The Detroit News has a story up saying that the Chrysler and the Canadian Auto Workers (CAW) have reached on an agreement on concessions. That provides a small glimmer of hope that Chrysler may be able to survive.
Meanwhile, back at Rancho Fiat, Fiat has been working on a 'Plan B' in case the Chrysler deal comes to naught. Word is they've been talking to GM regarding picking up Opel.
In the grand scheme of things we'll have the biggies, VW, Toyota, Fiat, Ford, and a whole bunch of also rans and boutique brands.
Showing posts with label Auto bailout. Show all posts
Showing posts with label Auto bailout. Show all posts
Saturday, April 25, 2009
Wednesday, April 22, 2009
More On Chrysler
This WSJ article points out issues with the debt to equity swap purposed for Chrysler's bondholders. The current administration believes that the banks holding debt are receiving more value than they should (in other words, they've attempted to minimize their loses in this case. ; -)
If the banks in question are receiving TARP funds and the automaker in question is receiving government loans also, how much say does the government have in the process? Could the demands of the administration block a potentially hopeful resolution of Chrysler's situation? Stay tuned . . .
If the banks in question are receiving TARP funds and the automaker in question is receiving government loans also, how much say does the government have in the process? Could the demands of the administration block a potentially hopeful resolution of Chrysler's situation? Stay tuned . . .
More On GM
Here's a link to a good post on the issues facing GM if a decision is made to go to bankruptcy court. Basically, with all of the claimants and parties involved it would be messy regardless of any desire to do a 'quick turnaround'.
Of note is the fact that bondholders (basically people that have loaned money to GM with the hope of seeing it returned with interest) stand to lose substantially. One approach to this is to convert the bond value to equity. In other words, a bondholder becomes a stockholder (and that's something they didn't want to do in the first place.)
Also the union has to look out for the interest of their workers and their benefits. Wages may be negotiable, hopefully work rules will be negotiable, but pension and medical benefits are likely to cause the most angst.
It won't be pretty or easy and the judge assigned the case should be on the top of their game.
We are a long way from being out of the woods.
Of note is the fact that bondholders (basically people that have loaned money to GM with the hope of seeing it returned with interest) stand to lose substantially. One approach to this is to convert the bond value to equity. In other words, a bondholder becomes a stockholder (and that's something they didn't want to do in the first place.)
Also the union has to look out for the interest of their workers and their benefits. Wages may be negotiable, hopefully work rules will be negotiable, but pension and medical benefits are likely to cause the most angst.
It won't be pretty or easy and the judge assigned the case should be on the top of their game.
We are a long way from being out of the woods.
Tuesday, April 21, 2009
A Polite Rant
I put up a more vicious version of this - but took it down soon after.
There is too much government intervention in what should better be left to markets. The opportunity to fiddle with product in the reconstituted GM (or Chrysler) will just create cars that people won't buy. Especially at current fuel prices.
Further, the announcement of spending billions on high speed rail is a money losing proposition. Building passenger rail service has been a losing proposition in this country since the advent of jet air service. Sorry, but building trains that people won't ride is not a good use of public funds.
I get the feeling that the current administration resembles nothing as much as it does an undergraduate liberal arts college student council.
There is too much government intervention in what should better be left to markets. The opportunity to fiddle with product in the reconstituted GM (or Chrysler) will just create cars that people won't buy. Especially at current fuel prices.
Further, the announcement of spending billions on high speed rail is a money losing proposition. Building passenger rail service has been a losing proposition in this country since the advent of jet air service. Sorry, but building trains that people won't ride is not a good use of public funds.
I get the feeling that the current administration resembles nothing as much as it does an undergraduate liberal arts college student council.
Thursday, April 16, 2009
Chrysler
It's looking less and less like Chrysler will make it. Fiat is saying that if both the UAW and CAW (Canadian Auto Workers) don't accept significant pay cuts they will pull out of the proposed merger.
I don't believe this is going to happen.
I don't believe this is going to happen.
Thursday, April 9, 2009
Another View of the GM CEO Defenestration
When Rick Wagoner was forced out of GM by the Obama administration, my take was that when you went to the public trough for funding you have to accept their rules. And I stand by that. However, the politics involved (on all sides) are significantly more complicated.
This article from Wards Automotive highlights some of the back story.
Hat tip, Bob Storck.
This article from Wards Automotive highlights some of the back story.
Hat tip, Bob Storck.
Monday, March 30, 2009
Determination of Viability Summary for Chrysler and GM
The Wall Street Journal (among others) posted links to the Determination of Viability Summary for Chrysler and GM. (Link to the summaries here.)
I looked for two words - work rules - and found them in the summaries for both companies as an issue that must be addressed. While they aren't THE critical component of the viability of either company, the absence of those two words would have indicated a bias in my mind.
From my reading of the summaries, I am in general agreement with the government's conclusions. First a word about the structure of the summary documents. It would appear that they built a boilerplate document and changed items as required for the specific company's summary. Given that there are significant overlapping concerns for both companies, that's a minor quibble.
Their assessment of Chrysler's inviability as a standalone company tracks with my thinking. Chrysler does not have the current product or the resources to develop the product (R&D) it needs to be competitive.
GM, on the other hand, has the potential to survive - only if a more realistic reorganization plan is submitted - and one that reduces financial risk to the company and suppliers (sorry bondholders and share owners ; -).
Of note is that bankruptcy proceedings may be required to resolve debt issues with both companies. And if Chrysler can't swing some sort of meaningful accommodation with Fiat, they are as good as history - they will be done as a manufacturer, bankruptcy would be useful only to dissolve Chrysler at that point.
Only one thing caused me to smirk in reading the summaries and that was a reference to Consumer Reports in the Chrysler summary. Personally I'm not that hip on CR as the final arbiter of things automotive. I'm still waiting for their article/expose on rollover testing for adult undergarments. ; -)
I looked for two words - work rules - and found them in the summaries for both companies as an issue that must be addressed. While they aren't THE critical component of the viability of either company, the absence of those two words would have indicated a bias in my mind.
From my reading of the summaries, I am in general agreement with the government's conclusions. First a word about the structure of the summary documents. It would appear that they built a boilerplate document and changed items as required for the specific company's summary. Given that there are significant overlapping concerns for both companies, that's a minor quibble.
Their assessment of Chrysler's inviability as a standalone company tracks with my thinking. Chrysler does not have the current product or the resources to develop the product (R&D) it needs to be competitive.
GM, on the other hand, has the potential to survive - only if a more realistic reorganization plan is submitted - and one that reduces financial risk to the company and suppliers (sorry bondholders and share owners ; -).
Of note is that bankruptcy proceedings may be required to resolve debt issues with both companies. And if Chrysler can't swing some sort of meaningful accommodation with Fiat, they are as good as history - they will be done as a manufacturer, bankruptcy would be useful only to dissolve Chrysler at that point.
Only one thing caused me to smirk in reading the summaries and that was a reference to Consumer Reports in the Chrysler summary. Personally I'm not that hip on CR as the final arbiter of things automotive. I'm still waiting for their article/expose on rollover testing for adult undergarments. ; -)
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