Bailout Watch 364: Chrysler Is Insane

by Robert Farago

Published: January 28th, 2009

Bailout fatigue? Not me. Every day I wake up wondering what new absurdity I’ll encounter in my quest to tell the truth about cars and those who make them. And just when I think it can’t get any more ridiculous—a Chrysler Fiat tie up, “strategic reviews” of dead brands, a back room bailout for an ex-Treasury Secretary’s new boss, viability plans spun out of thin air, product plans cut from the same cloth—it does. Here’s today’s hit of alternate reality: Chrysler wants—no, demands—that its suppliers cut their prices. WTF? Remind me again. Chrysler’s suppliers are making how much profit these days? I’m thinking… none. And how many cars can Chrysler build if its suppliers—make that one key supplier—can’t deliver parts? I’m thinking… none. Not that anyone’s buying Chrysler products, but blood from a stone? Aintgonnahappen.org.

And yet, there it is [via Automotive News]: “Chrysler LLC’s purchasing chief is demanding a new round of price cuts from suppliers as the automaker faces a Feb. 17 deadline to justify its federal bailout money. Scott Garberding has ordered price cuts from all suppliers effective April 1. Those would be in addition to annual price decreases required contractually of suppliers, according to a Jan. 26 Chrysler letter obtained by Automotive News.”

So Chrysler’s going to sacrifice its suppliers to get tax money to pay its suppliers to build cars no one’s buying. Fabulous! Literally.

“In his letter, Garberding offered suppliers a carrot in the form of a 90 percent share of any cost-reduction ideas they initiate. But such efforts require a long-term process of testing and evaluation.

The supplier executive said Chrysler’s mass layoffs have stripped much of the staff needed to run that program.”

You can’t make this shit up.

Robert Farago

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2 of 42 comments

50merc on Jan 29, 2009

Chrysler's policy: the components will continue to get shoddier until overall vehicle quality improves.

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Dougfixit on Jan 29, 2009

The big 3 have been beating up on us suppliers for years. I would bring up the point time and time again that they are saving a few pennies now, but paying out big bucks later in warranty and customer dissatisfaction. The supplier I worked for does business with all the big 3 and some of the transplants, yet despite their diversification, they are deathly afraid of losing business. To which I would say "Zero money is better than negative money." Anyway I am now unemployed.

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Jkross22 When I think about products that I buy that are of the highest quality or are of great value, I have no idea if they are made as a whole or in parts by unionized employees. As a customer, that's really all I care about. When I think about services I receive from unionized and non-unionized employees, it varies from C- to F levels of service. Will unionizing make the cars better or worse?
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