Story first appeared in The Detroit Free Press.
The Michigan Governor said Monday that he considers talent to be the state’s most valuable resource and said his goal is to keep people in the state who have valuable skills, including foreigners who study at the state’s colleges. He told a group of about 40 recently hired Chrysler employees that he is probably the most pro-immigration governor in the United States.
The United States became economically strong in part because immigrants who came to America seeking a better life became entrepreneurs and sought degrees in higher education.
There are now immigration laws set up in the U.S. that say we’re going to educate these really bright people, and then basically tell them to get out.
Snyder’s comments came in response to a question about the promotion of diversity in Michigan from a Chrysler employee. The governor spoke to employees for about 10 minutes before fielding questions about tourism, the state’s unemployment outlook and the quality of available jobs in the state.
Michigan’s unemployment rate has dropped from a high of 14.2% in August 2009 to 8.5% in March as the automotive industry has begun to recover and hire more workers. But the Michigan governor feels that the rate is still too high.
Chrysler’s progress under majority owner Fiat is a model that the state should follow as the state works to reinvent itself.
Under majority owner Fiat, Chrysler reported its first profit in years in 2011 and its first quarter earnings of $473 million were nearly four times its earnings for the same period last year. As Fiat and Chrysler get closer to a full merger it is hoped that the state’s available talent and proposal to reform the state’s personal property taxes will encourage the company to pick Auburn Hills as its global headquarters.
They are an industrial company that is dong fabulous work, that reform would actually make Michigan a much more competitive place and really encourage them to be here.
The governor declined to provide any specific updates to his efforts to reach an agreement to build a new international bridge across the Detroit River.
Snyder met in Windsor Thursday with the Canadian Transport Minister to work on a plan with Canadian officials, despite a lack of support from the Michigan Legislature.
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Showing posts with label Fiat. Show all posts
Showing posts with label Fiat. Show all posts
04 October 2011
Fiat Credit Rating Goes Down Because Of Chrysler Group
Story first appeared in USA TODAY.
Ratings agency Moody's downgraded the credit rating of Fiat today, saying it did it primarily because of risks associated with Fiats closer combination with Chrysler Group.
Fiat holds a 53.5% of Chrysler and has said it will get 5% more by year-end -- a chunk due from the U.S. government when it meets the final bankruptcy deal goal of building a high-mileage small car in the U.S.
Moody's said increased integration of the companies likely means they'd have to prop each other up if things go south, even though Fiat, under the terms of the takeover, is not on the hook for Chrysler's debts. Moody's expects "that the creditworthiness of Fiat and Chrysler will become more closely aligned over time as the strategy and operations of the two groups becomes progressively more intertwined," including sharing vehicle platforms and powertrains, Moody's lead Fiat analyst Falk Frey told the Associated Press.
In the arcane heirarchy of debt ratings, Moody's cut Fiat from Ba2 to Ba1. The real-world impact is that Fiat will have to pay more for loans. Chrysler already is lower, at B2.
While the rating reflects the risks still inherent in Chrysler's comeback, it also seems to reflect caution about Fiat's financial muscle to handle adverse events at one or both operations.
Fiat has lost money in Europe, where the financial mess, especially as it affects Fiat's home market in Italy, has hurt sales. And Moody's says that Fiat's loss in Europe share is due in part to a slower pace of new models than rivals, a pace CEO Sergio Marchionne said at the Frankfurt show last week may slow further because of Europe's woes. Moody's also cites increased competition in Brazil, Fiat's most profitable market.
Marchionne also at Frankfurt that for now, an IPO for Chrysler is not possible because of market conditions.
Ratings agency Moody's downgraded the credit rating of Fiat today, saying it did it primarily because of risks associated with Fiats closer combination with Chrysler Group.
Fiat holds a 53.5% of Chrysler and has said it will get 5% more by year-end -- a chunk due from the U.S. government when it meets the final bankruptcy deal goal of building a high-mileage small car in the U.S.
Moody's said increased integration of the companies likely means they'd have to prop each other up if things go south, even though Fiat, under the terms of the takeover, is not on the hook for Chrysler's debts. Moody's expects "that the creditworthiness of Fiat and Chrysler will become more closely aligned over time as the strategy and operations of the two groups becomes progressively more intertwined," including sharing vehicle platforms and powertrains, Moody's lead Fiat analyst Falk Frey told the Associated Press.
In the arcane heirarchy of debt ratings, Moody's cut Fiat from Ba2 to Ba1. The real-world impact is that Fiat will have to pay more for loans. Chrysler already is lower, at B2.
While the rating reflects the risks still inherent in Chrysler's comeback, it also seems to reflect caution about Fiat's financial muscle to handle adverse events at one or both operations.
Fiat has lost money in Europe, where the financial mess, especially as it affects Fiat's home market in Italy, has hurt sales. And Moody's says that Fiat's loss in Europe share is due in part to a slower pace of new models than rivals, a pace CEO Sergio Marchionne said at the Frankfurt show last week may slow further because of Europe's woes. Moody's also cites increased competition in Brazil, Fiat's most profitable market.
Marchionne also at Frankfurt that for now, an IPO for Chrysler is not possible because of market conditions.
16 November 2009
Marchionne Says Chrysler Recovery Underway
Wall Street Journal
Chrysler Group LLC vowed to return to profitability by 2011 and pay back billions of dollars in U.S. bailout loans by 2014, an ambitious set of targets for a company that exited bankruptcy protection just months ago.
At the end of a day-long presentation of its long-awaited turnaround plan Wednesday, the company said it is counting on a slew of new models to spark a surge in sales over the next five years and drive its revival.
Chrysler—which has seen its sales plunge by half in the last few years—predicted revenue will rise about 20% a year, from $42.5 billion in 2010 to $67.5 billion in 2014, and said it would break even in 2011.
"Today is the first day of a new Chrysler. We have laid out our plans and we have become publicly accountable for the delivery," Chief Executive Sergio Marchionne said at corporate headquarters in Auburn Hills, Mich.
The forecasts—more bullish than many people expected—suggest the Obama administration's investment in the company could yet pay off. The government saved Chrysler with $9 billion in loans and pushed it into bankruptcy and an alliance with Italy's Fiat SpA in hopes of saving American jobs and an icon of U.S. industrial might.
"Some of you have [assumed] that we are losing money. This is not true,'' said Mr. Marchionne, who also is Fiat's CEO.
He and other executives said Chrysler already is seeing a significant improvement in its financial performance.
It broke even in September, has taken in more cash than it spent in the last few months and doesn't expect to use up cash even as it spends to develop and launch models based on Fiat technology.
As a result, Chrysler ended September with $5.7 billion in cash, up from $4 billion at the end of June, Mr. Marchionne said. On the sidelines of the presentation, the company's chief financial officer, Richard Palmer, said that "going forward we don't expect to consume cash."
Before Chrysler was ushered into bankruptcy April 30, it was burning more than $2 billion in cash a month. In bankruptcy court, Chrysler shed billions of dollars in debt, slashed its labor costs, shed hundreds of dealers and closed plants.
Mr. Palmer said the company expects to repay all its U.S. loans by 2014.
To hit its financial targets, Chrysler expects to double its world-wide sales, from 1.3 million cars and trucks in 2009 to 2.8 million in 2014, and predicted its U.S. market share will rise from about 6% in 2009 to 11% in 2014.
But Chrysler has based prior turnaround plans on big increases in sales only to be disappointed.
Earlier this decade, when it was owned by Daimler AG, Chrysler pledged to boost sales by one million vehicles, from about two million a year to three million, over 10 years. After a few years of gains and profits, growth stalled, losses mounted and Daimler gave up a majority stake in Chrysler in 2007.
Chrysler is facing considerable skepticism in automotive and government circles. Last week, the Government Accountability Office questioned whether the U.S. can recoup its investments in car makers.
Industry analysts who sat through the presentation of the company's turnaround plan said Chrysler's survival still depends heavily on whether the U.S. economy bounces back and car sale rise from their current historically low levels.
"Everything is in the market—that's the big kahuna. Next year is critical," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. Mr. Cole said if the U.S. market returns to annual sales of 12 million vehicles next year, Chrysler will fare well.
Mr. Cole also pointed out that Chrysler doesn't have many new products coming out in the next year.
Mr. Marchionne's team is undaunted. "We are confident we can weather the storm," said Mr. Palmer, who recently joined Chrysler from Fiat.
Chrysler received a significant endorsement after its presentation. Michael J. Jackson, chief executive of AutoNation Inc., a large dealership chain, said he was impressed by the plan and is now interested in acquiring additional Chrysler stores.
"AutoNation is a buyer as of tomorrow," Mr. Jackson said.
As part of Chrysler's comeback plan, the company aims to boost its Ram truck sales by 50% over the next five years, increase global Jeep sales by 60% and more than double U.S. sales of Chrysler-brand vehicles.
It will add small vehicles to its Dodge car brand and eliminate several Jeep products in favor of new models jointly developed with Fiat. By 2014, about half of Chrysler's engines will be based on Fiat technology.
New products are vital to creating consumer buzz to drive sales. Chrysler's sales continue to suffer more than its competitors'. In October, the auto maker's U.S. sales fell 30% while both Ford Motor Co. and General Motors Co. notched increases.
Chrysler also vowed to improve the quality of its vehicles, which have often scored poorly in customer-satisfaction surveys.
"We get it. We are not in denial," said Doug Betts, Chrysler's top quality executive. "We've got an issue to deal with both in terms of what people think of our quality and the reasons behind what they think."
Don Metzner, president of Armory Automotive, a dealer in Albany, N.Y., said he was encouraged to hear that Chrysler has positive cash flow.
"Not only was it a surprise, it's the essential ingredient needed to bring the exciting new product pipeline to fruition. My confidence in Chrysler is greatly enhanced," said Mr. Metzner, who attended the presentation.
Chrysler said it plans to invest $500 million in its dealer network over the next five years, including $120 million in 2010.
At the end of a day-long presentation of its long-awaited turnaround plan Wednesday, the company said it is counting on a slew of new models to spark a surge in sales over the next five years and drive its revival.
Chrysler—which has seen its sales plunge by half in the last few years—predicted revenue will rise about 20% a year, from $42.5 billion in 2010 to $67.5 billion in 2014, and said it would break even in 2011.
"Today is the first day of a new Chrysler. We have laid out our plans and we have become publicly accountable for the delivery," Chief Executive Sergio Marchionne said at corporate headquarters in Auburn Hills, Mich.
The forecasts—more bullish than many people expected—suggest the Obama administration's investment in the company could yet pay off. The government saved Chrysler with $9 billion in loans and pushed it into bankruptcy and an alliance with Italy's Fiat SpA in hopes of saving American jobs and an icon of U.S. industrial might.
"Some of you have [assumed] that we are losing money. This is not true,'' said Mr. Marchionne, who also is Fiat's CEO.
He and other executives said Chrysler already is seeing a significant improvement in its financial performance.
It broke even in September, has taken in more cash than it spent in the last few months and doesn't expect to use up cash even as it spends to develop and launch models based on Fiat technology.
As a result, Chrysler ended September with $5.7 billion in cash, up from $4 billion at the end of June, Mr. Marchionne said. On the sidelines of the presentation, the company's chief financial officer, Richard Palmer, said that "going forward we don't expect to consume cash."
Before Chrysler was ushered into bankruptcy April 30, it was burning more than $2 billion in cash a month. In bankruptcy court, Chrysler shed billions of dollars in debt, slashed its labor costs, shed hundreds of dealers and closed plants.
Mr. Palmer said the company expects to repay all its U.S. loans by 2014.
To hit its financial targets, Chrysler expects to double its world-wide sales, from 1.3 million cars and trucks in 2009 to 2.8 million in 2014, and predicted its U.S. market share will rise from about 6% in 2009 to 11% in 2014.
But Chrysler has based prior turnaround plans on big increases in sales only to be disappointed.
Earlier this decade, when it was owned by Daimler AG, Chrysler pledged to boost sales by one million vehicles, from about two million a year to three million, over 10 years. After a few years of gains and profits, growth stalled, losses mounted and Daimler gave up a majority stake in Chrysler in 2007.
Chrysler is facing considerable skepticism in automotive and government circles. Last week, the Government Accountability Office questioned whether the U.S. can recoup its investments in car makers.
Industry analysts who sat through the presentation of the company's turnaround plan said Chrysler's survival still depends heavily on whether the U.S. economy bounces back and car sale rise from their current historically low levels.
"Everything is in the market—that's the big kahuna. Next year is critical," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. Mr. Cole said if the U.S. market returns to annual sales of 12 million vehicles next year, Chrysler will fare well.
Mr. Cole also pointed out that Chrysler doesn't have many new products coming out in the next year.
Mr. Marchionne's team is undaunted. "We are confident we can weather the storm," said Mr. Palmer, who recently joined Chrysler from Fiat.
Chrysler received a significant endorsement after its presentation. Michael J. Jackson, chief executive of AutoNation Inc., a large dealership chain, said he was impressed by the plan and is now interested in acquiring additional Chrysler stores.
"AutoNation is a buyer as of tomorrow," Mr. Jackson said.
As part of Chrysler's comeback plan, the company aims to boost its Ram truck sales by 50% over the next five years, increase global Jeep sales by 60% and more than double U.S. sales of Chrysler-brand vehicles.
It will add small vehicles to its Dodge car brand and eliminate several Jeep products in favor of new models jointly developed with Fiat. By 2014, about half of Chrysler's engines will be based on Fiat technology.
New products are vital to creating consumer buzz to drive sales. Chrysler's sales continue to suffer more than its competitors'. In October, the auto maker's U.S. sales fell 30% while both Ford Motor Co. and General Motors Co. notched increases.
Chrysler also vowed to improve the quality of its vehicles, which have often scored poorly in customer-satisfaction surveys.
"We get it. We are not in denial," said Doug Betts, Chrysler's top quality executive. "We've got an issue to deal with both in terms of what people think of our quality and the reasons behind what they think."
Don Metzner, president of Armory Automotive, a dealer in Albany, N.Y., said he was encouraged to hear that Chrysler has positive cash flow.
"Not only was it a surprise, it's the essential ingredient needed to bring the exciting new product pipeline to fruition. My confidence in Chrysler is greatly enhanced," said Mr. Metzner, who attended the presentation.
Chrysler said it plans to invest $500 million in its dealer network over the next five years, including $120 million in 2010.
05 November 2009
Chrysler Has A New 5-Year Plan
AP
Under the plan, the automaker aims to introduce four new Dodges by 2013 and put new exteriors, interiors and engines on most of its current lineup. The new Dodges include a mid-size sedan for the North American market designed by Fiat SpA, the Italian automaker that now owns 35 percent of Chrysler.
That sedan is a key component of Chrysler LLC's five-year overhaul, which is being outlined here Wednesday. Chrysler currently lacks a competitive product in the segment, the largest in the U.S. car market.
But it will be tough to win back U.S. consumers, who are skeptical of Chrysler's quality. The automaker's sales are down sharply this year as a weak U.S. economy curbs overall demand for autos and buyers flee to other brands.
The 84-year-old Chrysler lost upward of $8 billion last year and would have run out of cash had the U.S. government not stepped in with $15.5 billion in aid. Chrysler was forced into bankruptcy protection earlier this year.
Chairman C. Robert Kidder said the company intends to go public and repay its loans "with all deliberate speed."
But the automaker will also need to offer better cars to improve its fortunes. Chrysler's current mid-size offerings are the Sebring and Dodge Avenger, which sell poorly and have received low marks from Consumer Reports and others.
Sebring sales were down 71 percent during the first 10 months of this year, while Avenger sales were off 45 percent. The Auburn Hills-based company has sold only 44,000 of both models combined, far short of the 294,493 Camrys sold by Toyota, the top-selling car in the U.S.
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Another key to Chrysler's revival is whether it can tackle quality problems. Doug Betts, senior vice president of quality, said that work is under way.
He said the company has been restructured so the 14 teams focusing on specific areas act quickly to resolve problems.
When he arrived late in 2007, it took 71 days for someone to begin working on a problem, so the Chrysler's ability to raise its quality fell behind rivals.
"Seventy-one days goes to zero days," Betts said.
Fiat has plans to replace most of Chrysler's engines with its own. Paolo Ferrero, senior vice president of powertrain, said the number of Chrysler-designed engines will drop to 12 percent by 2014 from 84 percent currently, with many larger engines replaced by smaller, four-cylinder ones.
29 September 2009
Chrysler Faces Chilly Autumn
Story from the Wall Street JournalAlready mired in a tough year, Chrysler Group LLC appears headed for more bad news.
The auto maker's dealers are bracing for a steep drop in September sales due to the unusually lean inventories the company was left with after its bankruptcy reorganization and a long summer shutdown of its plants.
Most car makers expect a sales lull after an August surge sparked by the U.S. government's "cash for clunkers" incentive program. But analysts say Chrysler is on track for a significantly weaker showing than rivals.
IHS Global Insight projects Chrysler's September sales will fall 30% from September 2008, compared with a 19% slide industrywide. Meanwhile, Toyota Motor Corp., which also has low inventories, is expected to see U.S. sales drop 15%, Global Insight says.
A deep sales decline would add to the headaches facing Sergio Marchionne, chief executive of both Chrysler and its new alliance partner, Fiat SpA. Since taking the post in June, Mr. Marchionne has reorganized and thinned out Chrysler's management and has been trying to fashion a long-term model strategy that adds Fiat-developed cars to Chrysler's lineup.
The work has proved more difficult than Chrysler's new Italian owners expected, according to people familiar with the matter. Thousands of engineers left Chrysler in the last few years as it offered job buyouts. That weakened its development capability and slowed progress on its product plan, these people said.
Chrysler's ownership history also has distorted its product-creation system. Under the ownership of Daimler AG, which ended in 2007, the company relied heavily on the German parent to engineer certain vehicles such as the Chrysler 300 and key components. Now it lacks those resources.
As a result, Chrysler and Mr. Marchionne have had little progress to report publicly in the last two months. In contrast, General Motors Co., which also went through a government-sponsored bankruptcy, has been showing off new models it is working on, including the Volt plug-in hybrid, and talking about coming cars, including compact models for Cadillac and Buick. GM also kicked off a marketing and ad campaign featuring its new chairman, Edward E. Whitacre Jr.
Mr. Marchionne is expected to speak to reporters this week at an auto show in Frankfurt, Germany, but he may give only a timetable for when Chrysler expects to unveil its new model strategy rather than reveal the strategy itself.
As part of the plan, Chrysler is expected to announce it will make the Fiat 500 subcompact in Mexico for sale by Chrysler dealers, build another Fiat-developed small car at a U.S. plant, and work with Fiat to devise a new midsize sedan -- a high-volume segment where Chrysler barely competes now, people familiar with the company's strategy said.
The strategy will be discussed at a company board meeting later this month, these people said. Chrysler declined to comment on its product plans.
Meantime, Chrysler dealers said sales are falling because they have few vehicles on their lots.
"September is starting off extremely slow," said Dave Kelleher, owner of two Chrysler dealerships in the Philadelphia area. Mr. Kelleher's stores together usually sell about 150 vehicles a month, but right now he has only 72 in stock. "If I sell all the cars on my lots I will have one of my worst months this year," he said.
At the end of August, Chrysler's inventory fell to about 100,238 vehicles, enough to last just 28 days at the current selling rate, according to the company. A year ago it had a 93-day supply.
People familiar Chrysler's thinking said the company is betting the drop in inventory will boost the prices customers pay so the auto maker can pull back on costly rebates.
The strategy appears to have had an effect. According to Edmunds.com, the average price consumers paid for Chrysler vehicles in August was $29,032, the highest in 12 months.
Still, the company is aiming for a 60-day supply by the end of the year, said a person familiar with the company's thinking.
But boosting inventory is proving difficult. Chrysler said Monday it had to delay adding a second shift to an Illinois plant by more than a month due to issues with suppliers.
11 June 2009
Chrysler sells good assets to Fiat, new company formed
Alisa Priddle and David Shepardson / The Detroit News
The long-awaited tie-up between Chrysler LLC and Fiat SpA has been finalized, and now the company must get back to the business of building and selling cars and trucks.
The two sides signed off on a partnership this morning that creates a new automaker to be known as Chrysler Group LLC, allowing the new company to emerge after a 40-day stay in bankruptcy.
It begins operations immediately under new chairman Robert Kidder and Chief Executive Officer Sergio Marchionne, who is also CEO of Fiat. The vice chairman of the former Chrysler, Jim Press, has been appointed Deputy CEO and Special Adviser, reporting to Marchionne and responsible for restructuring the company to create a "new leaner, flatter" organization, Chrysler said.
Former Chrysler chairman and CEO Robert Nardelli returns to former employer Cerberus Capital Management LP and sent employees a farewell letter Wednesday.
"I am pleased to report that we have closed the alliance agreement between Chrysler Group LLC and Fiat SpA and have emerged from bankruptcy in record time," Nardelli wrote. "Chrysler Group now is a leaner, healthier and more robust company ready to compete in the challenging economy as an important player in the global automotive industry."
Marchionne in a statement said today was "a very significant day" for Chrysler and its employees, but also "for the global automotive industry as a whole.
"From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry. We now look forward to establishing a new paradigm for how automotive companies can operate profitably going forward."
The White House also praised the deal.
"This morning's closing represents a proud moment in Chrysler's storied history. The Chrysler-Fiat alliance has now exited the bankruptcy process and is poised to emerge as a competitive, viable automaker," the White House said in a statement.
The way for the deal was cleared when the U.S. Supreme Court put an end to the appeals of a group of Indiana pensioners late Tuesday.
Chrysler and Fiat wasted no time consummating the deal to get the new company up and running.
The new Chrysler combines the most valuable assets of the bankrupt automaker with small-car and engine technology from Fiat, which is not putting cash into the deal.
Fiat has an initial 20 percent stake in the company, which will grow to 35 percent if Fiat meets three benchmarks. Fiat can buy a majority stake in Chrysler -- only after $6 billion in government exit financing loans are repaid. But Chrysler isn't required to pay back the more than $7 billion that Chrysler received earlier.
Some of the bad Chrysler assets remain under Chapter 11 protection pending liquidation.
"We intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas," Marchionne said.
The new CEO said the Chrysler plants, which have been idled since Chrysler filed for bankruptcy April 30, "will soon be back up and running, and work is already under way on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward."
Most Chrysler plants are expected to resume operations later this month. Chrysler has been burning through $100 million a day while in bankruptcy.
Marchionne will bring Fiat management style to Chrysler, and the Italian automaker also offers its international distribution network to sell Chrysler vehicles in Europe, Latin America and Russia.
From the start, the company is being reorganized around the four key brands: Chrysler, Jeep, Dodge and Mopar parts, and each division is accountable for its own profits and losses, with back office functions being put in place to support this new way of doing business. The changes will also affect how the new automaker develops, builds and sells vehicles.
Among the personnel announcements for day one: Michael Manley is appointed president and CEO of the Jeep brand; Michael Accavitti heads up Dodge; Peter Fong will oversee Chrysler; Pietro Gorlier will be the Mopar chief; Joe ChamaSrour will continue to lead Chrysler de Mexico; and Reid Bigland will continue to lead the new company's operations in Canada. Peter Grady is appointed to lead the Network Development & Fleet organization, which means continued oversight over dealers whose ranks were thinned by 789 as of today.
Steven Landry, head of sales, service and marketing, is retiring, as is head of product development Frank Klegon.
Overseeing product engineering will be Scott Kunselman.
The heads of design, manufacturing, quality, suppliers and human relations remain unchanged.
The new company will be governed by a nine-member board including Marchionne and two more Fiat appointees. Four directors will be appointed by the U.S. government; one will come from the Canadian government and one from the United Auto Workers' retiree health trust fund.
U.S. Rep. Sander Levin, D-Royal Oak, said he is pleased the deal is done.
"Now this new company can get about the business of selling cars and stepping up a full alliance of advanced technologies essential to the future of the auto industry," Levin said in a statement. "The completion of the restructuring in just over 40 days while difficult was a much preferable outcome than liquidation of this iconic company, which would have had devastating impact on jobs, our communities, and among the entire auto supply and industrial base of our country."
Chrysler has a history of bailouts, mergers and assorted owners. This latest reincarnation is likely its final chance to succeed.
Nardelli said he thinks it has the wherewithal to do so.
"What I have learned along the way is that Chrysler people also have the resolute heart of a scrappy underdog. This is a company that has been knocked down many times, but never knocked out," the outgoing CEO told employees in his farewell letter.
He also praised the community.
"I also want to express my deep appreciation to the entire Detroit-area community for welcoming and accepting me during my time with Chrysler. In my many years in business, I have worked in 14 different cities," he said. "Detroit and the auto industry have done so much to shape our country's history, and I feel tremendously proud to have been a part of this dynamic community and a company so committed to its revitalization."
The long-awaited tie-up between Chrysler LLC and Fiat SpA has been finalized, and now the company must get back to the business of building and selling cars and trucks.
The two sides signed off on a partnership this morning that creates a new automaker to be known as Chrysler Group LLC, allowing the new company to emerge after a 40-day stay in bankruptcy.
It begins operations immediately under new chairman Robert Kidder and Chief Executive Officer Sergio Marchionne, who is also CEO of Fiat. The vice chairman of the former Chrysler, Jim Press, has been appointed Deputy CEO and Special Adviser, reporting to Marchionne and responsible for restructuring the company to create a "new leaner, flatter" organization, Chrysler said.Former Chrysler chairman and CEO Robert Nardelli returns to former employer Cerberus Capital Management LP and sent employees a farewell letter Wednesday.
"I am pleased to report that we have closed the alliance agreement between Chrysler Group LLC and Fiat SpA and have emerged from bankruptcy in record time," Nardelli wrote. "Chrysler Group now is a leaner, healthier and more robust company ready to compete in the challenging economy as an important player in the global automotive industry."
Marchionne in a statement said today was "a very significant day" for Chrysler and its employees, but also "for the global automotive industry as a whole.
"From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry. We now look forward to establishing a new paradigm for how automotive companies can operate profitably going forward."
The White House also praised the deal.
"This morning's closing represents a proud moment in Chrysler's storied history. The Chrysler-Fiat alliance has now exited the bankruptcy process and is poised to emerge as a competitive, viable automaker," the White House said in a statement.
The way for the deal was cleared when the U.S. Supreme Court put an end to the appeals of a group of Indiana pensioners late Tuesday.
Chrysler and Fiat wasted no time consummating the deal to get the new company up and running.
The new Chrysler combines the most valuable assets of the bankrupt automaker with small-car and engine technology from Fiat, which is not putting cash into the deal.
Fiat has an initial 20 percent stake in the company, which will grow to 35 percent if Fiat meets three benchmarks. Fiat can buy a majority stake in Chrysler -- only after $6 billion in government exit financing loans are repaid. But Chrysler isn't required to pay back the more than $7 billion that Chrysler received earlier.
Some of the bad Chrysler assets remain under Chapter 11 protection pending liquidation.
"We intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas," Marchionne said.
The new CEO said the Chrysler plants, which have been idled since Chrysler filed for bankruptcy April 30, "will soon be back up and running, and work is already under way on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward."
Most Chrysler plants are expected to resume operations later this month. Chrysler has been burning through $100 million a day while in bankruptcy.Marchionne will bring Fiat management style to Chrysler, and the Italian automaker also offers its international distribution network to sell Chrysler vehicles in Europe, Latin America and Russia.
From the start, the company is being reorganized around the four key brands: Chrysler, Jeep, Dodge and Mopar parts, and each division is accountable for its own profits and losses, with back office functions being put in place to support this new way of doing business. The changes will also affect how the new automaker develops, builds and sells vehicles.
Among the personnel announcements for day one: Michael Manley is appointed president and CEO of the Jeep brand; Michael Accavitti heads up Dodge; Peter Fong will oversee Chrysler; Pietro Gorlier will be the Mopar chief; Joe ChamaSrour will continue to lead Chrysler de Mexico; and Reid Bigland will continue to lead the new company's operations in Canada. Peter Grady is appointed to lead the Network Development & Fleet organization, which means continued oversight over dealers whose ranks were thinned by 789 as of today.
Steven Landry, head of sales, service and marketing, is retiring, as is head of product development Frank Klegon.
Overseeing product engineering will be Scott Kunselman.
The heads of design, manufacturing, quality, suppliers and human relations remain unchanged.
The new company will be governed by a nine-member board including Marchionne and two more Fiat appointees. Four directors will be appointed by the U.S. government; one will come from the Canadian government and one from the United Auto Workers' retiree health trust fund.
U.S. Rep. Sander Levin, D-Royal Oak, said he is pleased the deal is done.
"Now this new company can get about the business of selling cars and stepping up a full alliance of advanced technologies essential to the future of the auto industry," Levin said in a statement. "The completion of the restructuring in just over 40 days while difficult was a much preferable outcome than liquidation of this iconic company, which would have had devastating impact on jobs, our communities, and among the entire auto supply and industrial base of our country."
Chrysler has a history of bailouts, mergers and assorted owners. This latest reincarnation is likely its final chance to succeed.
Nardelli said he thinks it has the wherewithal to do so.
"What I have learned along the way is that Chrysler people also have the resolute heart of a scrappy underdog. This is a company that has been knocked down many times, but never knocked out," the outgoing CEO told employees in his farewell letter.
He also praised the community.
"I also want to express my deep appreciation to the entire Detroit-area community for welcoming and accepting me during my time with Chrysler. In my many years in business, I have worked in 14 different cities," he said. "Detroit and the auto industry have done so much to shape our country's history, and I feel tremendously proud to have been a part of this dynamic community and a company so committed to its revitalization."
09 June 2009
Fiat's Bid For Chrysler Put On Hold By U.S. Supreme Court
Story from Indystar.com
MILAN (AP) -- The Italian automaker Fiat says it won't walk away from a deal to acquire a controlling stake in Chrysler despite a U.S. Supreme Court stay on the sale.
Fiat has the legal right to walk away from the deal if the sale is not completed by June 15. But a spokesman for Fiat said today that the automaker will stay on board despite the new delay.
The U.S. Supreme Court decision on Monday to hear a challenge by three pension and construction funds could scuttle the sale. But the delay could also only be temporary. Justice Ruth Ginsburg could decide on her own to end the stay, or ask the full court to decide.
If Fiat were to walk away, Chrysler would have little option but to liquidate.
EARLIER: Indiana at center of Chrysler sale delay
Thousands of Chrysler autoworkers in Kokomo and across the nation were left in limbo Monday when Indiana Treasurer Richard Mourdock won a bid to get the U.S. Supreme Court to slow down and possibly overturn the sale of the struggling automaker to Italian carmaker Fiat.
The development raised questions over how soon the court will resolve the matter and whether the deal might be scuttled if it is not settled quickly.
Chrysler has said the sale must close by June 15 or Fiat has the option to walk away, leaving the Michigan company with little option but to liquidate. That scenario would throw enormous uncertainty over 6,000 Chrysler workers in Kokomo and tens of thousands nationally.
The sale hit a roadblock Monday when Supreme Court Justice Ruth Bader Ginsburg issued a delay just minutes before 4 p.m., when the deal was to become official.
She didn't indicate how long the delay would be. Her one- sentence order said the sale is "stayed pending further order," indicating the delay may be temporary. She could decide on her own whether to end the delay, or she could ask the full court to decide.
Some legal scholars said they doubted the court would resolve the issue within a week, as Chrysler wants.
"If the court goes ahead and asks for a hearing, it would be hard to see how they could do it quickly," said Gerard Magliocca, who teaches constitutional law at the Indiana University School of Law-Indianapolis. "The court isn't known for rushing these kinds of things."
Mourdock, the state's Republican treasurer, has been fighting the sale, claiming it unfairly favors Chrysler's unsecured stakeholders ahead of secured debt holders such as the state's pension funds. Indiana has funds worth $42.5 million in Chrysler's secured loans, making it a small player among bondholders who own $6.9 billion in secured loans.
Mourdock previously failed to convince the bankruptcy judge and an appeals court that the carmaker's spinoff plan is illegal. But now he has another shot at pressing his case.
In an interview Monday afternoon, he said his "heart goes out" to all the Chrysler workers whose future is now uncertain. But he said he had no choice but to challenge the deal because the law says secured bondholders should be favored ahead of unsecured bondholders, such as unions. He added that the deal would cause havoc in the bond market if investors saw that their investments suddenly were given unfavorable status.
"When one of the most liberal justices on the Supreme Court (Ginsburg) says, 'Time out,' I think it says a lot about this issue," Mourdock said. "The question is whether the law is going to be obeyed."
Mourdock has picked up support from some consumer groups, including Public Citizen and the Center for Auto Safety. They oppose the bankruptcy sale for their own reasons, saying it would allow a "new Chrysler" to emerge from bankruptcy without taking any responsibility for people hurt by defective Chrysler vehicles.
The Indiana Democratic Party called Mourdock's move a "partisan campaign" that threatens the future of Chrysler jobs.
City and economic development officials in Kokomo said the court's decision only extends the uncertainty in the north-central Indiana city, where four Chrysler plants employ about 6,000 workers.
"Delays probably are not going to be in the best interest of Kokomo," said Jeb Conrad, president of the Kokomo/Howard County Chamber of Commerce. "We've got facilities and people ready to go to work. It can be detrimental to not have a resolution."
Kokomo City Councilman Mike Karickhoff expressed hope the issue could be decided quickly.
Chrysler claims the agreement with Fiat is the best deal it can get for its assets and is critical to the company's plan to emerge from bankruptcy protection. The company said it has no other offers and would be forced to liquidate if the deal hits a roadblock.
But some business law observers said they wonder whether Fiat and Chrysler really would walk away from a deal at this point.
"If Fiat likes Chrysler for strategic reasons, and under these terms, then I don't think they would walk away because of a month delay for a Supreme Court hearing," said Nicholas L. Georgakopoulos, a law professor specializing in mergers and bankruptcy at the IU School of Law here.
Indiana also is challenging the constitutionality of the Treasury Department's use of money from the Troubled Asset Relief Program to supply Chrysler's bankruptcy protection financing. They say the government did so without congressional authority.
MILAN (AP) -- The Italian automaker Fiat says it won't walk away from a deal to acquire a controlling stake in Chrysler despite a U.S. Supreme Court stay on the sale.
Fiat has the legal right to walk away from the deal if the sale is not completed by June 15. But a spokesman for Fiat said today that the automaker will stay on board despite the new delay.
The U.S. Supreme Court decision on Monday to hear a challenge by three pension and construction funds could scuttle the sale. But the delay could also only be temporary. Justice Ruth Ginsburg could decide on her own to end the stay, or ask the full court to decide.If Fiat were to walk away, Chrysler would have little option but to liquidate.
EARLIER: Indiana at center of Chrysler sale delay
Thousands of Chrysler autoworkers in Kokomo and across the nation were left in limbo Monday when Indiana Treasurer Richard Mourdock won a bid to get the U.S. Supreme Court to slow down and possibly overturn the sale of the struggling automaker to Italian carmaker Fiat.
The development raised questions over how soon the court will resolve the matter and whether the deal might be scuttled if it is not settled quickly.
Chrysler has said the sale must close by June 15 or Fiat has the option to walk away, leaving the Michigan company with little option but to liquidate. That scenario would throw enormous uncertainty over 6,000 Chrysler workers in Kokomo and tens of thousands nationally.
The sale hit a roadblock Monday when Supreme Court Justice Ruth Bader Ginsburg issued a delay just minutes before 4 p.m., when the deal was to become official.She didn't indicate how long the delay would be. Her one- sentence order said the sale is "stayed pending further order," indicating the delay may be temporary. She could decide on her own whether to end the delay, or she could ask the full court to decide.
Some legal scholars said they doubted the court would resolve the issue within a week, as Chrysler wants.
"If the court goes ahead and asks for a hearing, it would be hard to see how they could do it quickly," said Gerard Magliocca, who teaches constitutional law at the Indiana University School of Law-Indianapolis. "The court isn't known for rushing these kinds of things."
Mourdock, the state's Republican treasurer, has been fighting the sale, claiming it unfairly favors Chrysler's unsecured stakeholders ahead of secured debt holders such as the state's pension funds. Indiana has funds worth $42.5 million in Chrysler's secured loans, making it a small player among bondholders who own $6.9 billion in secured loans.
Mourdock previously failed to convince the bankruptcy judge and an appeals court that the carmaker's spinoff plan is illegal. But now he has another shot at pressing his case.
In an interview Monday afternoon, he said his "heart goes out" to all the Chrysler workers whose future is now uncertain. But he said he had no choice but to challenge the deal because the law says secured bondholders should be favored ahead of unsecured bondholders, such as unions. He added that the deal would cause havoc in the bond market if investors saw that their investments suddenly were given unfavorable status.
"When one of the most liberal justices on the Supreme Court (Ginsburg) says, 'Time out,' I think it says a lot about this issue," Mourdock said. "The question is whether the law is going to be obeyed."Mourdock has picked up support from some consumer groups, including Public Citizen and the Center for Auto Safety. They oppose the bankruptcy sale for their own reasons, saying it would allow a "new Chrysler" to emerge from bankruptcy without taking any responsibility for people hurt by defective Chrysler vehicles.
The Indiana Democratic Party called Mourdock's move a "partisan campaign" that threatens the future of Chrysler jobs.
City and economic development officials in Kokomo said the court's decision only extends the uncertainty in the north-central Indiana city, where four Chrysler plants employ about 6,000 workers.
"Delays probably are not going to be in the best interest of Kokomo," said Jeb Conrad, president of the Kokomo/Howard County Chamber of Commerce. "We've got facilities and people ready to go to work. It can be detrimental to not have a resolution."
Kokomo City Councilman Mike Karickhoff expressed hope the issue could be decided quickly.
Chrysler claims the agreement with Fiat is the best deal it can get for its assets and is critical to the company's plan to emerge from bankruptcy protection. The company said it has no other offers and would be forced to liquidate if the deal hits a roadblock.
But some business law observers said they wonder whether Fiat and Chrysler really would walk away from a deal at this point.
"If Fiat likes Chrysler for strategic reasons, and under these terms, then I don't think they would walk away because of a month delay for a Supreme Court hearing," said Nicholas L. Georgakopoulos, a law professor specializing in mergers and bankruptcy at the IU School of Law here.
Indiana also is challenging the constitutionality of the Treasury Department's use of money from the Troubled Asset Relief Program to supply Chrysler's bankruptcy protection financing. They say the government did so without congressional authority.
30 March 2009
A Shotgun Wedding For Chrysler, Fiat
Originally Posted to ForbesTime is running out for Fiat and Chrysler to become fast friends.
The U.S. government has threatened to suspend federal aid for Chrysler unless it secures a deal with the Italian carmaker within 30 days, senior administration officials told Forbes. (See “Obama Takes The Wheel In Detroit.”) Chrysler, along with General Motors, has already received $17.4 billion in federal loans and has asked for billions more.
Fiat and Chrysler announced in January that the two were entering a partnership in which Fiat would take 35.0% of Chrysler in return for sharing its technology and product platforms with the firm, and not pay any cash toward the investment, with a final accord between the two to be announced in April.
But analysts were cautious about whether the carmakers would meet the 30-day deadline. "I give a potential deal a 50.0% probability,” said Martino de Ambroggi, an analyst with Equita SIM. “It depends on the agreement with U.S. aid, trade unions and suppliers. Fiat is like a spectator right now. The deal will go ahead in the case of the survival of Chrysler, which is not in the hands of Fiat.”
Fiat has been cautious about a potential partnership with debt-laden Chrysler. The Italian automaker said earlier this month that it would not take on Chrysler's debt, current or future. The company said it "intends to make absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness to Chrysler." (See “Fiat, Chrysler Clash Over Debt.”)
“I would not rate it as a "good deal" but as a "good opportunity" because the capacity of Chrysler to become profitable has to be checked in the medium- to long run,” Ambroggi said.
Fiat CEO Sergio Marchione has said that in order to survive, a carmaker needs to sell between 5.5 to 6 million units per year. But Fiat and Chrysler are still well below this level by more than 2 million units, Ambroggi added. “The deal would allow Fiat to become larger and to take advantage of geographical diversification and common platforms, but it’s not a secret that Fiat is looking for a third partner to join the venture."
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