Bailout Watch 225: Report From the ChryCo Cryfest

TTAC reader Steve Leiter took up our challenge and headed over to the Maryland Port Authority for Chrysler’s bailout begging party. He files this report… “Sorry, no pictures, ran out the door so fast, cell phone was selected specifically such that it does NOT have a camera in it.

The podium’s surrounded by a gray RAM pickup, olive Patriot, red Charger, white Caliber, Sand 300C, red convertible Sebring, Bbue Liberty, and silver Journey. About 90 folks, equally split between ACT employees, suits, and press corps people. 12 of the employees had neon yellow flak-jackets– must be the Stevedores. WJZ-TV, CNN-Political, etc. cameras.

AMPORT Parametrics is the largest US port for handling autos. The Big 3 export 300k/yr. from Baltimore. Chrysler accounts for 40 percent of that traffic, some 200k Chrysler vehicles in 2007. Who knew? Workers charge 7 hours per car. ACT has 400 employees, about 200 charge to Chrysler when adding RR, maritime, and Stevedore workers.

Jim Press, VP and Chairman Chryco LLC since 9/07– in charge of sales, international sales, marketing global strategy, and parts– steps up to the microphone.

Jimbo wants to learn from the (little?) people. He’s on a whistle stop tour to DC (no prizes for guessing what he wants when he gets there). Mr. Press presses his case: the U.S. economy needs value-added jobs– someone has to pay for the standard of living. Furthermore, America needs to preserve it’s manufacturing core. Around four percent of U.S. GDP is heavy industry; autos are the only heavy industry, don’t screw it up.

The U.S. auto industry– and by that he means Chrysler, Ford and GM– is under attack, from three different directions [look how two fronts worked out for Hitler]. It faces globalization (competing wage-structures due to pensions); product (quality, fuel economy) and “internal Issues.” To wit: Jimbo says ChryCo was working through their cunning plan, reducing their pesky cost-structure, when the fuel prices hit. Yes, they were waylaid by $200/bbl., followed by $4 gas. Funny, I don’t remember $200/bbl oil…

Anyway, the Industry’s contracting, from 16M/yr. to 10.2 M/yr. So Chrysler needs a 1.5 year bridge loan. But don’t blame us, we’re babies: “We’re only a one-year-old company.” So much for heritage, I guess.

More blame shifting: “This has been an interesting year,” Press admits. Pinched credit hit three ways: customers, dealers and operating costs. (Jim loves the number three.) From (his) international experience, he can see what Chrysler has to do differently to make it. More threesomes. Improve quality – which is up because warranty pay-outs are down by 29 percent. Export. And be expert in the industry.

This is your problem, guys. Beyond the port, MD has around 100 ChryCo dealers, with an average of 53 associates apiece. What’s an associate? Need to open our eyes (i.e. open Uncle Sam’s wallet) and preserve what’s been built (same). Skipping shameless politicking from politicians to JP’s Q&A…

Our plan is working, Mr. Press assures a less than skeptical audience. We are acting in a fundamentally responsible manner. We are being transparent, and accountable. We’re only one year old. (What’s up with that?) We are on this tour to ‘collect information;” we don’t want the loan to become a political logjam. We just need time (2010 – 2011) to finish resurrection and be competitive.

What would happen if Chrysler declared Bankruptcy ?

1) Very difficult to come out of; image of a quality product would be damaged; product is 2nd in magnitude only to house.

2) BRK would damage supplier base, big-3 connected outcome due to common suppliers.

JP will not attend the Thurs-Fri session downtown DC. Jim will be “scraping the hide” of local parts suppliers to try to build basis of support, in some room not open to the press. Stuart Schorr (Sr. Mgr. Communications) had ‘no comment’ on the mode of transportation for the Management Team to get to DC on Thursday+Friday session.”