THE FALL OF CHRYSLER
from the DETROIT FREE PRESS:
Life on the sinking USS Chrysler
BY SARAH A. WEBSTER
FREE PRESS AUTOMOTIVE EDITOR
Is it ever too late for a rescue?
As we all watch Chrysler LLC sinking right before our eyes — with nearly 60,000 passengers on board — I fear the answer might be, “yes.”
Around town, there’s plenty of chatter that the 2009 Detroit auto show, starting Sunday, will probably even be the automaker’s last.
A foregone conclusion has been hanging in the air that Detroit’s No. 3 automaker is destined for some sort of destruction. That it will be merged with some other company, sold off in pieces to foreign automakers — maybe the Chinese this time — or decimated in a bankruptcy.
Over the holiday, Himanshu Patel, a veteran analyst with JP Morgan, speculated that “some sort of orderly down-stepping of Chrysler may be in the works.”
Michael Robinet, vice president of global vehicle forecasting for CSM Worldwide Inc., said he couldn’t see Chrysler as “a viable entity” long-term. “I don’t think anybody thinks that,” he said.
In its most recent autos report, Consumer Reports couldn’t even find a single Chrysler, Dodge or Jeep vehicle to recommend in Chrysler’s lineup of nearly 30 products. “Many of Chrysler’s vehicles rank at the bottom,” CR said. “Chrysler falls short.”
Heck, even Cerberus Capital Management, which owns a majority stake in Chrysler, has offered to give its investment in the company to unions, debtholders and other stakeholders in exchange for concessions. According to some bean counters, Chrysler is essentially worthless anyway.
But none of that compares to what workers and former workers at Chrysler’s headquarters in Auburn Hills have told me about the eerie feelings of uncertainty that fill the sprawling complex. All the empty desks. A natural consequence, I guess, of losing one-fourth of your workers to buyouts, early retirements and doubts about the future.
Even the recent $4-billion loan from the federal government — which Chrysler workers lobbied for in a heartfelt video — hasn’t really quashed the pervading sense of doom.
• VIDEO: http://www.youtube.com/watch?v=UuwLZXmZOI8” target=”_blank”>See the workers’ plea
Chrysler had asked Congress for $7 billion, after all, and anyone familiar with the cash-intensive auto industry knows that $4 billion would probably only pay the bills for a month.
It’s not nearly enough to save the company in this stubborn economic downturn.
Meanwhile, tens of thousands of workers are still on the ship with their life jackets on, fighting for survival every day — by simply going to work and trying to do their job as the water rushes on board and the onlookers bet against them.
One Chrysler worker, who still goes about this business, told me there is still some hope left.
“I see people who are passionate about bringing the company back,” he said, pointing out all the erroneous predictions this industry has seen over the years.
C’mon, he countered: Weren’t GM, Ford and Chrysler all supposed to file for bankruptcy by now? Wasn’t Rick Wagoner supposed to lose his job as GM’s CEO? Wasn’t Nissan supposed to merge with GM? Wasn’t Chrysler supposed to merge with GM just last year?
Despite the litany of false predictions, though, even he wasn’t completely sure Chrysler could really survive this crisis.
“Personally, I could see it going either way,” he confessed.
So is it really too late for Chrysler? For all those workers? Their families?
Are there any real believers left — even at Chrysler?
Officials with Chrysler, and the private equity firm that owns the company, have insisted they are still committed to saving the automaker, founded in 1925.
On Dec. 19, Cerberus said in a statement that it “feels an overwhelming responsibility to this industry, the millions of jobs affected by its plight, the potential affect on the already fragile economy, and to America itself.”
On Jan. 2, Chrysler CEO Bob Nardelli spoke of the $4 billion as an “initial loan” that “will allow the company to continue an orderly restructuring.”
Most folks, including me, have grown accustomed to treating corporate statements like these with the skeptical eye they deserve.
But in the face of such long odds — as the U.S.S. Chrysler begins to submerge and the bow tips up — I’ve never hoped so much that they were telling the truth.
Contact SARAH A. WEBSTER at 313-222-5394 or swebster@freepress.com.
from the BUFFALO NEWS:
Is Chrysler a lost cause? Some experts think so
Analysts say a buyoutby GM is still possible
DETROIT — Even by the standards of battered automakers, Chrysler is in dire shape. Its sales in December were down a stunning 53 percent, far worse than Ford or General Motors, and analysts say it probably won’t survive the year as an independent company — despite $4 billion in government loans and the possibility of more.
Things were so bad last year that a single Toyota model, the Camry/Solara midsize car, outsold the entire fleet of Chrysler LLC’s passenger cars.
“Basically they’re done,” said Aaron Bragman, an auto analyst with the consulting company IHS Global Insight in Troy, Mich. “There is no real possibility of turning this thing around as an independent company in my opinion.”
Chrysler spokeswoman Shawn Morgan said she could not provide an immediate comment after requests Tuesday and Wednesday.
U. S. sales of Chrysler, Dodge and Jeep brand vehicles fell 30 percent last year, the worst decline of any major automaker. It lost more market share than any of its peers, down to 11 percent. Analysts say most of Chrysler’s products, especially its cars, don’t look, feel or drive as well as the competition’s.
Chrysler plans to introduce an electric car in 2010, but until then, there are few promising models to boost sales. Many analysts predict that by 2010, Chrysler will be acquired by another automaker or sold in pieces by its majority owner, New York private equity firm Cerberus Capital Management.
Chrysler’s chief financial officer has said the company needs $7 billion every 45 days to pay parts suppliers, and analysts question whether its meager sales are generating enough cash to make those payments.
Analysts also say an acquisition by General Motors Corp. is still possible. The two companies discussed it late last year before GM backed away to focus on its own cash issues.
Nissan Motor Co. could be interested in buying Chrysler’s truck business. Chrysler has already agreed to make pickups for the Japanese firm.
Jonathan Macey, a Yale University law professor who has been critical of U. S. automakers’ management, said Chrysler’s sales numbers are “further evidence of an unviable entity.”
When automakers went to Washington late last year, their aim was to get enough money to become viable again. They wound up with only enough help from the Bush administration to get them through March, when Barack Obama will be president and might provide more aid.
Macey said giving the carmakers any money is burning cash.
“I’m a big fan of not throwing good money after bad,” he said. “The idea that you would enter into a financing relationship like this without any parameters is more evidence of the complete insanity of all this.”
A Treasury Department spokeswoman noted that the agreement for the government’s automaker loans required that the administration designate someone to keep analyzing the companies’ finances and viability.
To get the loans, GM and Chrysler had to agree to negotiate concessions from creditors and the United Auto Workers union, but the specifics have yet to be worked out. The government can call in the loans March 31.
Chrysler CEO Robert Nardelli, in a presentation to the Senate Banking Committee last month, said the company could stay alive in the long term with reasonable concessions, a $7 billion bridge loan and $6 billion more out of the $25 billion Congress allocated to develop new fuel-efficient technology.
The Bush administration provided a $4 billion loan. Now, Chrysler is counting on an additional $3 billion for its financing arm, Chrysler Financial.
Some lawmakers say auto-makers need time to wring out the concessions, and point out that the recession and nearly frozen credit markets are at least partly to blame for poor sales.
“You could make a car that could run on air or could fly and people wouldn’t buy it,” said Senate Banking Chairman Christopher Dodd, D-Conn. “I’m hoping that we may see some of that investor consumer confidence come back.”
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