this year, the lowest level in four decades.

Chrysler will eliminate the Dodge Aspen, Durango and Chrysler PT Cruiser, according to company president Jim Press. GM said it plans to sell or spin-off its Saturn brand. If those attempts are unsuccessful, GM will phase out the brand.

GM is also evaluating options for a sale of its Hummer division and sought buyers for its Saab unit. Selling or eliminating those brands would leave GM to focus on Chevrolet, Cadillac, GMC and Buick, with Pontiac reduced to one or two models.

First of all, I haven’t even heard of a Dodge Aspen until right now (although apparently is called a Chrysler Aspen and is just a Dodge Durango with a new logo on it).

Secondly while it really is horrible to have your hours cut back, not cutting back quickly enough has been a big mistake of a lot of businesses and the automakers are a prime example.  Since I was a kid I have been hearing that General Motors had too many brands and while I am glad they are keeping Pontiac, why couldn’t they have made these kinds of cuts before now.

Whenever I read about job cuts in the auto industry I think back to the book, The Fifth Discipline and think of an anecdote told by Peter Senge about how hard it is to retrain autoworkers where so much of their identity is tied up in their profession, trade, and company.  I wonder how many of those jobs that are lost are going to be able to transition into something else or if we are going to see a whole bunch of Flint, Michigan type of cities across the Midwest.

Strategies for Survival

The Globe and Mail is trying to figure out the prospects for the Big 3.  Ford looks okay, GM is anyone’s call and it looks bad for Chrysler.

Can even Lee Iacocca save Chrysler? In past discussions about its product lineup, Chrysler officials have said they could cut a lineup of 11 SUVs in half and also make changes to the auto maker’s minivans. With the demise of the small car project with Chery, Chrysler is again looking for a way to build a cheap subcompact car — sorely needed in a time of greater fuel economy demands and tight budgets.

Chrysler officials say their situation is dire now, but as the first privately held major U.S. auto maker in more than 50 years, Chrysler is not required to provide details about its finances. Chrysler executives now say that, without government assistance, the company will not survive.

But even with assistance, Chrysler’s future product plan has troubling holes in it, unlike Ford and GM.

I don’t even think Lee Iacocca could save them now.

Mechanics

A couple of months ago Wendy and I got some shocking news that our trusted mechanics had retired and sold out to someone else who planned to open a used car lot.  Now our mechanics were grease monkeys in the best possible way.  They were always honest, never overcharged us, and always came in below their always inexpensive quote.  Now they mocked my car knowledge but they treated Wendy well which was cool.

Of course we were at a loss on where to take our Honda Accord or Dodge Caravan.  This became an issue when the brakes failed on the van last week.  The Centre uses Shirley’s Auto Service which is just down the street and so do several co-workers who all speak highly of them with one issue.  The problem with Shirley’s is that you can’t just bring your car over, it is a four to five day wait.  Don’t even think about heading in their for an oil change as they are too busy and refer to The Great Canadian Oil Change.  During these days of waiting, I called around, described the symptoms to other mechanics and was told it would be $300 which didn’t seem unreasonable but Shirley’s told me it would be under $150 to fix.  Well sure enough the bill was tallied and it was only $120.

It does lead us to another discussion around here and that is what do we want to do with our cars over the next year?

Counterpoint

General Motors has released a video showing how important they are to the North American economy.
Of course the question isn’t that the automakers need help, the question is what steps make the most sense and I am not convinced that a bailout will do anything than prolong the inevitable.  The video above came embedded in a AP story posted on The Globe and Mail.  Since when are propaganda videos embedded in news stories?