8 Weeks Ago …

I walked out of the Chrysler Technical Center for the last time as an employee

It still sucks.

Since that time, I watched Chrysler file for Chapter 11, and GM is on the precipice of doing the same.  All the while, I’ve also watched the government through President Obama state that government doesn’t want to run the automotive companies, but has demanded the resignations of several executives, ramrodded a deal with Fiat at the expense of secured bondholders, and made announcements that the government will demand or direct, as part of its loans to the automotive companies, the types of cars that the companies are to build.

It must be absolutely reassuring to the clueless that government will take care of us all while destroying the means of income to thousands of people, employees and investors alike.  And yes, that means the UAW too, because the government can only prop up these companies for a limited period of time, and that will end when it becomes politically expedient to do so.

And that means that the unemployment rate will rise to new levels, especially in Michigan where the rate is currently 12.6%!!  And the Governor is wondering why people are leaving the state in droves.

I have looked for jobs out of state, and while just starting to scratch the surface, there isn’t a whole lot out there for a person of my background.  And with the job market flooded with people looking for work, companies can certainly pick and choose who they want. 

I don’t know what is next.  Jobs within the state are few and far between.  Jobs out of state mean that selling the house would mean a huge loss.  It’s never fun being caught between two rocks, and that is exactly where I am at.

It may mean that I would need to change careers, and that is going to be a daunting task because it would almost mean that I would need to start at the very bottom again.  I’m not greedy – I’m just looking for something that I can do so that my wife and I can live comfortably and save for a comfortable retirement.  Unfortunately, I may not have the time nor the money to be able to get the educational qualifications for a new career.

Yep, it really sucks…

Will Chrysler Survive?


My personal opinion is a qualified “yes.”  But it’s not going to be pretty by any stretch of the imagination.

Today is the day that all phases of the government’s requirements for more funding were to be met.  And they almost made it happen.

While I’m writing this post, the announcement came through that the White House will force Chrysler into bankruptcy.  Exactly how this will affect the deal with Fiat, the newly approved contract with the UAW, and the bondholders is anyone’s guess since the fate of Chrysler will now be in a bankruptcy court.

Where the situation stood before the announcement was this:

  • Fiat announced that they would sign an agreement to form an alliance with Chrysler.
  • The UAW overwhelmingly ratified an agreement to cut benefits, cost of living increases, overtime pay, and bonuses.
  • The largest bondholders that held 70% of the debt agreed to a reduced settlement of debt.

Where the deal fell apart is that the remaining 30% of debt could not be settled with the bondholders.  Apparently, the bondholders could not tolerate for less than 30¢ on the dollar offered.  And in many respects, I can understand their position – I would not want to settle for that amount if my investment was guaranteed with company assets which are probably worth more that the offer.

The bankruptcy route that Chrysler will most likely take is Chapter 11 with Section 363(b), which is a provision of the bankruptcy code that allows companies to quickly exit bankruptcy by selling their most valuable assets in an auction, and then creating a new company without the liabilities. The “bad” assets of the company remain in bankruptcy and are liquidated.

The most valuable assets of Chrysler is Jeep and the minivans.  After that, there are a bunch of ho-hum cars, fuel-thirsty trucks, and so-so powertrains.  So if Jeep and the minivans are sold to the highest bidders, then what’s left of the company?  Not much, I’m afraid…

Now with Chrysler on the verge of declaring and filing for bankruptcy, will Fiat still ink the deal?  If I were them, I wouldn’t.  Instead, I would sit back and make offers for the pieces I want – dealer networks, maybe a plant here or there to build product in the United States, and perhaps the Jeep nameplate.

Where the UAW is going to end up with this latest development is anyone’s guess.  In some respects, the just approved contract change just might be thrown out by the bankruptcy judge.

But it doesn’t matter if Chrysler emerges from whatever bankruptcy filing, agreements, or deals if it doesn’t do the one thing that keeps any business going.  That is to sell their product.  And here’s where I think that Chrysler will have trouble.

President Obama has stated repeatedly that the state of the economy is dire, and could take up to a year to improve.  Couple that with people either losing their jobs or fearing the loss of the job will inhibit buying a big-ticket item such as a new car.  Those consumers will either fix up their old car or buy a used car.  And that’s bad news for all the car makers.

Chrysler is just the beginning.  In 30 days, we will see what happens with GM, and I’m going to predict that that situation will be just as ugly as Chrysler.


It was announced this afternoon that Chrysler and Fiat have signed an agreement.  Full details have yet to be announced.

In retrospect, I probably shouldn’t be surprised.  Fiat is only bargining with technology, not money, something they already have & can readily share.  In exchange, they get seats on the Board and 20% of the company with an option to aquire another 15%.

In a related announcement, Bob Nardelli, Chief Hachetman of Cerberus, is stepping down from the head of Chrysler.  About time…