Chrysler files for Chapter 11

AP sources: Chrysler to file for bankruptcy
April 30, 2009 - 10:17am



WASHINGTON (AP) - Chrysler will file for bankruptcy after talks with a small group of creditors crumbled just a day before a government deadline for the automaker to come up with a restructuring plan, two administration officials said Thursday.

The Obama administration had long hoped to stave off bankruptcy for Chrysler LLC, but it became clear that a holdout group wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt, according to the officials, who spoke on condition of anonymity because the filing plans are not public. Clearing those debts was a needed step for Chrysler restructure by the Thursday night deadline.

Bankruptcy doesn't mean the nation's third largest automaker will shut down. And the privately-held Chrysler is expected to sign a partnership agreement with the Italian company Fiat as early as Thursday as part of its restructuring plan. A Chapter 11 bankruptcy filing would allow a judge to decide how much the company's creditors would get.

President Barack Obama is expected to discuss the nation's auto sector at noon Eastern.

The Treasury Department's auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation's automakers.

Along with the Fiat deal, the United Auto Workers ratified a cost-cutting pact Wednesday night. Treasury reached a deal earlier this week with four banks that hold the majority of Chrsyler's debt in return for $2 billion in cash.

But the administration said about 40 hedge funds that hold roughly 30 percent of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and were holding out for a better deal.

"While the administration was willing to give the holdout creditors a final opportunity to do the right thing, the agreement of all other key stakeholders ensured that no hedge fund could have a veto over Chrysler's future success," said one of the administration officials.

A third person briefed on Wednesday night's events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.

When it files for bankruptcy, Chrysler would continue operating and Fiat would still sign on as a partner on Thursday, the people said. The government already has promised to back Chrysler's warranties in an effort to allay customers' fears that the automaker wouldn't be around to honor them.

President Barack Obama's auto task force in March rejected Chrysler's restructuring plan and gave it 30 days to make another effort, including a tie-up with Fiat. The company has borrowed $4 billion from the federal government and needs billions more to keep operating. President Obama said Wednesday night while the lender talks were still ongoing that he was "very hopeful" that deals can be worked out to keep Chrysler LLC a viable automaker, and more hopeful than he was a month ago that the company will stay in business.

The UAW agreement, which would take effect May 4, meets Treasury requirements for continued loans to Chrysler Corp., and includes commitments from Fiat to manufacture a new small car in one of Chrysler's U.S. facilities and to share key technology with Chrysler.

Meanwhile, the Fiat partnership means Chrysler CEO Robert Nardelli could be out of a job. In an April e-mail to employees, he said that if the deal is completed, Chrysler would be run by a new board appointed by the government and Fiat. The new board, Nardelli wrote, would pick a CEO "with Fiat's concurrence."

Sergio Marchionne, CEO of the Italian automaker, told reporters earlier this month that he could run Chrysler. Obama said Wednesday that Fiat's management "has actually done a good job transforming their industry."

And so it begins.

These times they are a-changin'.

I'm wondering if this won't actually help GM. Chrysler debt holders that held out for a better deal forced this. Now if they actually get less value back than what Chrysler had offered them, wouldn't the GM hold outs think twice before turning down a deal that would keep GM out of bankruptcy?

Didn't ford say all along if any of the big 3 went in to bankruptcy it would force the other 2 to also just to stay competitive?

I'm wondering if this won't actually help GM. Chrysler debt holders that held out for a better deal forced this. Now if they actually get less value back than what Chrysler had offered them, wouldn't the GM hold outs think twice before turning down a deal that would keep GM out of bankruptcy?

Time will tell. I think they stand a better deal if they go to court.

If I were a bondholder and my bond was floated to cover VEBA payments, I'd be looking to the courts to review the nature of compromises supposedly made by all parties. I might think I was getting the short end of the stick @ 29 cents on the dollar to settle and the UAW and FIAT walk with the ownership of stock that might rise in value.

I just don't know the particulars are. As a taxpayer I'd prefer to know who gets what and if "haircuts" are being spread equitably.



Maybe the bond holders felt it was a bad backroom deal for them?

Our president wants transparency. Make it transparent in the courts.

I'm a bit nervous that the political powers that be owe the Unions. The government is brokering the deal with MY money.

A loss as a bond holder is one thing. It's how things can happen. I don't want to see investors unwilling to purchase bonds because they fear the government will screw them.

Once again, as a taxpayer who's invested? Let the courts determine who's got to take the fall.

The fact that it appears the UAW and FIAT liked the deal concerns me. That deosn't mean it was not a good deal, it just means I'm suspicious.

Whatever works out for GM to have the best chance of success will, hopefully, be a result.

I'm wondering if this won't actually help GM. Chrysler debt holders that held out for a better deal forced this. Now if they actually get less value back than what Chrysler had offered them, wouldn't the GM hold outs think twice before turning down a deal that would keep GM out of bankruptcy?

The article said some creditors expected more in bankruptcy than what they were being offered. But of course each situation will be different.

It might help GM if buyers really start staying away from Chrysler now. Both Ford and GM could pick up some truck and SUV sales. I guess minivan shoppers will have to defect to the imports though.

Didn't ford say all along if any of the big 3 went in to bankruptcy it would force the other 2 to also just to stay competitive?

Perhaps things have changed since they said that. Union agreements have reduced labour costs quite a bit, and Ford renegotiated a lot of its debt down to a fraction of what it was last year. They might be in a good enough competitive position to weather things out now.

The one thing that could force bankruptcy on GM and Ford now is if the courts don't give enough to Chrysler's suppliers to keep them afloat. Once suppliers start failing from taking a loss on their Chrysler contracts, they may not be able to keep their factories going to supply GM and Ford (and the import too, for that matter). I wouldn't be surprised to see some additional focus by the government on supplier health.

Didn't ford say all along if any of the big 3 went in to bankruptcy it would force the other 2 to also just to stay competitive?I think when they said that they fully expected GM to file first, not Chrysler. Perhaps it'll be less of an impact on Ford since it wasn't GM.

I've spent the last half hour getting input on Chrysler's bankruptcy.

Seems that the bankruptcy is going to be used to flatten the small group of holdouts (3 investment hedge funds.... not a very popular group after those guys got massive federal bailouts themselves) that apparently demanded up to twice what everyone else was getting.

From what I've seen and heard it seems that they have phenominal backup and organization in this bankruptcy. Financing of the company's verious components and operations seem to be well financed, and there is no disruption in production.

No doubt whatsoever Chrysler will emerge from this. Everything that would normally be sorted out in BK court is already sorted out.

Short of an extremely unlikely court decision, Chrysler's going to actually pull this off.

Yet again, Chrysler proves it's historic scrappy ability to avoid certain death.

Chrysler seems like the Rocky Balboa of the car industry. :lol:

No doubt whatsoever Chrysler will emerge from this. Everything that would normally be sorted out in BK court is already sorted out.

Short of an extremely unlikely court decision, Chrysler's going to actually pull this off.

Yet again, Chrysler proves it's historic scrappy ability to avoid certain death.

Chrysler seems like the Rocky Balboa of the car industry. :lol:

A prediction or a guess of the future is fine, but already checking this off as a win for a resiliant Chrysler is premature. They haven't even officially filed yet....

The thing that really surprised me about the whole announcement was the fact that they're marking Chrysler Financial as "Not Viable" and GMAC will now finance Chrysler vehicles.

At first blush this smacks of a taxpayer funded takeover of Chrysler by FIAT.

I'm gratified some folks will keep thier jobs.

I'm disappointed an American company will end up not being an American company.

I don't see any preservation of American manufacturing in this.

We'll see how fair the bankruptcy proceedings go.

If it isn't fair and within existing laws, the bond market will dry up.

If the government wants a showdown with investors, they will get it.

If that happens the taxpayers have only seen the tip of the loan and bailout iceberg that will rear up.

I'm disappointed an American company will end up not being an American company.

Heh, they already went down that road before with the unholy Daimler merger.

At first blush this smacks of a taxpayer funded takeover of Chrysler by FIAT.

I'm gratified some folks will keep thier jobs.

I'm disappointed an American company will end up not being an American company.



If I recall correctly, Fiat will only get a 20% stake in Chrysler. It's not a take-over, but a partnership. Chrysler will still be an American car company, but a part of it will be foreign owned as a mutually beneficial exchange.

Heh, they already went down that road before with the unholy Daimler merger.

And I'd rather not see it again. Not on my dime.

Nardelli cooperates and he's out. Interesting.

I think Cerberus will tend to his wounds.:lol:

And I'd rather not see it again. Not on my dime.

Nardelli cooperates and he's out. Interesting.

I think Cerberus will tend to his wounds.:lol:

Nardelli isn't even on Chrysler's payroll...he's on Cerberus'. Interesting tidbit, eh? :) Jim Press is the #1 Chrysler guy ON PAYROLL...and I sure hope he stays. He's been great since coming over from Toyota.

If I recall correctly, Fiat will only get a 20% stake in Chrysler. It's not a take-over, but a partnership. Chrysler will still be an American car company, but a part of it will be foreign owned as a mutually beneficial exchange.

What I heard in Obama's response was that FIAT could not take a majority stake until all taxpayer funding was repaid.

Seems that FIAT having the majority stake is in the cards with government blessing...otherwise why mention it?:(

The bankruptcy is undoubtedly the decision of the government.

Otherwise why the offer as part of the filing, the U.S. government will provide up
to $3.5 billion in debtor-in-possession (DIP) financing and up to $4.5 billion in exit financing?

Should be an interesting summer...

interesting for sure.

It does seem like Chrysler is gonna pull this off. Almost a miracle.

I'm wondering if this won't actually help GM. Chrysler debt holders that held out for a better deal forced this. Now if they actually get less value back than what Chrysler had offered them, wouldn't the GM hold outs think twice before turning down a deal that would keep GM out of bankruptcy?

Werd!

A stroke of genius on the part of those that are orchestrating all this. Do the rehearsal with Chrysler in preparation for the show with GM.

Now where's the "popcorn" smilie?

I hope Chrysler comes out of this quickly and well. I DO like how Chrysler Financial (aka Cerberus) is no longer the go-to finance company.

F. Cerberus.

Nardelli isn't even on Chrysler's payroll...he's on Cerberus'. Interesting tidbit, eh? :) Jim Press is the #1 Chrysler guy ON PAYROLL...and I sure hope he stays. He's been great since coming over from Toyota.

Then it's even stranger that he has to step down, isn't it?:yes:

Werd!

A stroke of genius on the part of those that are orchestrating all this. Do the rehearsal with Chrysler in preparation for the show with GM.

Now where's the "popcorn" smilie?


I don't know that I'd call it genius.

If the government wants the bond market to evaporate, such a move will certainly do it.

If the BK is a "kangaroo court" deal the "game" will certainly be on.

You have to be cautious not to win a battle in a fashion that loses the war.

I'm betting the Chinese are not Chrysler bond holders...:lol:

I don't think we would tell them to eat a 71% loss. Of course, I'm just guessing.

I hope Chrysler comes out of this quickly and well. I DO like how Chrysler Financial (aka Cerberus) is no longer the go-to finance company.

F. Cerberus.


I hope america and americans come out of this well.

GMAC is the go to finance company according to Obama, and I think he mentioned more taxpayer dough would be loaned to GMAC to facilitate.

What's Cerberus' stake in GMAC? You might want to check.

Maybe there's a punishment and maybe it's a percentage of a punishment.

If I were to make a wild guess, Cerberus is one of the holdout bond holders. We will see.

I dug around and located this tidbit about the deal struck with the UAW and FIAT and the government:

"The UAW said its ratified agreement meets the U.S. Treasury requirements for continued government loans. Fiat also signed off on the agreement, which would give the UAW a 55 percent stake in the automaker and Fiat an eventual 35 percent stake."

I suppose it's not too hard to see that the offer to bondholders of nothing but cash at 29 cents on the dollar might get some resistance.

As far as I can tell, the UAW pensions and healthcare remain virtually intact.

I don't know what present stockholders receive.

It's amazing to me. This certainly qualifies as "change" in my opinion. It clears away any management and rank and file issues.

I hope the UAW runs it well. I can't tell where exactly the taxpayer, Cerberus, nor Daimler, nor present stockholders stand in the deal.

I think taxpayers foot the bill... and if it all goes bad they pay the pensions.

Let's hope it's run well.

I've spent the last half hour getting input on Chrysler's bankruptcy.

Seems that the bankruptcy is going to be used to flatten the small group of holdouts (3 investment hedge funds.... not a very popular group after those guys got massive federal bailouts themselves) that apparently demanded up to twice what everyone else was getting.



Hedge fund or not...they had secured loans,,meaning they were first in line to collect in a BK. This sets a dangerous precedent, and may make normal financing almost impossible for the big 3 for a long time. Also IMO, it makes no sense to bail out banks because they are writing down bad investments..and then tell them they have to take pennies on the dollar writing down Chrysler when they would have gotten first dibbs on everything in BK.

Its not about making sense. Its about appearances, votes, and control.

Its not about making sense. Its about appearances, votes, and control.


Agreed, now we 30 days til the big one. I just hope Ford can stay out of this mess.

Hedge fund or not...they had secured loans,,meaning they were first in line to collect in a BK. This sets a dangerous precedent, and may make normal financing almost impossible for the big 3 for a long time. Also IMO, it makes no sense to bail out banks because they are writing down bad investments..and then tell them they have to take pennies on the dollar writing down Chrysler when they would have gotten first dibbs on everything in BK.

It is a massive puzzlement.:(

The risk of running private speculative investment off is a huge gamble.

Of course, if that's the plan, it's a good way to do it.

I just miss the wisdom.

We certainly live in interesting times.:eek:

If the government wants the bond market to evaporate, such a move will certainly do it.

Haven't these bonds been well into junk territory for quite some time? I would bet a lot of them were initially offered as junk as well, so I don't think it will necessarily taint the entire bond market. People shouldn't be too terribly surprised when they lose money on low quality bonds.

Interesting that the bond ratings services have been downgrading the automakers for most of this decade, despite howls of protest from the CEOs. Well, look who was right in the end ...

Haven't these bonds been well into junk territory for quite some time? I would bet a lot of them were initially offered as junk as well, so I don't think it will necessarily taint the entire bond market. People shouldn't be too terribly surprised when they lose money on low quality bonds.

Interesting that the bond ratings services have been downgrading the automakers for most of this decade, despite howls of protest from the CEOs. Well, look who was right in the end ...

The bankruptcy laws offer redress for bond holders. Rating of bonds is one thing, value is determined in the final analysis in BK court. Bond holders were considered first in line to recoup. At least it used to be that way.

Bonds are essentially loans. Risk? Yes. Different kind of risk from stocks. That tends to make them attractive to large investors or investment houses.

This link may help:

http://www.sec.gov/investor/pubs/bankrupt.htm

Bankruptcy doesn't mean the nation's third largest automaker will shut down.

I hope that this little tidbit doesn't escape the masses. That the public realizes this is crucial to Chrysler's survival post-bankruptcy.



Its not about making sense. Its about appearances, votes, and control.

:Jake puts on Moderator hat:

Everyone, let's please stay away from the political side of the issue.

I hope Chrysler comes out of this quickly and well. I DO like how Chrysler Financial (aka Cerberus) is no longer the go-to finance company.

F. Cerberus.

Don't forget...Ceberus owns 51% of GMAC ;)

It is a massive puzzlement.:(

The risk of running private speculative investment off is a huge gamble.

Of course, if that's the plan, it's a good way to do it.

I just miss the wisdom.

We certainly live in interesting times.:eek:

The thing is..it was not a speculative investment. Chrysler had plenty of assets to back the loans in the case of a bankruptcy.

...I don't know what present stockholders receive.

I hardly ever can find a reason to disagree with you on things... and agree with a lot of what you've posted herein. But as for shareholders... I don't see why they should receive anything more than zero. Buyers of stock know what they're getting into. They could have sold their stock last week and got its full current worth. If they wanted more than zero, they should have sold.

I hope the UAW runs it well. I can't tell where exactly the taxpayer, Cerberus, nor Daimler, nor present stockholders stand in the deal.

I think taxpayers foot the bill... and if it all goes bad they pay the pensions.

Let's hope it's run well.
I hope it's run well too... and believe it's a reasonably good investment of our tax dollars so far. I also believe that taxpayers would have had to pay a lot more if Chrysler had just been allowed to be liquidated... and the US Govt (+taxpayers) would without a doubt be paying the pensions then too.

The whole arrangement is risky. The coming smackdown of dissenting bondholders will no doubt reek of class warfare. The US gov't and the UAW will have a lot more say in company direction than a lot are comfy with. It's going to put the last truly independent US carmaker (Ford) in the weird position of doing labor negotiations with competitors. But it's likely saved a lot of jobs and a carmaker with a rich and compelling American heritage. Overall it's about the best outcome one can get in the current circumstances.

Keep in mind the shareholders consist of Cerberus & Daimler. :lol:

They get nothing because they took a $38 billion company and made it worthless. (Moreso Daimler than Cerberus.)

I hardly ever can find a reason to disagree with you on things... and agree with a lot of what you've posted herein. But as for shareholders... I don't see why they should receive anything more than zero. Buyers of stock know what they're getting into. They could have sold their stock last week and got its full current worth. If they wanted more than zero, they should have sold.

We don't disagree that if a company goes under the stockholder should lose. I'm good with that.

What I am suggesting is that Chrysler was not "under" until the bankruptcy. I don't mean to put too fine a point on it. From the descriptions of the government worked out deal, nothing is said about what Cerberus <their investors> gets. Were I to guess it is likely a new Chrysler will be formed and and old Chrysler will be left with the bad debt.

It just little tidbits I think we as taxpayers should know. It's OUR money financing the deal.

Once again, stockholders losing everything is a part of how the games works, but that's settled by chapter 11 or chapter 7. Neither of which were going to happen in the Chrysler instance until it was forced by the bondholders.

I don't see why they should receive anything more than zero. Buyers of stock know what they're getting into. They could have sold their stock last week and got its full current worth. If they wanted more than zero, they should have sold.

I think the point is that Chrysler is NOT going under. If a company "goes under", then everyone loses. That's simple and perfectly understandable. But Chrysler will survive and yet the modest owners-at-large (average Joe stockholders) suddenly lose everything in their investment? Doesn't seem quite right. And these same people are helping to fund this to boot, via taxes.

I think the point is that Chrysler is NOT going under. If a company "goes under", then everyone loses. That's simple and perfectly understandable. But Chrysler will survive and yet the modest owners-at-large (average Joe stockholders) suddenly lose everything in their investment? Doesn't seem quite right. And these same people are helping to fund this to boot, via taxes.


The absurd part is that many want to turn this into a politically charged, class warfare issue, since that makes great sound bites.

You certainly wouldn't want to say that these stocks and bonds are actually from Mom and Pop American, funding their IRA, 401K, or their kid's college fund. Nope, it's alot more politically expediant to just say, "if you show dissent to the plan, I label you a greedy, faceless, unpatriotic, speculator."

You guys are way more educated than I am on this and matters like these, but in laymans terms, what does this mean for the suppliers? do we have any idea how many jobs will in effect be lost? Im sure that yes, the company is being staged to not "go the way of the dodo" but at the same time, im sure that jobs will be lost, at the manufacturer level, as well as at the supplier level? what can we expect to see in attrition? speculation of course from us as i dont think we're the ones making the decisions, but what does this mean? and also what does it mean for GM? does it mean that GM's path to Bankruptcy is a given now?

"WASHINGTON – The U.S. government will likely lose much of the $4-billion loan it gave Chrysler LLC at the end of last year as part of its bankruptcy case, officials said today.



The Bush administration was unable to secure its loans to any assets, and will recover only as much as any other unsecured debtors. It also may lose part of the $1.5 billion lent to Chrysler Financial backed by auto loans.


The Obama administration also said new Chrysler will be funded through a total of $10.5 billion in loans, with $8.08 billion from the United States and $2.42 billion from the Canadian government.


"We appreciate the close and cooperative relationship between the U.S. and Canadian governments during this period of restructuring in the auto industry,” President Barack Obama said in a statement. “Together, we have put in place a financing package that will give Chrysler a chance to achieve financial viability.”


The Obama administration says fixing Chrysler’s debts is the main objective of the bankruptcy filed today. It will use money from the $700-billion financial industry bailout to fund up to $3.3 billion in bankruptcy court financing and $4.7 billion in loans for Chrysler to exit and launch its partnership with Fiat.


The $2 billion that’s been offered to secured creditors in return for canceling $6.9 billion in debt will come from a mix of U.S. and Canadian money, officials said."

You guys are way more educated than I am on this and matters like these, but in laymans terms, what does this mean for the suppliers? do we have any idea how many jobs will in effect be lost? Im sure that yes, the company is being staged to not "go the way of the dodo" but at the same time, im sure that jobs will be lost, at the manufacturer level, as well as at the supplier level? what can we expect to see in attrition? speculation of course from us as i dont think we're the ones making the decisions, but what does this mean? and also what does it mean for GM? does it mean that GM's path to Bankruptcy is a given now?

I wish I could answer your question.

I do recall that some leglislation to assist suppliers was approved some time back, but if it was only Tier 1 level suppliers is not something I'm aware of. There are many levels of suppliers in the chain, I doubt the leglislation covered them all.

American axle cut lots of jobs just days ago, and they are moving production to Mexico from what I understand.:(

I think the point is that Chrysler is NOT going under. If a company "goes under", then everyone loses. That's simple and perfectly understandable. But Chrysler will survive and yet the modest owners-at-large (average Joe stockholders) suddenly lose everything in their investment? Doesn't seem quite right. And these same people are helping to fund this to boot, via taxes.

Exactly. Thanks for the succinct statement of the point.

I wish I could answer your question.

I do recall that some leglislation to assist suppliers was approved some time back, but if it was only Tier 1 level suppliers is not something I'm aware of. There are many levels of suppliers in the chain, I doubt the leglislation covered them all.

American axle cut lots of jobs just days ago, and they are moving production to Mexico from what I understand.:(


Thats ok. I realize much of what I asked is still up in the air but as a family that bleeds GM blood, Im very very concerned. I'm already saddened that the G8 is going to go :(

I dont see how having our suppliers cut jobs in the states only to move them to mexico is helping the economy or anything else. Overall i think we're on an economic downward spiral. It may just be a matter of time in my opinion before the dollar is worthless.

Im just really worried about all those good americans that have jobs in the supplier industry that will possibly be in jeopardy of loosing their only form of income. I myself dont work in the industry but I know that it will effect everyone.

Thats ok. I realize much of what I asked is still up in the air but as a family that bleeds GM blood, Im very very concerned. I'm already saddened that the G8 is going to go :(

I dont see how having our suppliers cut jobs in the states only to move them to mexico is helping the economy or anything else. Overall i think we're on an economic downward spiral. It may just be a matter of time in my opinion before the dollar is worthless.

Im just really worried about all those good americans that have jobs in the supplier industry that will possibly be in jeopardy of loosing their only form of income. I myself dont work in the industry but I know that it will effect everyone.

I appreciate your sentiments. I don't work for a supplier either, but like you, I worry for them because they are Americans and trying to do the best for themselves and their families.

I hope against hope that the economy NOT will tank. There's only so much paper money one can and should print.

I can tell you that I have had different careers in my lifetime. It can be troubling to take another path. I have done it in the past. I know the anxieties all too well.

The only guarantee is that that are no guarantees.

Looking at things with as much logic, wisdom, and honesty does help. Logic and wisdom are acquired and must be tuned regularly. Honesty is a have it or don't have it thing.

.I hope against hope that the economy will tank. There's only so much paper money one can and should print.

That actually might be fun in an enterprising way for somebody not burdened with the whole "rule of law" thing. :think:

--->edit<---
I think there might be a better way to go about it (would hate to see my retirement disappear under your hope against hope)

Some of my answers are coming in slowly but here is almost 5000 jobs... gone.

http://money.cnn.com/2009/05/01/news/companies/chrysler_plants/index.htm?postversion=2009050112

The plants on the chopping block are the Sterling Heights, Mich., assembly plant that makes the Chrysler Sebring and Dodge Avenger; the St. Louis North assembly plant that builds the Dodge Ram pickup; the Twinsburg, Ohio stamping plant and an engine plant in Kenosha, Wisc.

Now as a disclaimer the article says they didnt "announce" job cuts, as they *could* transfer jobs to fiat manufacturing once they are ready to produce them. SO idk.. i dont think its likely to work that well or fast.

That actually might be fun in an enterprising way for somebody not burdened with the whole "rule of law" thing. :think:

--->edit<---
I think there might be a better way to go about it (would hate to see my retirement disappear under your hope against hope)


Pardon the typo. I hope the economy will NOT tank.:eek:

The Sterling Heights plant is literally a mile or so from my house....as if Michigan wasn't getting it bad enough already.... :(

they *could* transfer jobs to fiat manufacturing once they are ready to produce them. SO idk.. i dont think its likely to work that well or fast.

I'm going to make a guess that someone has asked that question already. I think the Fed might be even more encouraging of the partnership if it means getting Fiat to produce cars here in chrysler's plants without shutting them down or idling them too long. Sounds like a good idea to me, if it is at all possible.

Save some American jobs, get some possibly cool little efficient "green" cars for sale in the US? Sounds like a good idea worth a little investigating.

I think HuJass works at the Ram plant in St. Louis...:(

I'm going to make a guess that someone has asked that question already. I think the Fed might be even more encouraging of the partnership if it means getting Fiat to produce cars here in chrysler's plants without shutting them down or idling them too long. Sounds like a good idea to me, if it is at all possible.

Save some American jobs, get some possibly cool little efficient "green" cars for sale in the US? Sounds like a good idea worth a little investigating.

I sure hope it works out, as well.

FIAT has horrible resale value in Europe, at least the last time I looked it did.

They need to step the quality up a notch or two. Chrysler and FIAT.

I would assume FIAT has ditched the idea of Mexico as a point of assembly. At least, one would hope that's been handled. I can't see a UAW owned company going for a NAFTA region North American build.

They need to get gas prices a lot higher as well to hit 100k plus, unless young folks get all excited about the 500 as a cultural statement.

A few notes:

Fiat can increase it's 20% share to 35% by building a small car capable fo 40mpg, in the United States. They must also build an engine line in the United States as well.

Fiat will certainly create jobs in the U.S. Take that back. There won't be any job creation, it will be job preservation.

The Sterling Plant, Conner plant and others listed are CLOSING. There will be no future investment by Fiat in to these plants.

The closing of the Conner plant all but guarantees the Dodge Viper is done in 2010. It's 99% likely the Viper is gone. The last 1% is if somebody buys it, which is just 1%.

Chrysler approached EVERY major automaker since 2008 in an attempt to secure partnerships. GM, Ford, Honda, Toyota and the Chinese. All said "thanks but no thanks." Fiat was literally the only automaker that wanted anything to do with Chrysler - and they are getting paid $10 Billion to take them. Fiats not paying a cent for Chrysler.

And one other thing thats very interesting. Chryslers Canadian and Mexico operations are not bankrupt. Just Chrysler U.S.

Fiat can increase it's 20% share to 35% by building a small car capable fo 40mpg, in the United States.

If true, THIS is the kind of ideology-driven stuff that chaps me. All Fiat needs to do is build a compact car here and they're handed more of Chrysler? Why on earth should building a specific type of product have anything to do with the amount of stake in the company they can accrue? :irk:

Maybe Charlie is right, maybe we better get the pitchforks ready.

I wonder if part of GM's multibillion dollar diesel engine gift to Fiat will find its way into a Chrysler...

If true, THIS is the kind of ideology-driven stuff that chaps me. All Fiat needs to do is build a compact car here and they're handed more of Chrysler? Why on earth should building a specific type of product have anything to do with the amount of stake in the company they can accrue? :irk:

Maybe Charlie is right, maybe we better get the pitchforks ready.

It took me a little bit to dig through the stuff yesterday but I found it and wrote about it on my blog.

Fiat Can Increase Chrysler Ownership By Creating U.S. Jobs
Fiat will start with an initial equity stake of 20% in the new Chrysler company while the VEBA will account for 55%. Fiat can increase its ownership stake by creating jobs in the United States. The press release says:

Fiat will have the right to increase its ownership stake an additional 15 percent in three increments as it meets the following criteria: 5 percent for bringing a 40 mpg vehicle platform to Chrysler to be produced in the U.S.; 5 percent for providing a fuel-efficient engine family to be produced in the U.S. for use in Chrysler vehicles; and 5 percent for providing Chrysler access to its vast global distribution network to facilitate the export of Chrysler vehicles.

That sure gives Fiat incentive to help Chrysler succeed.

Pardon the typo. I hope the economy will NOT tank.:eek:

:lol: :D I was like fastdog is hardcore!

So...if gas stays low, Chrysler is stuck building 40mpg Euro chitboxes no one will want. Because everyone knows it's the Yaris that pays the bills at Toyota:think:

The problem is Chrysler because so reliant on Mercedes for engineering it no longer can efficiantly design it's own platforms. Problem is, I really do not think Fiat builds anything most American consumers want. It's a shame to see an American company given away basically.

I am almost starting to wonder if the GM/Chrysler merger discussed back in the day would have been better. I mean now so many jobs have been lost, and so much money spent..the plan discussed then would have been on par or cheaper.

:lol: :D I was like fastdog is hardcore!

I am hardcore:lol:, just not when it comes to seeing folks lose their chance to find work.:no:

I am almost starting to wonder if the GM/Chrysler merger discussed back in the day would have been better. I mean now so many jobs have been lost, and so much money spent..the plan discussed then would have been on par or cheaper.
The only job that merger would have preserved was Rick Wagoner's. :lol:

GM can't even manage to put together an acceptable business plan on it's own. How do you think they could pull it off while also absorbing Chrysler?

Another in the series of "the government should give GM a blank check" posts from formula79. I'm noticing a pattern here :p

The only job that merger would have preserved was Rick Wagoner's. :lol:

GM can't even manage to put together an acceptable business plan on it's own. How do you think they could pull it off while also absorbing Chrysler?

Another in the series of "the government should give GM a blank check" posts from formula79. I'm noticing a pattern here :p

I am not saying a "Blank Check"...though companies like AIG basically have gotten one for things way more fraudulent than GM ever came near.

I am saying that GM and Chrysler had very deep structural issues that would have had to be addressed at some point. GM's biggest structural issue is/was retiree benifits which is much like the issue we have with social security. Our government has allowed the US automarket to be wide open to foriegn competiton over the last 40-50 years, and as a result (no problem with that), our automakers have lost market share...simply because the pie is split in more peices. Now you have one worker for every 4 retirees...and simply no company can support that. The costs added by the retiree benefits (plus giving a little too much to the union) is what has caused GM to skimp on things, and allow their product to fall from the forfront of the market. As they lost market share, they laid off or bought out workers, which makes the retiree mess that much worse. I don't care who you have running or managing the company...anyone with the kind of competive cost disadvantage will be in a slow death spiral.

If GM cannot support it's retiree's..it is the government that pays the bill...and it would be a bit more than the bail out has cost.

Make no mistake about it..if you were to saddle Toyata with the same legacy costs GM has accumulated the last 20 years by being a good citizen and taking care of it's employees it would be facing bankruptcy too.

And I am not even touching on the nonsense regulations that the government has forced on automakers to compound the issue. CAFE is a joke. Hell...obesity is an issue, so why not limit the amount of double quarter pounders with cheese McDonalds can sell.

formula79 -- I think you're basically correct, but a major contributing factor was GM's "We're Number One" business model dependent on moving as much barely-profitable metal as possible. They went into a "death spiral", as you put it, because they were constantly two steps behind restructuring to a small enough core that they could operate profitably.

Buying Chrysler (with taxpayer money) was GM's last-ditch attempt to corner the fleet sales market, and would have done nothing to resolve the core issues on either the cost or the demand side.

Putting it another way, if the government just erased GM's legacy costs, Pontiac would probably still be shut down because GM wouldn't feel the need to flood the market with entry-level cars. There's some problems even a blank check can't solve.

I would much rather see a smaller, focused and profitable American auto industry than what we've put up with for the last 10 years. And it looks like that's what the government is going to produce. Understandably, if you were a happy customer, you might think differently.

The thing is, fixing the domestic automakers and creating an industry that can survive another 100 years is a process that will take time. It may be a decade or more before people even stop thinking of GM and Chrysler as bankrupt, much less consider buying a car from them.

And that is the thing...our politicians do things with nothing in mind but political gain, and making it through the next election. They don't care if GM makes products that customers want. They don't care that by forcing GM and Chrysler into bankruptcy they are just reinforcing most American's already negative views of American cars. They have no issue spending to bail out and American compnay, and then giving it away for free to a foriegn company, as long as it saves a few union jobs to make unprofitable small cars in the US. In the end, all they want to do is be able to talk in a debate about how they saved union jobs, and made it so there are more green cars no one want.

You don't see a major bank getting forced in to surgical bankruptcy to rid itself of bad investments. They get the gaurentees they need, a little tough talk and that is that. Wanna know why the banks and financial industry get such a smoother ride? Because they are the people with money who grease the political machine.

formula79 -- I think you're basically correct, but a major contributing factor was GM's "We're Number One" business model dependent on moving as much barely-profitable metal as possible. They went into a "death spiral", as you put it, because they were constantly two steps behind restructuring to a small enough core that they could operate profitably.

Buying Chrysler (with taxpayer money) was GM's last-ditch attempt to corner the fleet sales market, and would have done nothing to resolve the core issues on either the cost or the demand side.

Putting it another way, if the government just erased GM's legacy costs, Pontiac would probably still be shut down because GM wouldn't feel the need to flood the market with entry-level cars. There's some problems even a blank check can't solve.

I would much rather see a smaller, focused and profitable American auto industry than what we've put up with for the last 10 years. And it looks like that's what the government is going to produce. Understandably, if you were a happy customer, you might think differently.

formula79 -- GM's problems (at least) are a far deeper than something that can simply be papered over. The public thinks of them as bankrupt because they are bankrupt. Blotto. They're on the dole, and everyone knows it.

And I agree it will take a long time to rebuild their relationship with the customer and regain people's trust. The way to do it is have the appropriate resources that every product is a winner. People need to trust that the domestics can produce a good car all of the time, not just now and again.

One positive thought is that GM should come out of bankruptcy with a solid product lineup from top-to-bottom. I don't think that's ever been true for my entire lifetime. And it wouldn't be true if they were still trying to support Pontiac and Saturn.

Also I've seen no indication that the government is going to stop them from making cars that customers want. (Unless you think customers want Pontiac Grand Ams, in which case you'd be wrong.) The Volt is something GM itself thinks is hugely important. If anything, the politicians are trying to take credit for GM's innovation.

As for the financial industry, I'm not exactly happy about it either. But the government has forced numerous mergers and consolidations, and AIG is being more-or-less dismantled. In the banking sector, the government has much more power to order companies around, and they don't need to use the bankruptcy courts.