Your link proves my point. The companies on the original Dow are unrecognizable today, and those who survived in some form have experienced numerous twists and turns, with varying fortunes and owners.

In the last few decades, Chrysler has gone through substantial ownership and management changes, from self-contained public company to a subsidiary of the public Daimler to a wholly-owned LLC of the private Cerberus. This is fairly normal stuff, and in and of itself not a sign of failure.

Businesses change, and expecting them to remain constant is a false yardstick by which to judge them. The Iacocca-era bailout made sense at the time and paid dividends to the US government and taxpayer. The fact that Daimler and Cerberus aren’t very capable operators does not negate the benefits that came from that earlier rescue package.

Like people, corporations don’t live forever. (If you don’t believe me, look up the original components of the Dow and see how many of those companies are still in business today.)

11 of the original 12 Dow components are still in business today. From Wikipedia:

Of those original twelve, only General Electric remains part of the index. The other eleven were:[2]

American Cotton Oil Company, distant ancestor of Bestfoods, now part of Unilever
American Sugar Company, now Domino Foods, Inc.
American Tobacco Company, broken up in 1911 antitrust action
Chicago Gas Company, bought by Peoples Gas Light in 1897 (now an operating subsidiary of Integrys Energy Group, Inc.)
Distilling & Cattle Feeding Company, now Millennium Chemicals, a division of Lyondell Chemical Company
Laclede Gas Light Company, still in operation as The Laclede Group, removed from the Dow Jones Industrial Average in 1899
National Lead Company, now NL Industries, removed from the Dow Jones Industrial Average in 1916
North American Company, (Edison) electric company broken up in the 1940s
Tennessee Coal, Iron and Railroad Company in Birmingham, Alabama, bought by U.S. Steel in 1907
U.S. Leather Company, dissolved 1952
United States Rubber Company, changed its name to Uniroyal in 1961, merged private with B.F. Goodrich in 1986, bought by Michelin in 1990.

So, your point fails. However, you will note that many of said Dow components are now small portions of bigger companies (although vice versa occurred in two cases where the government broke up the companies in anti-trust actions). I guess this means, if you take the analogy further, that it’s more likely GM will buy Chrysler and the combined company will survive than anything else.

http://en.wikipedia.org/wiki/Walter_Chrysler

After he left GM a millionaire and went on to save (ironically) Willys-Overland (the descendent of which would become part of Chrysler Corporation via AMC in 1987), he started his own car company, and went ahead and bought Dodge Brothers from bankers who’d bitten off more than they could chew (the more things change, the more they stay the same?) Chrysler Corporation was very small, Dodge was VERY big – it was like a minnow swallowing a whale. But he did it.

This man also had cajones the size of bowling balls and gambled hard on the 1934-1936 Chrysler and DeSoto Airflow cars which combined safety and strength with aerodynamics. Unfortunately, they flopped.

This company, Chrysler, was known for many decades as the engineer’s car company, and did many advanced engineering firsts, including mass producton Hemi V8’s (1951-1958), Simpson gear set 3 speed automatic transmissions (1956 on – the Torqueflite) – you have to understand how bad the old style automatics were to get this one. Also, torison bars from 1957, and unit construction (except Imperial) from 1960. The CAP (clean air package) developed to help California and put into production in 1963, which none of the other car companies could make work (instead, they jerry-rigged air pumps etc.) First disc brakes in 1950-1951 (they were unlike the current crop of disc brakes; they were “inside out” and I can’t explain it any better than that – but it was aircraft technology from back in the day).

Later, the (now) much maligned (then) well thought of Dodge Omni and Plymouth Horizon (1978) and K-cars (1980) and minivans saved the company.

Then in a “why purchase Alaska?” moment, Chrysler bought out American Motors and Jeep from Renault and US stockholders in 1987, which actually helped save the moribund company.

Chrysler’s biggest mistake was to crawl into bed with Daimler, IMHO. Better they should have snuggled up with another company more their size who had NO presence in the markets where Chrysler was strong. Someone like FIAT maybe. And also, a 3rd leg to the stool, Mitsubishi (which Chrysler once owned a portion of and relied upon for much technology, from the 1980’s on).

A Chrysler-FIAT-Mitsubishi combine might have stood to this day, if they’d have done it right.

Too late for “what might have been” now, or at least – very very soon.

Anything described as Chrysler henceforth will be a mere shell of what was.

Dumbler dismantled design/development moved it to Germany where it was then done for a price. The price was was like $150 per man hour charged to Chrysler. I am sure there are more of these situations that I am not aware of.

The purpose of Dumbler buying chrysler was to help Dumbler penetrate the US market with Dumbler vehicles not improving Chrysler.

Generational transitions for every company takes place every 20 years (bosses,designers, owners, engineers, scientists get old and tired). Many companies fail during the transition. Maybe no US companies building Cars?

US $10 trillion in debt, where and what will the US sell to the world to maintain our current life styles with 10 trillion in debt and needing 1 trillion a year to buy imported gas?

My favorite car company is going to get gobbled up and dismantled by my least favorite car company

The two technologies that had the capability to carry Chrysler through this mess, Phoenix V6’s and the AMT’s, are all but gone

And nobody will talk. At this point, I just want something straight from the horse’s mouth, Wagoner, Nardelli, hell, Ghosn, I don’t care what happens anymore. Just put the damn company out of its misery.

The Jeep curse was bad enough, but I think another curse is now upon Chrysler: The Plymouth curse. Plymouth was Walter P. Chrysler’s creation and baby when he took control of Maxwell and eventually created Chrysler Corporation. It was also credited with more or less saving the company during the Great Depression.

So, with the brand that has carried the company through economic hardships in the past gone, Chrysler faces the latest round of economic turmoil and is now dying. In fact, Chrysler has not really been successful at all since they killed off Plymouth in ‘01

Cerberus is probably still busy trying to pawn the Viper off on somebody like Steve Saleen’s new company.

Hindsight is always 20-20 but if Eaton had not sold out Chrysler to Dumbler in 98, better yet if Lutz had been selected instead of Eaton, then things would be a lot different today. Chrylser might still be in the red, but the product mix would have been different and much better. Your analogy is missing something: the patient has the procedure, does great, and then about 18 years later is hit by a truck (Dumberl) and critically wounded. Not the fault of the original procedure at all.

NOOOOOOOOOOOOOOOOOOOO

Don’t worry, I won’t make any sudden trips to Switzerland with the money…. heh heh.

People outlive most businesses. Even reasonably successful companies die more quickly than people do.

Squeezing another 25 years out of a company is a pretty good run, no matter how you slice it, assuming that you don’t hold an unrealistic view of how the business world works.

His peers will have some of their life force sucked out of them as a result, reducing their life spans, and thousands of peoples lives will be sent down a doomed path resulting in the need to do an even more costly and risky procedure all over again.

Keeping Chrysler alive did nothing to harm anyone else. It kept suppliers in business and people employed. They couldn’t prevent Toyota and Honda from evolving into even better companies, either.

How about we go back to the eighties and try to sell the deal all over again?

That was a very easy deal to do. It turned a profit for the government, in more ways than one. A no brainer, by every measure.

Unlike the last one, the current deal isn’t a no brainer. Circumstances are different now because it is not clear that a bailout today has much chance of success.

Bailouts need to be evaluated on a case-by-case basis. Sometimes they work, sometimes not. Rather than approaching it with a predetermined political bent, it makes more sense to weigh the benefits against the costs and make a determination based upon likely outcomes. Chrysler has a far lower chance of recovery today than it did in the past, which should lower the likelihood of a check being cut.

I’m chuckling since it’s what I said when buying Kitchen Aid over Samsung. That said, every sales guy I know pushes the more expensive models, which LG is.

We have had this fight. I have a much longer term view, and a much broader perspective on the actual costs. I also think the medical anaology is completely narrow.

How about the analogy is that we can do a medical procedure that will keep the subject alive 25 more years. If it works, the subject will not likely be as healthy as his peers. His peers will have some of their life force sucked out of them as a result, reducing their life spans, and thousands of peoples lives will be sent down a doomed path resulting in the need to do an even more costly and risky procedure all over again. (Okay, the last part is hard to fit into the analogy).

How about we go back to the eighties and try to sell the deal all over again? Only this time we admit that it will ONLY last twenty five years, and that at the end of that time, all the remaining domestic companies will be in trouble.

Do you really think it would sell?

The damage to the market, the moral hazard, and the misdirection to young people starting careers completely overwhelms the equation. Add to that the increased damage done to our political process by the increased UAW bribes and it’s REALLY a bad deal.

Quite the contrary, it was rather successful. The government made a profit on the bailout, and Chrysler subsequently provided much employment, both directly and indirectly, as well as tax revenues.

The downside of the Chrysler bailout is that the products didn’t improve in comparison to the competition. They should have used the opportunity to substantially improve their vehicles and service, but they didn’t.

Like people, corporations don’t live forever. (If you don’t believe me, look up the original components of the Dow and see how many of those companies are still in business today.) A medical procedure that allowed a sick human to live an extra 25 years would be considered a home run.

Or, I suppose we could risk billions to ensure that yet another generation of people risk their economic futures in order to work for the UAW thugs building cars.

Well, she didn’t say to a dealer near you. I don’t doubt that Chrysler will send its little fleet of cobbled-together electric prototypes out on the road to drum up publicity? Sell them? You must be mad…

I couldn’t agree more. It was Daimler’s arrogance, short-sightedness and elitism that brought Chrysler to this stage. Daimler had a fantastic formula in using previous-generation Mercedes platforms for new Chrysler vehicles – with unique, American styling and powertrains. The Chrysler 300 model should have been carried over to use of the previous-generation C-Class platform for mid-size and compact cars. But too many at Daimler were worried about diluting the Mercedes brand – as if many people ever cross-shopped a Chrysler and Mercedes. Instead, they continued to crank out mediocre – at best – cars and focus on big, heavy and thirsty trucks and SUVs. Who says myopia is restricted only to the Detroit automakers? I truly hope Chrysler survives. If it can’t be independent, then I hope they end up as part of a firm that will keep the brands alive and allow them to produce unique vehicles.

Colin Powell is on the Obama team.

So that they can also spread the wealth around there too?

Stingray :
October 21st, 2008 at 10:14 am

Nationalizing it is another option. I don’t agree or like on this one.

No kidding… this is America after all.

They have the opportunity to do this, just make the offer. I’ll throw out some numbers….Let’s say $5B, divided among 70,000 employess……comes to about $70,000 each. Shouldn’t be too hard to round up everyone for a contribution.

Good analysis of the groupthink and utter lack of vision of the media. They report the truth when they think there’s enough cover to do so.

Mainstream journalism has been dying a slow death for some time.

It is in everyone’s best interest if GM pulls the trigger, and yes, even GM’s. It is becoming rather clear that the government will do whatever is necessary to ensure that GM and Ford are not forced to file for bankruptcy. However, if the government was to give financial support to GM and Ford, it would be political suicide to then let Chrysler fail. Thus, the government is faced with “saving” the entire U.S. auto industry or letting it all crash and burn. However, if GM buys and then summarily executes Chrysler, the government is then free to bail out the entire U.S. auto industry without supporting Chrysler.

For example, suppose the government has decided that it can afford to give the entire automotive industry $30 billion. To keep this hypo simple, assume that the government intends to distribute the bailout evenly amongst GM, Ford, and Chrysler (i.e, they each get $10 billion). Assuming that the $30 billion pay-out is fixed, regardless of how many automakers exist when the funds are distributed, GM would be willing to pay up to $5 billion for Chrysler just to get Chrysler’s share of the bailout.

Notice how rumors of the Chrysler-GM merger began to pop up only after the government began to hand-out bailouts left and right?