By on June 20, 2007

nitro_0362.jpgSo that's it: deal done. Yesterday, federal regulators cleared DaimlerChrysler's suffix sale to Cerberus Capital Management. In the absence of any immediate change to the status quo, the United Auto Workers (UAW) and the Canadian Auto Workers (CAW) couldn't be happier with their new overlords. Chrysler dealers have also met with the new bosses and sworn their fealty. So it's one big happy family, all pulling together for their mutual health and happiness. And if you believe that, I've got some Ford stock I'd like to sell.

If Chrysler were a healthy company with an economically viable work force, a solid product line and strong financials, Mercedes would have kept it. If Cerberus didn't make billions by transforming ailing companies into cash cows– or sending them to the slaughterhouse– they wouldn't have bought it. So what we have here is a moment of silence: a dignified pause before Cerberus grabs its finest filet knife and guts Chrysler like a fish.

To understand the fishmongery to come, it's important to see Chrysler through Cerberus' eyes. As far as CEO Stephen Feinberg and his Armani-clad mob are concerned, Chrysler doesn't make cars. It makes loans. Its cars, trucks, vans, minivans, SUVs and pickups are simply a means to an end: profitable paper. Chrysler Financial Services is the only part of Chrysler Group that makes any money. Cerberus already owns 51 percent of GM's financial services unit, GMAC. Join the dots. Do the math.

Despite Chrysler's CFO's pre-sale pooh-poohing of the possibilities, Feinberg dropped hints about "synergies" between Chrysler Financial and GMAC at the recent dealer pow-wow. Believe it. It's only a matter of time before Cerberus combines its two lenders to grab the lion's share of the auto loan market from Ford. Aside from the power that comes from being number one, former GMAC Prez Bill Lovejoy reckons the deal will generate tremendous efficiencies in finance and remarketing off-lease vehicles.

Of course, an auto finance company needs autos to finance. That's where the rest of Chrysler comes in– but not Chrysler as we know it.  

Start with this: Cerberus is a deal maker, not a car maker; and they sure ain't no miracle maker. They know they can't get Chrysler's unions to agree to the kind of wage and benefit roll backs needed to create American-built cars that compete with non-union transplants– at least not without exercising the nuclear option. While long overdue, a showdown strike would kill the short term value of Cerberus' investment (which is their primary frame of reference).

So here's Cerberus' cunning plan: they're not even going to try. Oh, they'll ask for the same concession as Ford and GM (should there be any on offer). But Cerberus isn't counting on union malleability. They'll simply turn their back on their American unions, build or buy cars elsewhere and transform Chrysler dealers into the automotive equivalent of Wal-Mart. In other words, Cerberus will decouple the traditional link between automotive manufacture and retail.

It's a bold strategy: gut Chrysler to save Chrysler. The fact that GM CEO Rick Wagoner has already expressed interest in a combined Chrysler Financial and GMAC shows that the major players "get it." They understand that cash is King and outsourcing is the way forward,

How much branding is needed for it to work? Could Chrysler dealers sell GM or Ford products? Would Cerberus pick-up Jag and Land Rover, turn them over to someone else to manage and sell the resulting products through their dealers? Sure. Why not?

Of course, none of this relieves Chrysler of its burden to build/import vehicles American consumers want to purchase. Something other than what they're trying to sell at the moment. And so the urgent reevaluation process has begun.

The Detroit News reports that CEO Tom LaSorda and Chief Operating Officer Eric Ridenour consumed Consumer Reports' scathing reviews of the Nitro and Sebring/ Avenger, checked the sales stats and freaked. Apparently the suits were "quite upset" that they "missed where the market was to end up versus our projections." They've begun a "series of deep dives into its processes and standards," looking at both current and future products.

But can they keep Chrysler afloat until Cerberus can change the game? Jeep is the only Chrysler division that's making money, but it isn't enough to carry the group. While Cerberus has deep pockets, will they be willing to continue pouring money into Dodge and Chrysler while they try to reverse nine years of epic mismanagement? 

Although Cerberus repeatedly insists they're in it for "the long run," they've never actually defined the term. Since all things are relative, Chrysler has to move quickly if they're to survive the latest chapter in their less-than-illustrious recent history. Cerberus' mission is to make money, pure and simple. Whether sliced to bits or served whole, any company that doesn't meet that goal is history. 

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69 Comments on “Chrysler Suicide Watch 16: Cerberus’ Master Plan?...”


  • avatar
    USAFMech

    Damn…now that’s the kind of outside-the-box thinking that keeps me coming back. And as a Business Admin. major, these are the kind of ideas that tickles me in funny places.

    This is one of your better articles, Mr. F. A clear, concise and to-the-point article detailing the wierdness that goes on in the auto industry.

  • avatar
    Steve_S

    If Cerebus has no real long term goal in bringing Chrysler to profitability as an auto manufacturer then why bother to bring on Tom Gale, Wolfgang Bernhard and try to leech designers from other companies like they are doing? Bringing these people on board costs money and if there is some major intent to slice up the pie then there is no need in trying to improve the portions you don’t intend on keeping is there.

  • avatar
    Alex Rashev

    Maybe, just maybe, we’ll finally get to the point where you’ll have separate engine manufacturers, separate “body&interior” makers, and separate car super-dealerships. Boeing doesn’t make its own engines, and for a reason.

    “Let those in the Big Theater sing, and we’ll keep doing surgery”.

  • avatar
    Dynamic88

    “Start with this: Cerberus is a deal maker, not a car maker; and they sure ain’t no miracle maker. They know they can’t get Chrysler’s unions to agree to the kind of wage and benefit roll backs needed to create American-built cars that compete with non-union transplants– at least not without exercising the nuclear option. While long overdue, a showdown strike would kill the short term value of Cerberus’ investment (which is their primary frame of reference).”

    Why do we always have to pretend that working guys (UAW/CAW) making a decent living are the cause of the big 2.5’s inability to compete? Not all of Chrysler’s non-union transplant produced competition is cheaper in price. Chrysler (GM, Ford) got beat on quality, more so than price. Management is the problem, not labor.

  • avatar
    KatiePuckrik

    If I understand Mr Farago’s article (that wasn’t a slur on your journalism! I’m just a bit dim!) then it is a fantastic hypothesis, but an old concept. What you describe is something called “Toll manufacturing”. I work in the chemical industry and sometimes a manufacturing plant can’t make a particular product (haven’t got the necessary licence, raw material is too expensive, etc) then they ask to a rival company to make it for them on their behalf. All copyright of the formulation stays with the inital company but gets licensed out to the rival company. In some instances, the inital company license out the formulation to a rival company so they can sell it legally in a particular terrority/market simply because the inital company can’t be bothered to sell it/withdrawing from a market/downsizing etc.

    Which gives a lot of credence to Cerberus doing such a thing. They’re a glorfied bank, what do they know about making cars? (come to think about it what do Chrysler know?) But they do know how to make money and they’ll slit anyone’s throat who gets in their way, including Chrysler’s!

    Theoretically, Cerberus could manage the finance side and license the manufacturing to someone like Magna (who were interested in Chrysler to start with) or the Chinese or the Indians could be a good bet. Cheap labour, lower raw material costs and the Chinese and Indians would jump at the chance to manufacture the techonology they intend to rip off!

    Like I said, great idea Mr Farago! :O)

  • avatar

    Steve_S: A gain, there is no escaping the need to build desirable product. The main question is: who decides that it is and who builds it? I repeat: matter what strategy you pursue for manufacturing or distribution, you have to have a compelling brand proposition. Jeep does. The rest? Meh.

  • avatar
    Point Given

    It’s the same thing that has happened in countless other industries. You own the brand, not the factories, not the products. The Brand. Akin to Nike not owning any production facilities for shoes. It’s cheaper, if you are diligent the quality can be fairly good and you offload salaries, insurance, supply chains etc etc.

  • avatar
    geeber

    Dynamic88: Management is the problem, not labor.

    But part of the mistakes management made was to give labor too much of what it wanted. Now that those mistakes are glaringly apparent, labor acts as though those problems don’t exist, or tries to frantically blame other factors (exchange rates, free trade, bad reviews of domestics cars in Consumer Reports, etc.).

    The bottom line is that the current labor contracts are unsustainable, they hinder the domestic’s ability to field more competitive vehicles (although they are certainly NOT the sole cause of that inability) and they need to be revised to face the reality of a more competitive market.

    Please note that does NOT mean paying workers the minimum wage or abolishing the UAW (the companies need it to maintain plant discipline).

    Most of the current provisions of the contract were agreed to when the domestics could simply pass increased costs on to customers, because they controlled over 85 percent of the market. Those days are long gone.

    I don’t think that this message has sunk in with either the UAW leadership or the rank-and-file. The union cannot simply sit there and say, “This isn’t our problem, don’t expect any sacrifices from us.”

  • avatar
    SaturnV

    Interesting article – I hadn’t thought of this takeover in terms like this, but it makes a certain amount of sense. I wonder, if this were to actually happen, whether it wouldn’t shake the foundations of the ‘patriotic buying’ mindset? I don’t know how much the ‘American’ brands count on that in reality, but from their adverts it seems as though it figures in at some level.

    -S5

  • avatar
    Hippo

    Dynamic88

    There is one theory of why there is zero future for US automakers as long as they are unionized, and while I’m sure that a English PhD could come up with enough flowery semantics and code words, if mentioned in plain English it would result in a cat fight and banning.

  • avatar
    CliffG

    1. Cerberus is not a manufacturing company and has no intention of becoming one.
    2. I would guess that the amount of money Cerb. is risking on Chrysler’s ability to make/sell cars is a very small number. And Cfin and GMAC will easily cover that.
    3. UAW should be in full fledge panic, Cerb’s patience for them is measured in nano-seconds.
    4. C will be split into separate component parts so one division’s C11 won’t impact the money making areas.
    5 C will be unrecognizable in 24 months. Although Wolfgang might be doing some interesting things with Jeep/Hummer Inc. – a Hong Kong Plc.

  • avatar
    Glenn 126

    I think Tom Gale, Wolfgang Bernhard et al are going to be around as leaders in their respective fields, but that it is entirely probable – not just possible – that Chrysler will out-source much of what is now built in the US, in order to not only compete – but survive. Perhaps, in time, they will be able to import kits and assemble cars in the US again.

    This, despite the newspaper stories about 3 “Phoenix” V6 engine production plants, 2 of which will (supposedly) be in the US (and 1 in Mexico). Of course, Mercedes owning 19.9% of Chrysler Holdings LLC means that US produced (cheap dollar) V6 engines might be less expensive to build and export to Germany, saving them money (not to mention sending V6’s to their Mercedes SUV plant in Alabama, instead of importing them).

    The mid-sized Sebring/Avenger cars are – to put not too fine a point on it – not only UGLY but poorly engineered and built too expensively in plants filled with overpaid workers (if the real world is any gage to go by). They’ve got to go. But what to replace them with? How do you compete with the Camry and the Accord?

    Well, with the open free market between South Korea and the US, perhaps some “synergy” with SsangYong would be in order. A SsangYong Chairman with an (ironically, ex-Mercedes Benz) inline six of 3.2 liters would be a nice mid-sized REAR WHEEL DRIVE sedan for Chrysler to badge as their own; the chassis of the Chairman (as the Chrysler 300) ex-Mercedes tech, too. As for Dodge, how about making nice with South Korean Renault-Samsung (partly owned by Nissan-Renault) and import their mid-sized SM5 FWD car as a Dodge, with an appropriate grill change and badges. The car looks like this: http://members.home.nl/godriespijkers/2005-26.html

    Oh by the way, here are a few photos of the Chairman. It can be ordered with cloth interior and fewer luxuries (which means the factory could build cars of various luxury levels).

    http://es.autoblog.com/2006/06/22/nuevo-ssangyong-chairman-2007/

    As for Jeep, well…. how about getting rid of the abominations and concentrating on what it does well?

    And finally, relating to Jaguar and Land Rover. Cerebrus? RUN AWAY! HIDE! DON’T DO IT!

  • avatar
    Dynamic88

    It’s nonsense to pretend that labor costs are the problem, when the competition is about quality. We’ll see that proved soon enough. Once the unions are busted, or forced to make deep concessions, people will still be bying the non-union Hondas and Toyotas rather than the non-union (or weak union) Big 2.5 vehicles.

    It’s management that has run these companies into the ground, not the unions.

    Yugos were a heck of a lot chaper than any Japanese made car, wonder why they disappeared from the market?

  • avatar
    AGR

    Cerberus is poised to hit the “reset button” on the North American (Big 3) automotive industry.

    The “players” that have an understanding of hitting the reset button are themselves eleborating a few alternate plans of their own.

    It might just be the best thing that happened to the North Americam over unionised over dealered automotive industry since many years.

    Cerberus has a unique opportunity to effect compelling/meaningful change, and the stakes are high enough to do away with knee jerk decisions.

    Over unionised affects all of them, and over dealered the same…both are long standing deeply entranched issues.

  • avatar
    Steve_S

    RF: Hence the reason for bring on Tom Gale and other designers to as quickly as possible infuse better design into the product stream.

    It’s in Cerebus’s interest to keep a supply of car loan and lease buyers coming to GMAC/CF. They also have the means to break the CAW/UAW. This could play in their favor by bring down GM and Ford and allowing them to be the only “American” auto manufacturer not in Chap. 11 while wiping out half their competition.

    Now they are not car people but they can buy car people and have done so in Wolfgang Bernhard. There are plenty of rich people/compaines that have businesses they understand nothing about yet employ people who do.

  • avatar
    geeber

    Dynamic88: It’s nonsense to pretend that labor costs are the problem, when the competition is about quality.

    It’s not so much direct costs (i.e., wages) as health care costs and work rules. Those hinder the efforts to build a quality product. If GM is paying more for health care benefits, or has less efficient factories because of union work rules, it has less money to put back into the product in the form of a nicer interior or better engine.

    As I’ve said before, the union is not the sole reason for the domestics’ predicament. But the union MUST be part of the solution, and that means making some concessions, or at least thinking outside the box when this contract is negotiated.

    It’s not 1937 anymore, when the union’s main enemy was Harry Bennett.

    And it’s not 1965 anymore, when the main concern was dividing up those eggs laid by the Golden Goose, and then passing on any increased costs to customers.

    The UAW is at a crossroads. Cerberus is the new player in town, and I don’t think it has the same patience (or complacency) that the management of GM and Ford have shown in dealing with the union.

    This fall will be VERY interesting.

  • avatar
    Glenn 126

    What I found fascinating was the CAW (Canadian Auto Workers) sudden descent from cooperation to spoiling for a fight, and demanding that no concessions be given, perhaps a week or so ago.

    The Canadian unions are as entrenched as the UAW.

    Yes, this fall ought to be “fascinating” and may well spell the end of one or two of the big 3. I suspect that Ford will be the first to fall. And not get up. But we may end up as the British – no “domestic HQ” auto companies left.

    In actual fact, the situation could be far worse.

    Toyota, Nissan, Hyundai, Kia, Subaru, Honda etc. might have decided to NOT built factories within the United States.

    Surely it’s better to have some jobs, than none? Or is that too logical and simple for some to grasp?

    Much of what passes as management in the US auto companies should be made to live in downtown Flint Michigan by way of punishment, if the big 3 fail, however. Much of the blame lies on their overcompensated and spoiled shoulders.

  • avatar
    Rocketeer

    Very good article on the Chrysler merger. I always look forward to reading a different viewpoint on what is going on in the auto industry. It is what keeps me coming back to TTAC.

    Does anyone else remember when Robert wrote reviews? (The Ultima Can-am is my favorite)

  • avatar
    Dynamic88

    http://tinyurl.com/yvabwl

    My point is not that unions should get all they ask for or never make concessions. My point is the rabid anti-unionism and the pretense that labor costs, including legacy costs, are the problem, is just another way American management sticks it’s head in the sand and avoids the real issue – they have to follow the quality methods of Toyota and Honda. And Toy/Hon are not standing still, waiting for the Big 2.5 to catch up.

    However emotionally fullfilling it might be for some to see the unions forced to make concessions, or even be busted altogether, it simply will not solve the problem. The big 2.5 are competing on quality, not price.

    The link at the top shows that Honda/Toyota pay in the neighborhood of $24/hr. A bit cheaper than UAW, but nothing like working for half pay. The concesions will come, down to about what the trasplants are paying, but these concessions won’t work the hoped for miracle. People aren’t buying Toyota/Honda because they are cheaper – in many instances they are more expensive.

  • avatar
    SherbornSean

    Great article. Robert makes an obvious point, but what that is also enduringly true: “there is no escaping the need to build desirable product.”

    Since that is the case, then Chrysler’s recent failures(Compass, Nitro, Sebring,..)and the fact that the current management team was SURPRISED by these failures points to Cerberus dumping the Lasorda & Co. very quickly.

    It seems ironic that German VW was so clueless about the US market they had to launch Project Moonraker (results to date? none) whereas Cerberus will bring in a German to get the newly American Chrysler back in touch with US consumers.

  • avatar
    Badger

    Very nice piece. I still find it shocking how many people are in denial about the hatchet job that is to come. Take a look at what happened at other Cerberus owned entities – the only way these guys know how to earn a return is to hack away at the cost structure. That means management, blue collar, suppliers and dealers – get ready for some pain. They are not about investing in the product. Every nickel they think can take out of the cost structure, they will.

    I think you’re right about GMAC/Chrysler Financial. The manufacturing outsourcing I think would take longer to execute than Cerberus’ investment horizon… I can see steps taken in that direction tho.

  • avatar
    MX5bob

    The UAW chief has already said that the union needs to match the concessions that were made to Ford/GM several years ago. They weren’t made to Chrysler at the time because the company was making money.

    But is that enough? Cerberus could well start buying cars from overseas and rebadging them to fill in a “new” model lineup relatively quickly. The more that is done, the more plants being closed, the weaker the union becomes. As RF has said, why pick a nasty, public fight with the union when there are methods that will fly under the radar?

  • avatar
    korvetkeith

    Glenn 126:
    June 20th, 2007 at 1:46 pm

    Much of what passes as management in the US auto companies should be made to live in downtown Flint Michigan by way of punishment, if the big 3 fail, however. Much of the blame lies on their overcompensated and spoiled shoulders.

    A lot of them went to school in Flint, they know.

    And anyone trying to deny that the UAW is a (major?) part of the problem has never worked in the automotive industry and especially not in a UAW plant.

  • avatar
    Jeff in Canada

    Could this be the beginning of a massive shift in the way cars are made, and sold. Just think, it took a mega-investment firm to purchase an automaker to star the ball rolling.
    Someday we could have a super-dealership where you can pick and choose, not just options, but manufacturers. Eliminate the redundancies of the industry to create an uber-efficient manufacturing firm.
    Offer a range of body styles, all based on a flexible platform, built and assembled in the same plant. A range of engines, all engineered identically. A range of drivetrains, all compatible with the range of engines (within reason) and offer the best damn financing plans available, people will come.
    Want a Compact hatchback, with a small V6, 6spd manual, RWD? Sure! Want to make it a pick-up body? Sure thing Sir, let me just mark that checkbox for you.
    Interesting times ahead for next 10 years.

  • avatar
    Dynamic88

    “And anyone trying to deny that the UAW is a (major?) part of the problem has never worked in the automotive industry and especially not in a UAW plant.”

    Oldsmobile isn’t gone because of the UAW. It wasn’t legacy cost, or hourly wages, or union work rules that killed Olds, it was GM management screwing up the brand, and not producing the same quality as Camry/Accord, etc.

    Same can be said of Chrysler, both under it’s American and German management. UAW is a very minor part of Chrysler’s (GM, Ford) problems.

  • avatar
    Redbarchetta

    Why is it that the Union/Management relationship in this country is always an adversarial fight instead a cooperative relationship that promotes growth. I understand why the unions were there to begin with but that need is not the same anymore. The unions should be able to say they add value to the labor force not bring it down like a lead weight. I don’t know about any of you but I have to EARN mt raises and bonuses by proving I add value to the company not just because it’s expected. And I am in no way excusing management, they are just as at fault. The unions should be bringing ideas to the table along with management to make the business better, after all they are on the factory floor.

  • avatar
    SherbornSean

    RedBaretta,
    You’re right, and unions aren’t to blame for all the Big 3’s problems. At first, I found Gettelfenger’s recent announcement that the union was now willing to be reasonable about offering Chrysler the same (limited) concesssions it had given GM and Ford.

    But then I looked at his reasoning. The union was only willing to consider concessions because of the Chrysler’s changed financial position. In other words, union pay has nothing to do with the value provided or with labor markets, it is linked only to the profitability of the host.

    This is how blackmailers and vampires think, not how partners think.

  • avatar
    tech98

    The union was only willing to consider concessions because of the Chrysler’s changed financial position. In other words, union pay has nothing to do with the value provided or with labor markets, it is linked only to the profitability of the host.
    This is how blackmailers and vampires think, not how partners think.

    Management does this all the time in my industry. “No raises for anyone this year, because the contract/company didn’t make its profitability targets”. Doesn’t matter how much value I added or how much I impressed the customers, no raise for you because so-called meritocracy becomes collective punishment when it’s convenient.
    Or even better, “No raises this year” for the workforce, then fat bonuses for management because they kept labor costs down.
    I’m no fan of the UAW, but American corporate management has a lot to answer for in terms of arrogance, shortsighted greed and contempt for the workforce. Reading about your CEO taking home 400 times your paycheck, while the company and stock sinks, doesn’t exactly scream ‘partnership’ to the guys on the front lines.

  • avatar
    Pch101

    I would agree that Cerberus is most likely largely motivated by the break up value from the financing arm and Jeep brand.

    But Cerberus is already in the manufacuturing side of the automotive business. It owns Blue Bird (school bus maker), North American Bus Industries (public transit buses), and GDX Automotive (seals, etc.), plus Vanguard (operator of Alamo and National Rent A Car.) It has also made other acquisitions, such as Tower Automotive, and attempted to make others, such as Delphi.

    For whatever reason, Cerberus seems to like all aspects of the automotive business. So while it’s quite possible that Chrysler is intended to be a break up play, it’s also possible that Cerberus’ goal will be to build its value through vertical integration and cost reductions.

    I’m personally skeptical that the latter strategy will work. Dynamic 88 above is absolutely right on the money. The real issue facing these companies have not been their costs, but product that is rarely good enough to be sold without a fire sale and giveaway financing to match. After decades of brand self-destruction, Chrysler’s branding is weak enough (Jeep excepted) and the competition strong enough that it may already be too late to turn the brands and build market share.

    And again, Dynamic88 is absolutely, positively correct. “Legacy costs” are simply the latest excuse in a whole string of alibis that have been used to deflect attention away from the managers who created these problems in the first place by creating products that people don’t want and then allowing these subpar creations to destroy their brand equity.

    They used to blame the Japanese, the strong dollar, trade policies, bad astrological conditions, broken rabbits feet and everything else but themselves for what ails them. After years of self-induced implosion, management still can’t step up and take responsibility for what they hath wrought, and instead has turned to blaming the peons who don’t even run the company.

    I’m sorry, but the Caliber, Stratus, and the like would not be desirable cars to own, regardless of who built them or how little or much those workers were paid. I’ll take my current ride, built by highly paid German union workers, any day of the week…

  • avatar
    jerry weber

    Two points: First the UAW cannot survive when more than half of the plants in the US are non-union, it is this black and white juxtaposition that just won’t go away. If all car companies were union no problem. Second, the lack of need for all this mfg. capacity will create what Bob is saying. Too many plants have been built both here and overseas to be supported for all the product they churn out. Therefore, it will be survival of the fitest. So far we have seen who they are. It can’t go on with minor give backs and adjustments, the nuclear option will come one way or another.

  • avatar
    Redbarchetta

    I understand that the union bosses are akin to mob enforcers and that management make things worse by looking down on the labor force that actually makes the cars. Without them they would only be selling designs on paper, bad ones at that. How come we can see this but they can’t or just choose not too(I’m going with the latter)?
    What bugs me the most is this sort of mindset adds nothing to the nation as whole and is actually destroying it, since this isn’t the only industy being driven into the ground by this stupid Us vs. Them crap.

  • avatar
    Luther

    “But the union MUST be part of the solution, and that means making some concessions, or at least thinking outside the box when this contract is negotiated.”

    It is not in a Labor Union’s nature. Legalized power to control without ownership always results in destruction. Think about how people treat a rented or leased car as opposed to the one they own. With current labor laws, environmental laws, taxes, and other regulations (Including Sarbains-Oxley), the deindustralization of NA in the Global Economy soldiers on…Which begs a question…Why are Gettelfinger and Hargrove so happy about the Cerberus buyout?

    Also…The UAW active members are taking a “hit” in compensation just to keep [lots of] retired UAW members in benefits…Brotherhood?…Milk-cow more like it!

    I think Jeff in Canada has it right. Chrysler has the GEMA I4 and soon Phoenix V6 and will need a modern V8 and transmissions to complete a global component mix. Flex-size Chassis is key to global efficiency. Sheet metal and interior design will be the only big variable in the global marketplace.

    Jeep/Ram/Land Rover sharing the body-on-frame platform(?)

  • avatar
    Lumbergh21

    Yes people buy the Japanese cars because they are better not cheaper. Why are they better? Are our automotive design engineers incompetent when they work for an American manufacturer? Or, could it also be that due to the higher cost of labor, American auto manufacturers can’t afford to make as nice of a product and maintain a price at or near the competitions? And, it’s not just the hourly wages and health/retirement benefits, it’s also the ridiculous labor rules, the job bank being the prime example. I blame the management first and foremost for caving into the outrageous demands the unions were making and not trying to bust the unions in the 60’s or the 70’s when the hand writing was on the wall. Management is still screwing things up by insisting on efficiency while they are unwilling to make any changes to their little fiefdoms in order to bring about a more efficient operation. Having said that, it is ridiculous for the unions to expect anything approaching the sweetheart deals of the past. If they insist too hard, they may find very few employed UAW workers left, as the car makers begin to fall and the pieces that are left behind will have neither the desire nor the need to deal with the strong-arm tactics that the unions have used in the past and seem intent on continuing to use in today’s very different economy.

  • avatar
    Dave M.

    Unions will be the first to feel the pain. Not that its all deserved for the decline, but the UAW easily paints the largest target.

    Anyone on this board who has worked in a union shop knows all too well the union shenanigans. My best friend just regretfully left the self-employment field after 12 years(was spending WAY too much time and income on state and federal paper work, taxes, and insurance). He started last week as a restorer at an area concern with older buildings. ALREADY he has been approached by several co-workers suggesting he ‘slow down’ a little and ‘cut us a little slack, would ya?’.

    Pathetic. There is no doubt the UAW was desperately needed back in the ’30’s. But their day has passed.

  • avatar
    Pch101

    Yes people buy the Japanese cars because they are better not cheaper. Why are they better?

    Because they (or at least Toyota and Honda — not all of the Asian automakers are as well managed as are these) strive for continuous improvement and meeting customer needs. Pretty simple.

    There is a reason why GM and Ford can turn out a decent product in Europe, where wages and taxes are higher and work rules are even more stringent, than in the US, yet can rarely do it in North America. The difference is that GM and Ford have long faced intense competition from a wide variety of players in Europe, so they have never had any laurels in that market on which they could rest and no patriotism to which they could appeal. Had their European operations been operated as badly as had their US divisions, they would have failed in those markets a long time ago.

    Contrast that to the US where both of them have maintained dominant market share. Faced with little competition here, they invested their money and attention instead into creating a cynical abundance of redundant nameplates, overlapping brands, and mediocre products.

    And then, they topped it off by making horrible acquisitions (think back to Chrysler’s purchase of Renault’s North American operations, GM’s bungled deal with FIAT and its failure with Saab, Ford’s bleeding with Jaguar, etc., etc.) that drained them of even more cash, and diverted their attention away from fixing at home what they already broken.

    The incompetents could prosper in a postwar US environment that had left them with massive manufacturing capacity, minimal competition, millions of consumers eager to consume, and sky-high compensation packages. But as time passed and new competitors emerged, these management teams were so spoiled by their earlier success that they were unable to comprehend that there even was a threat, let alone actually address it.

    These entrenched managers spent decades being in the lead, and never understood that they were the winners only because there was no one else with whom to compete. Dial in some tough players with better products and better management, and they haven’t had a clue what to do in response ever since.

  • avatar
    Terry

    Hello! PCH101 and Dynamic88—110% correct on all counts. It has always come down to product regardless of who builds it and how much it costs.
    Back in the ’70s and ’80s, I used to wonder how it felt if I were a French citizen knowing how another country(our USA) has rejected our cars. Citroen, Renault, Peugot, maybe a source of pride in France, despised here.
    With the our current domestic carmaker “situation”, I think I now know.
    And carry it one step further…if WE dont want our cars..why would anybody else?

  • avatar
    jthorner

    I don’t see any reason for Cerberus to hold onto US manufacturing plants. They could sell a few of the choice ones off to Magna and let Magna be a contract manufacturer for them.

    I spent several decades in the computers & communications industry and what happened is that we went from a time when the US based companies built most of their own product in their own factories in the US (at least for US sales) to the modern world where most products are built by subcontractors with the majority of factories in Asia and only a few lines in the US for building low volume or early production products. The Japanese consumer electronics industry has gone much the same way. Very little stands in the way of the automobile industry going down this path and you can be sure that the Cerberus people are aware of the issues as well. A good strategy would be to only pretend to tussle with the UAW and CAW while in parallel gearing up the plan-B of imports and asset transfers to subcontractors.

    Again, the US electronics companies all did this. They sold off factories to Flextronics, SCI and other subcontractors by the bucket load. HP, IBM, Compaq, etc. all did this. No reason Chrysler can’t as well. Guess what, when the factory is sold to a new owner the union contract goes up in smoke.

  • avatar
    carlisimo

    I find the politics of unions very interesting, and fortunately I can say that in my field (construction) they’re much better. I’ve met good local union leaders and bad ones, same for the workers, but basically the provide the service of maintaining a pool of trained labor to draw from – better than hiring guys off the street – and many of the workers are proud of their work and try to outdo their coworkers every day. It looks like it’s much too late for that between the Big 3 and the UAW.

    Anyway, at this point it’s also much too late for unions to make or break Chrysler. Why did Chrysler crash so hard, so quickly? Were they that much better through the ’90s and early ’00s than they have been the last two years?

  • avatar
    ihatetrees

    geeber:
    It’s not so much direct costs (i.e., wages) as health care costs and work rules. Those hinder the efforts to build a quality product. If GM is paying more for health care benefits, or has less efficient factories because of union work rules, it has less money to put back into the product in the form of a nicer interior or better engine.

    To make matters worse, the TYPE of worker who is content to work in a strict work-rule environment generally isn’t very team or quality oriented.

    Yeah, there ARE crap companies and abusive management. But in today’s mobile and hyper-communicative society, those jobs and workplaces are known.

    I live in a slice of UAW land. Some small pharma facility workers – where promotion is based on technical skills and testing – would rather be paid 20% LESS than the UAW premium than have to deal with strict work rules.

  • avatar
    Lumbergh21

    PCH101:

    My brothe-in-law is an engineer with Delphi and has been for quite some time. He has spent some time including a two-year stint working for GM in Germany. He painted a different picture than you of GM quality in Europe. He was there to try and bring manufacturing up to spec in terms of cost, quality, and production.

  • avatar
    rtz

    Every time I see the name Tom LaSorda, I immediately think of Tommy Lasorda(Baseball). Am I the only one?

  • avatar
    Geotpf

    What’s to stop the three headed dog from shutting down all of the Chrysler Group’s domestic car lines (keeping the pickup and SUV lines for now), and telling Chery (or somebody) to build thier replacements in China?

    Not much.

  • avatar
    rjsasko

    It is interesting that someone mentioned union labor in the construction field and how much better they were. Not my experience at all. By the time the union ironworkers erected the steel, the union spread the concrete, the union guys laid the tile, and the union plumber installed the fixtures, you needed a seatbelt to keep from sliding off of the toilet everything was so crooked. Union workers have little skill and even less of a work ethic.

  • avatar
    Dynamic88

    rtz

    No, you aren’t the only one :-)

  • avatar
    jolo

    Great article, Robert, along the same lines I have been wondering about since the news got out about Cerberus buying Chrysler.

    What are Cerberus’s plans for Delphi? They have not officially left the table. They are still there and a deal between Delphi, GM and the UAW (another three headed monster?) is about to go through. Let’s get hypothetical and say that Cerberus is still the lead financial arm in the getting-through-bankruptcy deal, what do you think will eventually happen to Delphi? Thanks in advance for any prognostications you may have.

  • avatar
    mrcknievel

    Oh by the way, here are a few photos of the Chairman. It can be ordered with cloth interior and fewer luxuries (which means the factory could build cars of various luxury levels).

    http://es.autoblog.com/2006/06/22/nuevo-ssangyong-chairman-20

    The people that “designed” that car must have left fingerprints all over the MB studio…styling is very Benz inspired…dunno how well an economy version of the last gen S-Class would sell here…

  • avatar
    cheezeweggie

    After reading the front page of todays Wall Street Journal it appears that things arent all that rosey at the Japanese transplants either.

  • avatar
    Landcrusher

    But what about parts and warranty issues?

    The costs of repairing cars will go through the roof without off the shelf parts use. It’s not just about cost of manufacture, it’s about the tail. If you just badge a “bit of this, and a bit of that” you will quadruple the parts needed by the dealers. Also, the accounting on warranty issues is a mess. Just look at the issues between Ford and the guys making the diesels for their trucks.

    How will they overcome these issues? I suppose they can, but how will it work with the states’ dealership laws?

    Dynamic:

    About 10 years ago, I sat on a plane with a guy who was a UAW “seat catcher”. Great guy, and overqualified for his job. He made almost as much as I did, and with benefits actually more.

    He had a two year degree, and 3 years experience. I had a 4 year degree from a top 25 school, served a tour on active duty as an Army Officer, AND had 5 years of experience working in technology sales.

    That is simply unsustainable and in my opinion, socially irresponsible. He obviously had the character and ability to take on more responsibility, but likely would not do that while holding down a job that some lesser skilled person would have been happy to have at HALF that wage. Because of overzealous unions, we are wasting his ability and lesser skilled people are suffering from lack of good jobs.

    If the unions had to compete with other unions and non-union labor it might work, but monopoly of anything rarely does.

  • avatar
    Dynamic88

    Landcrusher

    I wasn’t going to post on this topic anymore, but-

    1. Perhaps it is you who is overpaid and unsustainable? Perhaps it is socially irresponsible to pay you what you get? I doubt you ever considered the possibility.

    It makes no difference what level of education someone has – I have a friend who never went beyond HS, and he could buy and sell people like you and I several times over.

    2. Unions do compete with non-union labor. Perhaps you’ve heard of Toyota and Honda.

    3. My main point is not to be a cheerleader for the UAW – it makes no difference to me whether they continue to exist or not. My point is management is 90% of the problem, so blaming the UAW for wages that aren’t all that much higher than what Toyota/Honda pay, makes no sense. It’s like saying “Hey, I’m fat. It can’t be the Whoppers and fries and cokes, it must be the after dinner mints”. Again, I repeat – the big 3 arent’ getting beat on price. The big 3 are getting beat on quality.

    Management decided to destroy the distinction between Plymouth and Dodge – not the unions. Management decided to focus on Trucks/SUVs and assume that conditions would never change – not unions. Management quit following the methods Dr. Deming taught them in the ’80s – not unions. (Or if they are still following the philosophy, they aren’t as comitted as the Japanese) Management decided to buy up ailing companies and pour billions into them shortchanging development of NA operations, then selling at a loss- not unions.

    To be fair to management, they are also responsible for good decissions, such as buying Jeep – not unions.

    Management makes the decissions. Management is the probelm.

  • avatar
    BostonTeaParty

    Dynalmic88:
    Yes management is to blame for past decisions, but also when your union workers make you uncompetitive and restrict your ability to adapt to the market place, well then thats the unions fault isn’t it. Those business decisions are in the past, most are in the process of being fixed, but whats the union going to do, dig its feet in like a petulent child? Its a big viscious circle that needs to be broken. We hear stories about both sides but at the end of the day if you need to change your work practices to stay alive and you can’t because of the unions, who’s fault is it then? Management, i think not.

  • avatar
    fallout11

    Long term for Cerberus, historically speaking, is a very short timeframe (months, not decades). We will not have long to wait to see what becomes of Chrysler’s assets.

  • avatar
    Wotan

    I agree with jthorner. I worked at BMW and as a purchasing director in Detroit. Having worked for a few years now in the electronics outsourcing world, I can’t understand why this model hasn’t been investigated earlier in automotive. We’ve seen it work in niche, small volume cars, but why not volume production?

  • avatar
    geeber

    Dynamic88: It makes no difference what level of education someone has – I have a friend who never went beyond HS, and he could buy and sell people like you and I several times over.

    Very true, and a good point, although virtually every self-made man and woman I know has absolutely no patience for unions.

    Dynamic88: Unions do compete with non-union labor. Perhaps you’ve heard of Toyota and Honda.

    Yes, which is part of the problem. The non-union environments allow Toyota and Honda more flexibility in deploying their work force, maintaining discipline and promoting workers (i.e., based on competence, as opposed to strict seniority).

    And as for discipline – the daily absentee rate at a GM, Ford and Chrysler plants is 10-12 percent. At the transplants it’s around 1 percent.

    Granted, management has tolerated it, so it is partially to blame, but the union benefits by keeping slackers on the payroll (more dues-paying members).

    If you don’t think it’s harder to fire someone for non-attendance in a union environment than it is in a non-union environment, you are kidding yourself.

    Dynamic88: My main point is not to be a cheerleader for the UAW – it makes no difference to me whether they continue to exist or not. My point is management is 90% of the problem, so blaming the UAW for wages that aren’t all that much higher than what Toyota/Honda pay, makes no sense. It’s like saying “Hey, I’m fat. It can’t be the Whoppers and fries and cokes, it must be the after dinner mints”. Again, I repeat – the big 3 arent’ getting beat on price. The big 3 are getting beat on quality.

    And I will repeat, part of the reason they are getting beat on quality is because of the work rules and other inefficiencies that the union refuses to relinquish.

    Even if the union is only 10 percent responsible, that 10 percent is crucial in today’s brutally competitive industry, and the UAW has shown absolutely no inclination to change ITS ways to make the companies (its employers!) more competitive.

    Dynamic88: Management decided to destroy the distinction between Plymouth and Dodge – not the unions.

    Very true. That can be partially blamed on the Dodge dealer group, which wanted a low-price car to sell after Chrysler management took Plymouth away from the Dodge dealers for the 1960 model year.

    I always thought that having Dodge compete directly with Plymouth was one of the dumbest moves made by ANY American company.

    Dynamic88: Management decided to focus on Trucks/SUVs and assume that conditions would never change – not unions.

    One reason they decided to take this route was because they were the only profitable vehicles, and the UAW was as happy to ride the SUV boom as management was.

    In the 1ate 1990, Ford realized that only three of its vehicles were consistently profitable – the F-150, Explorer and Panther cars. It could have gone back to the union and asked that it work together to make its other cars profitable (thus ensuring that they would generate enough profits to pay for regular updates), but that would have required some sacrifice from union members, so I doubt that it would have happened.

    The union would have pointed to the profits generated by light trucks and the financing units and said, “Why should we change? The company is making money!”

    In other words, they were as short-sighted as management. Sorry, but the UAW was just as happy to ride the SUV gravy train as management.

    Dynamic 88: Management decided to buy up ailing companies and pour billions into them shortchanging development of NA operations, then selling at a loss- not unions.

    Very true, although I think that the purchase of Volvo and Mazda DID benefit Ford. Ford has used Volvo’s safety expertise, and Mazda platforms and quality control methods to improve its products.

    But GM’s purchases….I understand why the UAW hates those.

    Dynamic88: Management makes the decissions. Management is the probelm.

    So, when management realizes that part of the bad decisions they have made are agreeing to the Jobs Bank (it was proposed by Ford management in the early 1980s, so it was a MANAGEMENT idea) or agreeing to a health benefits plan that is simply unsustainable, is the UAW going to say, “Those were MANAGEMENT decisions, and we aren’t going to stand in the way of changing those bad decisions for the ultimate good of the company?”

    The UAW now spends lots of time now ferociously defending bad management decisions that benefit blue-collar workers in the short run, even if they are destroying the company in the long run. If they were truly management decisions, then I would expect management to be able to unilaterally change them. Which they can’t.

    So merely saying, “These were management decisions,” is more than a little disingenuous.

    I don’t like paycuts either, and I understand the fear of losing a job, but the UAW is just as good at finger pointing as any other entity. And, quite frankly, some of its actions look very baffling to people in the rest of the country (outside the industrial Midwest) who are happily driving Toyotas, Hondas and Hyundais and aren’t about to change their choice of vehicle to allow both management and labor to pretend it’s still 1965.

  • avatar
    dean

    rtz – you mean that Chrysler’s Tom LaSorda isn’t the former Dodger’s manager?

    ;)

    (Actually, the first time I saw a reference to LaSorda here on TTAC I thought maybe Tommy had made a career change. It wasn’t until I saw a picure of him that I knew for sure!)

  • avatar
    Glenn 126

    Pch101 wrote “And then, they topped it off by making horrible acquisitions (think back to Chrysler’s purchase of Renault’s North American operations…” – however, it must not be forgotten that Jeep was not for sale as an independent entity. American Motors Corporation – only partly owned by Renault – owned Jeep Corporation 100%, and Renault was not going to sell one without the other.

    The ironic thing is, it is AMC’s then-new (in 1987) Bramalea plant (with satellite factories owned by suppliers right next door, a la the Japanese and much touted – and later – and now soon abandoned – Saturn factory).

    This Bramalea plant is building Chrysler 300’s, Dodge Magnums and Chargers and will build the Imperial and the Challenger. Whether it is currently profitable, I don’t know. Probably not – because Chrysler is a MONEY LOSER.

    Cerebrus probably will close down, farm out, subcontract and minimize expenses – after the CAW and UAW walk out on them for asking for concessions which were already given to GM and Ford some years ago.

    By the way, the Eagle Premier (AMC designed-with-Renault-assistance) car which was built in Bramalea from 1987 through 1992 was a competent car, but suffered from reliability issues.

    If only AMC had gone ahead and studied Toyota more closely, and actually adopted “best practices” well, perhaps it would have been AMC buying up CHRYSLER in 1999, instead of Chrysler buying up AMC in 1987.

  • avatar
    pdub

    This is slightly off topic, but I’m wondering if anyone else is aware that Enterprise is waiting on FTC approval to purchase Alamo and National from Cerberus. This was done just before Cerberus bought Chrysler. Enterprise increases its fleet capacity, Cerberus gets much needed collateral and investment funding. Could anything else be going on here?

  • avatar
    Landcrusher

    Dynamic,

    It does matter what education people have. The amount of education represents the level of investment the individual and society has made in the abilities of that person. Yes, individuals may vary, and jobs may vary, its a free market with uncertain results, but still – it matters.

    Your friend cannot buy me, but if he is really wealthy, I will be glad to sell him an airplane. In fact, mine is for sale.

    Unions in non-right to work states do not compete. Once they take over a factory they have a legally enforced MONOPOLY. No one can get a job at that factory without joining.

    Lastly, I am not an apologist for management by any means. I have posted here several times about how they have both been failures. The difference is that management can be fired in several ways, but the union is protected by force.

    I see it as my duty as a citizen to speak out against injustice by our government. That is why I am anti-union. If I don’t like management, I have other means of protest. That’s what pro union people just don’t seem to understand. If 2.5 managers were using coercion backed by government then I would speak out against them here as well. Instead, I can just not buy their products.

  • avatar
    NickR

    I agree. (Is that too short a post? Okay then…)

    I wonder what Cerebrus will do with Mopars aftermarket performance parts enterprise? I wonder if that is a money-making operation? From my one experience with them in Canada, they are pretty disorganized (I never did get my camshaft). There are lots of aftermarket companies producing intakes, cams, etc so my guess is the competition is pretty intense and their departure wouldn’t leave much of a gap. And I can’t see Cerebrus continuing to build crate hemis for the sake of nostalgia.

  • avatar
    jurisb

    reminds me waltham, or hamilton watches that you can buy even today. but they represent nothing of those american companies just badges. chrysler might become only a badge too. because when married to mercedes, chrysler could pump out technologies and platforms. cerberus is a nerd company, they don`t have any physical platforms or engineering capacity. WHERE WILL THE SICK PATIENT(LEECH) NAMED CHRYSLER TAKE THE PLATFORMS FROM?
    they will create new platforms themselves? you must must be kidding! it `s an american company , and they are afraid from physical tangible engineering more than devil from the cross. anyway, whatever happens to chrysler, will happen to ford next. while your grandpa`s played with model kits, trainig their hands, or fixed a bike in garage, todays kids are mostly idling at computers, playing around with net or games. they will become good masters of computing. but we don`t need computing, we need for god`s sake physical engineering, because whenenever i go shopping i buy tangible cd players, watches or wc closets, not computer programs, fire walls, or 3d car images. will chrysler be turned into another service company? because those who are too weak to manufacture, they go the easiest way- services. like Surinam or my country as well. sad.

  • avatar
    SuperAROD

    For a company wanting to “gut” Chrysler, they sure are announcing a lot of capital investment. New Axle factory, new V-6 engine factories, new dual clutch transmission factories, new in-house 4 cylinder diesels, all of them in the United States, and a huge announcement yesterday.

    Hiring of Bernhard and Gale. Leaked memo on the disappointment of a couple of their new models and how they will strive to not make the same mistakes in the future.

    Doesn’t quite jive with they hypothesis of this editorial.

  • avatar

    SuperAROD:

    For a company wanting to “gut” Chrysler, they sure are announcing a lot of capital investment.

    As the editorial says, Chrysler has to keep building desirable cars and, for that matter, keep the lights on.

    In the bigger scheme of things, I reckon they’ll outsource like crazy.

    Crunch time comes AFTER UAW negotiations are complete.

    We shall see.

  • avatar
    mikey

    Yeah 61 comments and the winner is “this fall should be interesting”
    And yes indeed RF we shall see

  • avatar
    mike frederick

    As I’ve said before, the union is not the sole reason for the domestics’ predicament. But the union MUST be part of the solution, and that means making some concessions, or at least thinking outside the box when this contract is negotiated.
    Great comment Jebber,its whats going to happen.Take it from me as an insider.More info to follow—& yes I will post it regardless of raised eyebrows from my constiuents…..R.F. you want some leaks????Oldsmobile isn’t gone because of the UAW. It wasn’t legacy cost, or hourly wages, or union work rules that killed Olds, it was GM management screwing up the brand, and not producing the same quality as Camry/Accord, etc.
    Damn Dynamic,I like the way you think.

    Unions in non-right to work states do not compete. Once they take over a factory they have a legally enforced MONOPOLY. No one can get a job at that factory without joining.Sorry Landcrusher thats not entirely true regarding UAW shops.You can forgo paying you’re dues if one reads into the Internationals Constition & by-laws.And of course you could simply deny any representation afforded to you in matters of a contractual dispute with management.I just wonder how quickly someone with that mindset would never ask for some insight in regards to a situation in which safety was the main concern?
    Take my word for it Landcrusher,Auto factories ( stamping,foundry,powertrain and assembly)are no walk in the park.Just ask OHSAA when comprehensive studies are done and they need input on how to solve workplace fatalities/injuries in the proactive nature.

  • avatar
    seldomawake

    Crunch time comes AFTER UAW negotiations are complete. We shall see.

    I wonder how long this suicide watch has left to go. Exactly when do you decide that a company is “dead”?

  • avatar

    For our purposes, a company is “dead” when it files for Chapter 11.

    And rest assured that we will take Chryslerberus off Suicide Watch (and Ford and GM off Death Watch) when we believe the companies are in no danger of filing.

  • avatar
    jolo

    Robert Farago wrote:
    For our purposes, a company is “dead” when it files for Chapter 11.

    Are you saying Delphi is dead and won’t come back to life once it emerges from chapter 11?

  • avatar
    mikey

    The unions are allways an easy target.One has only to take a closer look at the inner workings the big 2.5/3 to see how small a role that the unions have played.
    Unions are responsible for workers pay, benifits, and yes safety.
    The situation that the big 2.5 find themselves in is of thier own making.
    Bloated, overpaid, enept lazy senior management should be the ones taking the hit here.
    As Mike Fredrick pointed out,working in a modern auto plant is no walk in the park.I for one wouldn,t want to work without a union.Once you have seen a guys leg get crushed, or lose a hand it gives you a different view.
    GM Ford and Chrysler stated 10 -15 years ago they wanted to move towards “core”manufacturing.where the only company employee was the one bolting parts on cars.
    All other work material handling, maintenance,cleaning,tradesmen done by outside companys.Of course the incompetant layers of management won’t be touched.
    Well boys and girls with some smoke and mirrors and some creative bookwork management has almost reached that goal.All thats left to do is to convince the UAW/CAW leadership.The UAW/CAW leadership then has to convince the folks on the shop floor.Good luck with that one.
    35 years on the floor tells me, don’t give an inch,they will just want more,and more and more.
    Allready the transplant workers are looking at our wages and benifits with envy.We keep what we got and the Toyota/Honda workers will be breaking down the UAW/CAW
    doors to get a piece of the action.
    Ron G knows this Buzz H is aware. The union is looking to grow not shrink.
    To quote RF we shall see.

  • avatar
    seldomawake

    For our purposes, a company is “dead” when it files for Chapter 11.

    And rest assured that we will take Chryslerberus off Suicide Watch (and Ford and GM off Death Watch) when we believe the companies are in no danger of filing.

    That’s a good definition. However…

    I don’t doubt for a minute that Cerberus is going to rip Chrysler apart, merging it into GMAC and handing out manufacturing et al. The Chrysler name and badge will live on (perhaps). To me, that’s a death of a sort: the name lives on, but it’s little more than a badge stuck on product lines that are managed and manufactured by various companies in China, India, etc.

    The company may never actually file Chapter 11, but effectively be completely different. Is there a way to recognize this? (Is it something one would even want to recognize?)

  • avatar
    GMrefugee

    Management and union are mutually responsible for product quality, both in materials used and assembly. Both must act within the confines of the agreement. This puts a relatively high labor cost in place, which in turn limits the amount that can be spent on materials.

    To remind the “younger” readers, management “caving” into union demands seems a lot more reasonable when the company is making billions in profits and the workers demand their fair share. Trouble is, as we are discussing, now that the tables are turned and the big 3 are losing their rears, union’s response is “not our fault” and “don’t give up an inch.”

    I would like to see Cerberus hand the vehicle assembly over to the UAW at a fixed rate per finished unit. I suspect that would help clear up any work rule and job bank BS real quick.

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