Buried in the Detroit Free Press story trumpeting the Canadian Auto Workers’ latest agreement with Chrysler: news that the Presidential Task Force on Automobiles (PTFOA) plans to split the zombie automaker into two.
“We’re living to fight another day,” [CAW Boss Ken] Lewenza said. “But the fear and uncertainty is not over. Not by a long shot.” Specifically, he said representatives of Chrysler and Fiat told him that if Chrysler files for Chapter 11 bankruptcy protection next week, the company will be split into “a good company and a bad company. And the bad company would be sold off.”
This is the first we’ve heard of ChryCo’s cleavage, although the PTFOA has been promoting it for GM for weeks. One supposes that “good” Chrysler would consist of Jeep, Dodge trucks and . . . that’s it. So could it fly?
First, the people in charge of this Chrysler clusterfuck—the Presidential Task Force on Automobiles—would have to “convince” ChryCo’s debt holders to get them to exchange secured debt for equity. Note the word “secured.” The debt holders have first right to the proceeds from the sale of the “good” bits the PTFOA would need to create “good” Chrysler.
Second, the PTFOA would have to convince all the stiffed stakeholders, from Chrysler’s unions to its squeezed-to-death suppliers, that a stake in “good” Chrysler is better than selling the whole schmeer, grabbing what money’s available and calling it a day. NB: the proceeds from the sale of “bad” Chrysler would be somewhere between fuck-all and nothing to write home about.
To get all that done, the PTFOA would have to parcel-out the new “good” Chrysler to seven—count ’em five—major groups: Chrysler debt holders, the US Treasury (that’s you and me), Daimler, the CAA, the UAW, Fiat and everyone else. Did the PTFOA forget the old adage “too many cooks build a Sebring?” Or just ignore it?
This plan sounds crazy, but you know what? It will never work. Too bad that won’t stop it from happening.
The CAW has a ratification vote on Sunday.Details will trickle in,but it looks like they,broke pattern.
All this deal is going to do,is give the CAW a seat at the table.The Chrysler pie is gonn’a be sliced up.RF is right, it ain’t much of a pie.
The CAW is making the best, of the worst time’s we have ever faced.Us folks in the Canadian auto industry active,retired,and even the lower end of management people.We know we only got one friend and that would be the CAW and Ken Lewenza.
Yes indeed we have all figured out.When your down and out you find out real quick, who your true friends are.
Every day is April Fool’s Day with Chrysler and GM lately, isn’t it?
As Mikey says, the only friend that Canadian Auto Workers have is there Union, what I dont understand(coming from a Union background) is why over the years the membership did not try to turn this Union around? The members appear to be sheep, in the Union I was active with, this leadership would not have been tolerated.
It very much look likes the Union and the Company where much too friendly to each other and it led to what we see now in the Detroit Three, Bad vehicles for well over Thirty years and no one thought to stop the “Train” its no wonder these Companies are all failures, and as such they should be allowed to die like any other failed business, there are other companies that are just as important as is the Auto Sector, probably its both Pride and Greed eh?
To answer you question Geo Levecque one word,
Apathy.The money was rolling in,lots of O.T who wanted to rock the boat?Who cares?after all we are too big to fail.I was guilty as the next guy.I could count on one hand the number of membership meeting I attended Out of a workforce of 18000 they couldn’t get 50 guys to show up at a union meeting.Judging by the crowd we had at Queens Park I think a few of us may have seen the light.
Picking winners and losers is the favorite game of the elite. The problem becomes one for the “winners” when they have to produce. Again, the missing component is sales and customers have voted with their wallets.
It’s all bad, mostly
Love it or hate it – the good company/bad company approach just has too many parties with wildly different best interests to work.
Chrysler will go first and I think that it won’t take too long to see that as mentioned previously “(So) many cooks (can’t) build a Sebring”sic.
The GM reorganization is right behind Chrysler. If the first one starts to go south, panic is sure to set in quick for GM and the Gov’t.
I know what goes in the “bad” Chrysler; what goes in the “good” Chrysler?
I know what goes in the “bad” Chrysler; what goes in the “good” Chrysler?
A couple of Jeeps.
John
“I know what goes in the “bad” Chrysler; what goes in the “good” Chrysler?”
the mini-vans.
How about a marginal chrysler?
can add the trucks and the 300.
good chrysler is simple
cummins trucks
wranglers
indian jeeps
challenger
some sedan
some small couple
and some bullshit fiat econosled, possibly a fiat econosled mini truck also
hoipefully a redesigned ALL NEW half ton ram, their kinda ugly and they cost too damn much
oh yea…minivans sell ok, so don’t leave them out
Why would anybody be willing to take a flier on a 363 in this industry? Way too much risk compared to the alternatives of a conventional 11 or 7.
I disagree with the assessment of the asset pool. The product portfolio 12-24 mo. out is extremely competitive, and the mfg facilities, GEM, and MOPAR all have value.
The plan is doomed to failure as long as the UAW has any connection with the “good Chrysler” (or GM)
All the failed entities should be part of the “bad” company.
Something like Jeep with an alliance that can provide modern diesel engines, decent interiors and non union assembly should be viable.
Funny how a “failed auto maker” (American Motors and its once-upon-a-time wholly owned Jeep subsidiary) end up being a large portion of what is considered ‘good’ Chrysler.
“Good Chrysler” could entail
Jeep Division (pared to the most logical and best sellers)
Dodge Division (minivans, pickups)
“Bad Chrysler” could include everything else. Probably 75% of the company, in fact.
I find it highly ironic that the trucks certainly have been engineered at the old Plymouth Road Detroit (ex-Kelvinator then Nash-Kelvinator then American Motors then Jeep-and-truck under Chrysler) engineering center, which was open until I think last year.
In other words, in fact, most that is currently “good” about Chrysler was a ghost of American Motors Corporation. (I think minivans were developed all along in Chrysler’s engineering facilities, not Plymouth Road). Actually, the “original” Chrysler minivans were originally developed at Ford by an engineer and both his designs and he were rejected – so he went to Chrysler before Lee Iacocca joined him. Sperlich was his last name… Another interesting factoid is that AMC had a minivan developed even earlier than that, and showed it as a concept car in public! They simply didn’t have the money to do it… I think it was based upon a Pacer chassis (thus rear drive).
Perhaps they should be honest in advertising and actually call Dodge-Jeep “American Motors LLC” and hive off Chrysler as the dead-duck.
I don’t see a point in this because Chrysler is a manageable size. It is not like GM, which is too large and bloated for its tiny market share. All Chrysler has to do is file Ch11, shred its debt, get a couple of good new models out on the market and it is back in the game.
I feel sorry for the workers, as usually when an employer wants to negotiate, they want more productivity (i.e. more production with fewer workers), but in this case, the employer doesn’t actually want more production (cars).
Due to the way production lines work, reducing workers doesn’t work as you can’t reduce the number of stations putting the cars together. So productivity for a car maker is about making cars more efficiently and faster, neither of which matter when there’s like half a year or more inventory unsold.
So the stuff being trimmed is literally taking the tinsel off a forest of Christmas trees. The workers take a small haircut, and the employer goes out of business. Not a win win.
A Chrysler Engineering friend of mine and I were having a similar discussion…we thought that if you had:
The Jeep line (minus Commander)
The FS-truck line (plus perhaps a FS SUV variant that Daimler would not allow…if gas stays low)
The NEXT 300-Charger
The Challenger
The Minivan line
The Sprinter van line
A 200-C-shaped smaller sedan with an interior competitive with Toyohonda
Along with offering a Hybrid Variant for all vehicles listed above…Plus a few FIATs…you might just have the basis for a competitive, smaller automaker if you sweat the details and put forth the kind of spirit that Chrysler had in the 80’s and 90’s when they were being quite innovative. It might work. Maybe…Let me at it-I’ll run it like Lido did in the late 80’s and unshackle the creative folks at Chrysler from their Cerberus captors.
“the proceeds from the sale of “bad” Chrysler would be somewhere between fuck-all and nothing to write home about”
Proceeds? Bad Chrysler? They will have to pay someone to take the bad Chrysler assets. Consider that Daimler paid Cerberus to take 80% of Chrysler off their hands when it was in far better shape a few years ago.