Bailout Watch 468: PTFOA Gives Chrysler 30 Days to Marry Fiat
The Presidential Task Force on Automobiles (PTFOA) has given Chrysler 30 days to tie-up with Fiat or it will recall federal loans and throw the company into bankruptcy. If they DO do the deal, they get a $6 billion “loan.” I’m no corporate negotiator, but the move seems to give all the power to Fiat, an automaker with its own share of troubles. Well, not ALL the power, according to The Detroit News:
“Chrysler’s deal with Fiat has been restructured, a government official said, to reduce its initial ownership stake down from 35 percent. Fiat wouldn’t be able to obtain a majority of Chrysler until the new $6 billion in government loans were repaid, the official said. The fact sheet also notes that there are guarantees of U.S.employment in the plan. “After extensive consultation with the administration, (Fiat) has committed to building new fuel efficient cars and engines in U.S. factories,” the fact sheet said.
I think this seems to be a pretty good deal for Fiat. As for Chrysler, well, at least some of the workers might be able to keep their jobs if this thing works out, that's about the best one could hope with Chrysler being what it is. Looking at product lineup it complements itself well, Chrysler will be the truck division and Fiat the car master. Once the oil and gas go back up again, as they surely will, small cars like Fiat builds would have a lot better staying power in NA.
Fiat knows as well as we do that there will me lots of government sugar available in the name of "saving jobs." I have a question... If Chrysler ends up going C11 after the merger, what does Fiat get for its 35%? I mean, are they just somehow trying to get themselves in a better position for the inevitable?
The North American market is the big prize. Right now, there are only a few companies that play in the market. Fiat wants to be one of them, and the simpliest way to do so it to latch on to somebody already here, IE, Chrysler. Now, the question is, do they want it bad enough to subsidize Chrysler forever? Kudos to Obama for pressing this question.