Chrysler is American again


DaimlerChrysler provides $1.5 billion of financing to seal deal to sell Chrysler to Cerberus Capital, closing books on failed 9-year-old merger.

NEW YORK -- Chrysler Group returned to U.S. ownership Friday, just as the troubled automaker and its U.S. rivals are facing make-or-break labor negotiations and American car buyers are increasingly turning away from domestic makers.

The purchase by private equity firm Cerberus Capital Management closes the books on a failed nine-year-old merger. The German automaker then known as Daimler-Benz paid $37 billion for the company in 1998, and essentially ended up paying Cerberus tobuy 80 percent of the automaker, and take its long-term liability to pay for its retirees' healthcare coverage off its hands and off its balance sheet.



http://money.cnn.com/2007/08/03/news...ion=2007080314

 

these guys seem pretty committed to getting chrylser back in good shape too. they're consolidating dealerships. offering the lifetime powertrain warranty and a liftetime bumper-bumper extended warranty just to name a few. plus they're very committed to keeping the cummins nameplate on the side of our trucks and that can only help sales.

 

So what's the outlook for the Chrylser unions?

Typically when private firms buy out big union companies... They don't remain union for long.

 

No offense to the union types around here but this is the major problem with the major companies in the US and Canada. Not the current union but all the past members, pensions and buy outs and medical and so on.

Ok, I don't know many of the details - and please don't flame me here I'm just trying to outline a point here as touchy as it is...

The company needs to restructure, it needs the AWU and others to get the cars and trucks built but being held hostage by a union makes an employer look to other countries in central and south america to get things built where labour is very cheap and quality control is generally low on the scale. This puts people in Canada and USA out of work making it a loose loose. If there was a way to get things more "real" and keep the people working to do what they do, isn't that a better option?

I don't know for sure but there was a time when made in Canada and made in the USA meant something. Everything these days seems to come from China and with recent scares with kids toys and lead paint and paint thinner in toothpaste it is really scary that there isn't any quality control on that sort of thing. We'd have it here but Corporate culture wants things built cheap so they can keep the profits up and North America labour is simply too expensive right now.

Shopping at WalMart is another problem with me but that is entirely another kettle of fish.

 

Unions are not the problem - I dont buy that for ONE SINGLE MINUTE. Corporate greed and delivering maximum profits to stockholders is the problem along with HUGE wages for the upper crust of the company - are those people actually worth 5+ million dollars a year (or whatever they make)? - I think not.

I suppose the unionized workers are supposed to work without medical benefits or a pension? I suppose that is what is killing every unionized company?


Your right about Walmart though - Ill give you that much.

 

its my understanding the pay of full benifits to the retirees is whats killin all the autoworkers.

 

Alrighty then - I guess I was wrong. Im man enough to admit it...



Thanks Whit....

 

Exactly. Although DRE is right, I don't think anyone in the major 3 is worth 5+ mil per year.

I think that if you are working you deserve the medical and pension like any other joe worker but if it is getting out of control I would rather work (so I didn't go nuts) than have my job moved to China, Mexico or Brazil. Oh I know there are likely members on this board from Mexico so don't take that the wrong way, please.

It is sort of like raw log exports from the coastal mills. I strongly disagree with that. Keep the logs here and keep the mills open and people working. Working people pay taxes, buy houses and trucks and so on.

 

2007 ยท German automaker DaimlerChrysler has announced that it is selling 80 percent of its struggling Chrysler division to Cerberus Capital, a private equity firm. Cerberus will pay $7.4 billion for the U.S.-based entity, but little of that money will go to Daimler.

In the transaction announced Monday morning, Daimler will actually end up paying to get out from under Chrysler's crushing liabilities. That predicament is a far cry from in the late 1990s, when Daimler's plans to go global led it to pay $36 billion to acquire Chrysler.

But now, nearly a decade after Daimler-Benz's historic "merger of equals" with Chrysler, the German-American marriage is essentially over.

It is not clear what Cerberus plans to do to rein in Chrysler's cost structure. But many analysts expect that what emerges will almost certainly be a smaller company.

"Their objective very clearly in private equity is making money," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "It's not benevolence for dealers, or workers; it's making money, and they are going to try and do what's necessary to ensure that kind of financial return."

Cerberus may plan to get those returns by eliminating jobs and reducing retiree pensions, but it didn't announce any details of its future goals.

Such a plan would likely mean more pain for Detroit. But many analysts say such cuts are necessary if the U.S. automobile industry is to fend off growing competition.

 

No doubt...

Any way you look at it - the issues are complex...and take more smarts than I have.