May Be Looking For a Job Soon

Discussion in 'Vintage Topic Archive (Sept - 2009)' started by patriot2980, Dec 30, 2007.

  1. Well folks, things aren't looking good fore the Chrysler Corporation.
    Im a parts guy at a dealership and the from what some of the salesmen have told me, sales are B-A-D bad. Check this out:

    Chrysler Suicide Watch 28: The End of the Beginning of the End

    By Robert Farago

    "Are we bankrupt? Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with." Another milestone: Chrysler CEO Bob Nardelli used the “b word’ in public. What’s more, Boot ‘em Bob told the Wall Street Journal (WSJ) that he’s on a leash so short he can feel the hot breath of his Cerberusian owners tickling his neck hairs. Why’s that then? Because all Hell's about to break loose.

    More specifically, Chrysler is about to follow GM and Ford’s lead and break loose anything that isn’t nailed down and sell it. This forthcoming “Staving Off Bankruptcy†sale should come as no surprise; this fall, Nardelli announced his intention to flog bits of the biz just after Christmas. His “operationally bankrupt†shocker is PR hyperbole, preparing Chrysler's camp followers for the divestiture to follow.

    Saying that, Nardelli's “backs up against the wall†spin is a double bluff; or, if you prefer, the truth. Chrysler really is “operationally bankrupt.†Have a look at their new product plans. What product plans? Well, exactly. While $10b is a lot of money for you and me, that’s the amount of cash GM needs just to keep the lights on. Ten billion bucks ain't enough money for Chrysler to make the long-term investment in the new product designs and technology it needs to compete for the American car buyer’s customer AND keep the company going. Period.

    So what? That was never the plan. Chrysler’s new owners did not– and do not– have any intentions of investing their hard-earned money in the bottomless pit known as a product-lead turnaround. The purchase was– and still is– all about stripping and flipping. That’s why the smartest guys in the room installed Nardelli, who’s about as much of a car guy as I am a numismatist. The Home Depot despot was charged with cutting costs and stabilizing the company until such time as it could be sold; which was to be sooner, rather than later.

    And here’s where Cerberus and their main minion came a cropper. As the private equity boys knew sweet FA about cars, they failed to realize that Chrysler’s German owners had left behind a mortally wounded automaker. Perhaps the incoming execs were dazzled by the new minivan, or the company’s total turnover. But they didn't understand that carmaking is a consumer-driven– not cost driven– business; an enterprise that depends entirely on brand strength and an endless stream of class-leading products for its survival.

    Cerberus never imagined that Chrysler would get this bad this fast– because they didn’t know cars. Nor did they clock the fact that the overall new car market was headed rapidly, radically, dramatically south. Cuts or no cuts, bad intelligence and bad timing have quickly destroyed any possibility of stabilization in Auburn Hills.

    Needless to say, none of this does anything more than accelerate Cerberus’ original time lines. Nardelli will continue to wield his axe even as he begins the inevitable process of dissolution. To that end, the Chrysler CEO told the WSJ that “the company will move very aggressively to dispose of about $1b in land, old plants and other assets, even if it has to sell them below book value.â€

    Don’t be fooled by the implications of that list. Chrysler doesn’t own any “non-core†businesses. The only thing Chrysler has to sell that’s worth a damn are its MOPAR parts operation, its production facilities and the Jeep name. The “book value†of these “assets†is a Hell of a lot less now than it was when Cerberus bought them, and falling by the day. In fact, unless the Chinese, Indians or Canadians (Magna) are interested in buying Chrysler’s U.S. production facilities, they are worthless.

    Where does that leave Chrysler? Nowhere. Ten billion dollars isn’t enough to do anything more than pretty-up their current products’ dreadful interiors a bit and help the automaker hold on for another year or so– albeit cutting every step of the way, facing ever-diminishing market share. Meanwhile and in any case, Chrysler will either sell itself to someone “below book value,†or its private equity masters will throw in the towel and file for Chapter 11.

    If we had any doubts before, Nardelli’s willingness to mention the dreaded bankruptcy word leaves no doubt whatsoever that Cerberus is prepared to cauterize its Chrysler wound and use federal bankruptcy court to amputate the automaker from its portfolio. Cerberus will hive off Chrysler Financial, take their tax write-off and call it a day. And consign one of America's greatest automakers to the scrap heap of history.
    Chrysler Faces Financial Pinch, Sees Asset Sales

    December 21, 2007; Page A1

    Chrysler LLC has slipped into a serious financial crunch just four months after Cerberus Capital Management LP swept in to save the auto maker.

    At a meeting earlier this month, Chief Executive Robert Nardelli told employees the company is headed for a substantial loss this year and is scrambling to sell assets to raise cash, according to an account by two people present that Mr. Nardelli confirmed.

    "Someone asked me, 'Are we bankrupt?'" Mr. Nardelli said at the meeting. "Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with."

    In an interview yesterday, Mr. Nardelli acknowledged making the comment, saying it was intended to "convey a sense of urgency" among employees.

    Cerberus is often viewed as among the shrewdest of the private-equity groups reshaping America's industrial landscape. But the Chrysler acquisition is turning into a case study of how deals made during the recently ended boom are going sour.

    Cerberus's secretive chief, Stephen Feinberg, essentially paid nothing to DaimlerChrysler AG (now Daimler AG) for an 80.1% stake in Chrysler. He agreed to put $5 billion into Chrysler, and $1 billion into its financing unit. Cerberus secured $10 billion from investors to pull off the deal. Mr. Feinberg's goal was to spiff up the company and sell it or list its shares for a huge profit -- a feat Cerberus had pulled off many times before.

    Mr. Feinberg put Mr. Nardelli at the wheel, giving the former Home Depot Inc. chief a chance to redeem his reputation after he left the retailer in January under a hail of criticism over his hefty pay and heavy-handed style.

    Mr. Nardelli arrived to find Chrysler's vehicle sales and cost-savings efforts were falling well short of their targets. Some models had faults such as cheap plastic interiors and noisy rides. He learned that Chrysler badly lags behind on fuel-saving technologies and will have to spend billions to catch up. Worse, the mortgage crisis and slowing economy mean U.S. auto sales are likely to fall next year to their lowest level in 10 years.

    Mr. Nardelli and Vice Chairman Jim Press, the highly regarded Toyota Motor Corp. executive who jumped to Chrysler in September, had hoped to bring costs down enough to generate cash in 2008, and then use that money to develop gas-electric hybrids and other new vehicles, people familiar with the matter said. Instead, Chrysler appears headed for another loss in 2008.

    "When you look at the precipitous drop in the industry, we're going to be as aggressive as we can on the cost side." -- Chief Executive Robert

    In an interview yesterday, Mr. Nardelli declined to give a forecast for 2008, saying only that he thinks Chrysler "will make a pretty significant improvement" over the $1.6 billion the company will lose this year.

    After making headlines by clashing with critics at a Home Depot shareholder meeting, Mr. Nardelli has worked hard to present a softer image. He speaks regularly with groups of employees, often striking a patriotic chord, declaring they will prove American companies can compete in the global auto industry.

    At a November meeting with Chrysler's dealers in Las Vegas, he choked up when he talked about growing up as the son of a steelworker, and about his belief in American innovation, according to a video of the meeting seen by The Wall Street Journal. The dealers responded with a standing ovation lasting several minutes.

    Originally, Cerberus's Mr. Feinberg envisioned another executive as his man at Chrysler: Wolfgang Bernhard, Chrysler's chief operating officer from 2001 to 2004. As Cerberus neared the closing of its deal to take Chrysler off the hands of the German auto maker now called Daimler AG, Mr. Bernhard took an office at Chrysler's Auburn Hills, Mich., headquarters, and began visiting design and engineering centers.

    Mr. Bernhard was in line for the chairman's post, but he backed out when he learned that Mr. Nardelli, an automotive novice, would be CEO.

    Mr. Nardelli took the job Aug. 6 and quickly began driving different models home every few days to familiarize himself with Chrysler's vehicles. He would sometimes meet in the mornings in the parking garage with engineers, who tutored him on how to evaluate a car's ride and other fine points, people familiar with the matter said.

    He liked the new Jeep Grand Cherokee, but also saw Chrysler's product line had many serious weak spots. Riding the Sebring convertible, "I found the wind noise totally unacceptable and bordering on offensive at speeds of 80 mph," he wrote in a terse email to Chrysler's top designer, Trevor Creed. Griping about the cheap plastic of its interior, he added, "I sure hope that as we go forward, we don't punish the customer by thrifting the interior to meet a cost target."

    The news was no better on the financial front. On three models -- the Chrysler Pacifica, Chrysler Crossfire and Dodge Magnum -- the company lost money for every one sold. Mr. Nardelli was irritated to discover that a program designed to save $250 million to $300 million in parts and other costs was actually saving only $1 million because of rising commodity prices, people familiar with the matter said.

    Messrs. Nardelli and Press agreed to stop making the money-losing cars and drew up plans for a crash program, called Project D, to replace the Sebring, these people said. Mr. Nardelli meets every Monday at noon with Mr. Press and other executives to go over the company's turnaround plan. Often the sessions last until 6 or 7 p.m., people familiar with the matter said.

    In October, the United Auto Workers union narrowly ratified a new contract that allows Chrysler to slash its labor costs in the years ahead. The contract calls for Chrysler to create a fund that the union will use to cover health-care costs for its retirees. That will take billions in liabilities off Chrysler's books, but it also means the company will have to come up with $8.8 billion by 2010 to start the fund.

    In October, U.S. vehicle sales came in at an annualized pace of 16.3 million, and Chrysler's own sales were down 9%. The drop would have been even greater had the company not pushed thousands of vehicles to rental fleets, a practice that hurts resale values.

    Mr. Nardelli was dumbfounded to learn Chrysler was running its plants based on a forecast of U.S. industry sales of about 17 million. Chrysler had set to produce 2.8 million cars this year, but was on track to sell only about 2.6 million, people familiar with the matter said.

    The overly optimistic forecast forced the company to keep "a cost structure well beyond affordability," Mr. Nardelli said at the meeting earlier this month, in which he addressed Chrysler engineers at an auditorium outside Detroit.

    Chrysler announced in November it would almost double planned job cuts to 24,000, and eliminate shifts at five plants. New internal forecasts anticipate U.S. sales for all makers of 15.5 million next year. "We took some pretty aggressive steps in resizing our footprint," Mr. Nardelli said in the interview.

    At a 13-hour meeting in New York on Wednesday, Mr. Feinberg and other Chrysler board members expressed "unwavering support" for the company's direction, Mr. Nardelli said.

    A senior Cerberus executive said both Cerberus and Chrysler have ample cash supplies. He added that Chrysler's turnaround is progressing as Cerberus had expected.

    As the mortgage crisis has worsened, Cerberus itself has run into trouble. GMAC Financial Services, the lender it bought from General Motors Corp. for $12 billion, is now swamped with losses tied to subprime loans. Cerberus is also trying to back out of a deal to buy United Rentals Inc., after appearing to have overpaid for the equipment company.

    With revenue likely to be under pressure -- and little likelihood of a further cash infusion from his private-equity bosses -- Mr. Nardelli is pushing harder to trim expenses. It's a tall order for car developers who have also been told to upgrade interiors and improve the look of Chrysler products. "If you're an engineer, you're beating your head against a wall," said one person familiar with the matter.

    Concerned Chrysler's management could use some help, Mr. Nardelli has brought in consultants, including some former Home Depot executives, to help out. Dennis Donovan, a former human-resources chief at Home Depot now working for Cerberus, is advising Chrysler's HR department. A marketing consultant, Peter Arnell, is helping to overhaul the positioning of the Chrysler, Dodge and Jeep brands.

    Another ex-Home Depot executive, John Campi, is working in purchasing. Chrysler purchases about $40 billion in parts and materials a year, almost all of it from suppliers in North America. Mr. Campi has pushed to buy more parts from Asia, people familiar with the matter said, including car and truck batteries from India. Chrysler executives warned that the batteries are difficult to ship and apt to lose their charge in transport, but he is pushing ahead with the effort, these people said.

    Chrysler's top communications official, Jason Vines, resigned last week after clashing with Mr. Nardelli, people familiar with the matter said.

    In his talk with the group of engineers, Mr. Nardelli said the company will move "very aggressively" to dispose of about $1 billion in land, old plants and other assets, even if it has to sell them below book value. He noted that publicly owned companies hesitate to do that because they would have to charge the book loss against their earnings. But in a private company, "cash is king," Mr. Nardelli has told colleagues.

    He told the engineers, "We need to generate cash to keep this machine running."
  2. elguapo

    elguapo Guest

    Thats not cool...
    I was looking at those new Challengers, too.

  3. I'm beginning to doubt the Challengers will ever see the light of day, my friend. If Chrysler hadn't wasted so much money on bad designs and poor planning, they wouldn't be in this mess. Chrysler's problem was they had too many Chiefs and not enough Indians, if you'll pardon the analogy.
  4. I hate to say it but I see a govermnt bail out comming. Which will probably still screw the little guy and keep giving super bonuses to the "top men".
  5. I wondered if Chrysler wasn't dumped on Cerberus just so it could be sold off piecemeal. I think the only 2 names they have worth any real cash are Jeep (obviously it would be easy to sell) and Dodge (the truck line has some real fans). Otherwise, Chrysler is just its real-estate, plants, etc. I expect to see it sold to someone like Toyota who can't afford another US auto manufacturer to close and bring about legislation making it more difficult for 'foreign' brands to compete. That's my .02 :mrgreen:
  6. Nothing really surpises me anymore. If they sell it off piecemeal as you said, I'll be curious to see how that affects individual dealers.
    Ours is hanging on by a thread now as it is.

  7. That is interesting, we just bought an 07 plain jane Dodge Caravan minivan with 28000 miles that had been sold (or leased)to a major car rental company and then sold back to Dodge. Its now 10 months old.

    We payed 12,900 for it which I dont think is too bad a price considering its hard to tell that the van has been driven at all.

    Its worrysome to hear that they are having the trouble that they are having though, considering my family has a Chrysler minivan, 3 Dodge trucks and now a Dodge minivan
  8. Ari

    Ari Guest

    Have always been a mopar guy, I hate to see them go. But what do you do?
  9. neothespian

    neothespian Member

    The problem is that Dodge/Chrysler failed in their design.

    The Dodge Magnum? That was supposed to have a V10. EVERYONE was pushing for it....then that got pulled.

    The Challenger was SUPPOSED to be out at the same time as the Charger. Didn't happen.

    The SMART car, a 60mpg city runabout, was hyped up to the HILT in 2001, yet in 2008 they will have a FEW finally in the US. But all of those have been pre-sold and there won't be any available to general consumers till mid 2009.

    The Dodge Neon was supposed to be offered in a 2 door format to compete with sport versions from Honda, VW and Mazda and complete with a turbocharger. It didn't happen, and they got slammed by the automotive community.

    The promise of the Jeep line being offered across the board with 4 cylinder Diesel motors was also never developed, upsetting alot of loyal Jeep owners.

    Funds were pumped into pork projects such as a "redesigned" Avenger, a Chrysler "Pacifica" that got worse gas mileage than their trucks, and projects like the Prowler and PT Cruiser were kept on longer than their shelf life, losing millions per month in lost unit sales. Even newer attempts to refresh the line have met with either outright rejection or cool responses, with the Dodge "Nitro" becoming the least popular introduction of a new line since the Pontiac Aztek, and the "Caliber" being outed by Car and Driver Magazine as putting out LESS MPG than reported by Dodge by as much as 10mpg.

    Then there was the partnership with Daimler that yeilded less than stellar results when Chrysler, without consulting the rest of the board, re-signed their contract to continue putting Cummings Diesel motors in their worktrucks instead of Mercedes Diesels, which was the original understanding when the "Sprinter" van was introduced to the Dodge line by Mercedes.

    There were MANY factors within the past 10 years that could've been avoided, and WERE avoided by other US automakers such as Chevy and Ford. Chrysler simply didn't diversify and weren't bold enough to take the risk all the way. Dodge/Chrysler were on the verge to be the "performance" company even with the risk of drawing the ire of the eco concious. Their truck divison has enjoyed unusual success in comparison to their auto fleet, simply because that division took the risks and listened to the market. While a V10 wagon might of been a risk, Chevy took an equal risk by making a Cadilliac SUV with EVERYTHING that the European market disliked in a modern luxury machine, and it was a hit! They kept a theme and kept true to it. Dodge tried to be the performance company, but pulled back on the punch the minute they saw that there might be a risk. They had a hot platform for a sport Neon, but pulled back when Toyota introduced the Scion line and put theme on ecconomy and ease of use.

    Instead of putting risk to application, they tried to outplay the market at it's own game, and failed.
  10. I work for a Cerberus owned company.

    They will invest much into making operations more efficient. They will install software into the computer systems that let them know if anything is down for mere minutes, they will also increase your workload 3-4 fold while stripping you of benefits. With the cost of living Cerberus will ensure that raises are held to a level where in a short time you will be making less than you do now.
    You will always be under threat of plant closure and relocation as you will be expected to work mandatory overtime and fix what needs fixing without spending money to do so.
    You will be laid off on a moments notice to balance the budget for the quarter.
    You will see money squandered on projects that have no value while you cannot get parts.

    The list is too long to go on.

    I really don't know if the problem is Cerberus itself or if it is management in the companies that they buy feeding them bad information.

    It ain't gonna be pretty.
  11. Ehh, I'm blaming it on the liberals, sorry neo.
  12. Shootest 995

    Shootest 995 Guest

    Cerberus is nothing more then a snatch and grab, cut and run investment company. Chrysler will soon be cut into pieces and shed of the money losing divisions and the jobs that go with them will be gone.

    5 yrs it will be Jeep and maybe a few good selling auto products under 1 name banner and nothing more. Factories and dealers will close and people will be out of work. Oh and don't look for too much in the way fi fed or state help either, Cerberus won't even go there, they don't need or want to. And has for those out of work, your un-employment benefits from the state will be less and short in time. Ohio has already said that their funds for un-emplyed peopleare drying up and will soon be depleted. And we all know that jobs are really easy to find right now!!

    Again, just a sign of the times.

    Just a sign of the times.
  13. neothespian

    neothespian Member

    *Looks for a large, safety-rated, stick manufactured using carbon-reducing technologies and cut from deadfall, non-clearcut wood purchased from an open-market UNICEF supported Ikea retailer to reduce the human races carbon footprint by one*

    Twit :p
  15. AGuyNamedMike

    AGuyNamedMike Lifetime Supporter

    Hmmmm, interesting name for a company to pick.

    from Wikipedia

    Cerberus - the mythical three-headed dog.

    In Greek mythology, Cerberus or Kerberos (Greek ????????, Kerberos, "demon of the pit") was the hound of Hades, a monstrous three-headed dog with a snake for a tail (sometimes said to have 50 or 100 heads) called a hellhound. Cerberus guarded the gate to Hades and ensured that spirits of the dead could enter, but none could exit (additionally, no living person was to come into Hades).