Posts Tagged ‘Fiat-Chrysler Alliance’

Now Married, Where will Chrysler/Fiat Live?

Heritage and history make headquarters location a touchy subject.

by on Jan.02, 2014

Might Chrysler House in downtown Detroit be the new headquarters for Chrysler/Fiat?

With Fiat’s takeover of Chrysler nearly complete, one big question remains unanswered: where will the headquarters of the newly combined companies be located?

Fiat represents an enormous part of Italy’s industrial heritage, but Chrysler/Fiat chief executive officer Sergio Marchionne is looking for ways to finesse the issue and putting the combined company’s headquarters in Detroit.

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Prior to the announcement of the deal to merge the two companies before the end of January, executives from Chrysler/Fiat had noted privately the number of people involved in shifting the reconstructed companies to the U.S. would be relatively few. (more…)

Treasury Officials Continue to Pore Over the Books of Chrysler and General Motors

Viability of the companies hinge on assumptions in the recovery plans. Is a Fiat takeover of Chrysler a political issue?

by on Mar.16, 2009

Is there light at the end of the bailout tunnel?

Is there light at the end of the tunnel?

There an old wheeze about the search for a one-handed economist, since the profession is well known for its “on the other hand” predictions that contradict initial ones. The immediate question is whether to grant GM an additional $13 billion and/or Chrysler an additional $5 billion on top of the taxpayer given $13.4 billion at GM, and $4 billion at Chrysler by the imposed deadline of March 31st.

Well, as Treasury hands continue to scrutinize the business plans for signs of life at Chrysler and General Motors, key assumptions in the plan on industry size, share and pricing are being challenged. And the assumptions used will make or break the companies.

These auto loan sums pale when compared the $173 billion already granted to bail out  AIG and its workers and pay them millions in bonuses. But the U.S. government, like the EC, apparently places a higher value on rescuing financial institutions that threaten larger economic instability in its view, than saving any company in the manufacturing business. The increasing populist resentment of such snobbery complicates the politics of bailouts, but appears to make the case for continuing to help the auto companies recover since they are part of the real economy that makes things. The Obama administration is now saying it won’t necessarily adhere to the March deadline, which suggests it might play for more time while doling out additional loans slowly. Republican leaders continue to press for bankruptcy.

Both Chrysler and GM maintain that they are viable businesses and TDB has reported on the public portions of the plans after their February 17th submissions. At that time, TDB noted that GM now forecasts 2009 U.S. industry sales of 10.5 million units, down radically from its previously projected industry sales rates of 12.5-13 million last December. This was part of the reason why its funding requests went up.

Unlike Chrysler’s estimate of a flat market in the 10-11 million range for the next four years, however, GM assumes growth to 11.5-12.0 million or more units annually starting in 2010. GM says it will then achieve breakeven levels in 2011, and have a positive cash flow of more than $6 billion in 2012-2014. Several caveats could change this, including the need for GM to put more money in its pension funds in 2013 – if the financial markets and its investments don’t recover by then.

In an e-mail to Chrysler employees this morning, Bob Nardelli, Chairman of Chrysler, presented an updateon the ongoing negotiations with Treasury officials. Calling the discussions “constructive,” Nardelli said he continued to stress that Chrysler is a “viable business as a stand alone company” and its “future is further enhanced through the proposed global alliance with Fiat.”  Well, what else would or could he say? (more…)

Fiat to Take Over Chrysler in Latest Plan

U.S. taxpayers continue to prop up company; Fiat gets control and access to Canadian, U.S. and Mexican markets.

by on Mar.01, 2009

The plolitical storm is just begining for a Fiat-Chryler deal.

The political storm is just beginning for a Fiat-Chrysler deal where Fiat takes a 55% stake.

Fiat takes over Chrysler if it survives. That stark fact was buried back on page 177 of the Chrysler survival plan submitted to the Treasury Department last week.

Chrysler’s bargaining position is now so weak that under the deal Fiat would provide no cash, nor would it commit to funding Chrysler in the future.

Worse, Fiat’s offer is contingent on more U.S. taxpayer support – Chrysler’s request for an additional $5 billion dollars to cover operating expenses on top of the $4 billion already given, and $6 billion from the Department of Energy to develop fuel efficient technologies. More money might be needed if a permanent source of funding for Chrysler Financial is not secured.

So the multi-billion dollar question facing the U.S. government is whether this is a good investment. Will it ultimately save taxpayers’ money, as Chrysler-owner Cerberus maintains, or is it time to fold the company and cut our losses?

Saving an American auto company by giving it to an off-shore maker is not exactly the sound-bite I would choose to carry the day in a skeptical Washington. However, in the wake of General Motors refusing a merger with Chrysler, and Nissan’s inability to pursue one given its collapsed financial position, this is the only gamble left.

A large wager it is, since the consequences of liquidation are huge. Chrysler says a bankruptcy will cost tax-payers $65 billion. No matter the debatable but still significant amount, the only winners in this scenario would be the lawyers, sucking more cash out of an economy that desperately needs spending and investment.


Chrysler Can Survive Worst Down-Market, says Jim Press

Automaker preparing to ride through the worst, even without Fiat alliance.

by on Feb.03, 2009

Chrysler still viable, says V. Ch. Jim Press

Chrysler still viable, says V. Ch. Jim Press

Despite the doom and gloom sounded by ratings agencies and Southern Senators, Chrysler is preparing to ride out the worst the economy can throw at it, and will be able turn a reasonable profit even in a long recession, the automaker’s vice chairman told reporters during a Tuesday “roundtable.”

The sharp cuts Chrysler has made since it was taken over by Cerberus Capital Management, in 2007 have repositioned the automaker to survive even an extended downturn in the U.S. market, asserted Jim Press, the troubled automaker’s second-in-command.

“We feel we’re on a firm footing, financially,” proclaimed Press, prior to beginning the last of eight meetings Chrysler has held with dealers from across the U.S.

According to the plan Chrysler submitted to the federal government to justify a bailout, the U.S. market will slip by as much as 2 million units, this year, to a total sales volume of just 11.1 million, and could hold at that dismal level “for a couple years, and maybe as much as four years, going up to 13 million”,” when the market finally starts to recover. And, if anything, added Press, a worst-case scenario could see sales slip as low as 10 million.

Even at that level, Chrysler claimed, “We were still viable. We were still okay,” according to Press.


Federal Money Off-Limits for Fiat, Says Nardelli

Another sweeping buying underway at Chrysler.

by on Feb.02, 2009

Chrysler CEO Bob Nardelli: "Hands off, Fiat"

Chrysler CEO Bob Nardelli: "Hands off, Fiat"

Fiat won’t be able to touch any of the “bailout” loan money provided by the U.S. government if it decides to move forward with its alliance with Chrysler LLC, says Chrysler Chairman Robert Nardelli.

In addition, Chrysler also said it is going ahead with a sweeping buyout of hourly workers at the company’s throughout its manufacturing system, which now has about 34,000 employees.

“Given the difficult economic and market conditions in the U.S., Chrysler LLC determined in December 2008 that it would offer another phase of its ‘Special Programs,’” said a company spokeswoman, adding that, “The original window to offer the programs was slated to begin in December and run into January, per an agreement with the UAW. Due to the fact that many of the company’s facilities had suspended production for extended periods in December and January, the program offerings are being rolled out now.”

Workers have until Feb. 25 to decided whether to accept the buyouts, which would provide up to $75,000 in cash and $25,000 to buy a vehicle to those who leave the company without retiring. The incentive for early retirement is $50,000 cash and a $25,000 voucher.

The latest program follows another buyout, in November, that saw some 5,000 salaried employees – or 25 percent of Chrysler’s white-collar workforce – agree to leave the company.