End of an institution? If no bailout comes from Congress, what will happen to the workers at Chrysler & GM and their suppliers? While Ford has money for a while, does it matter? Can they survive? Can the economy recover if that many businesses disappear with hundreds of thousands (millions?) thrown out of work with no chance of coming back?
Chrysler shuts down all production
Chrysler LLC announced late Wednesday that it is stopping all vehicle production in the United States for at least a month.
All 30 of the carmaker’s plants will close after the last shift on Friday, and employees will not be asked to return to work before Jan. 19.
Chrysler blamed the “continued lack of consumer credit for the American car buyer” for the slow-down in sales that forced the move.
The company ordinarily shuts down operations between Dec. 24 and Jan. 5. This closure would add roughly two weeks to that shutdown.
I’d blame it on the continued lack of demand for crappy American cars.
This will be good for Chrysler. When you lose money on every car you build, you should try building fewer cars.
Fear tactics, just like with the bank bailout. The old ‘if you don’t give us money we’ll ruin your country’ extortion tactic. This ain’t no Jurassic Park, no saving the dinosaur. How long has it been since this company has shown a profit? On the other hand, I really doubt that if Chrysler goes tits up that those huge plants and infrastructures will stay unused long. Foreign manufacturers will be interested, as long as the UAW doesn’t screw the pooch.
It is common commercial practice – stopping production to clear unsold inventory. Chrysler should have stuck with what it did best, making elegant light saloons and American muscle coupes. Maybe, time will mend things.
I wonder if the UAW has a clause stating that a car maker can’t force union members to take vacation time at the companies discretion? I’m willing to bet the usual 2 week closing is covered under holiday pay. I tried reading a UAW contract last night but at over 2000 pages I couldn’t bring myself to read more than 2.
I’m still not feeling sorry for any of the parties involved.
That’s the best news the car buying public has herd in years.
They will all open back up in a few years, but nobody will see anyone go in or out. It will be run by Oompa Loompas.
Even Daimler couldn’t save Chrysler. Why should I pay to keep a bad business model alive?
Rather than Daimler not being able to ‘save’ Chrysler, they sucked it dry, dumped their crap on it, and sold it as a shadow of what they bought.
During the Daimler years they basically sat on their ass. No innovation, no major design work. Most of the talented people were transferred out of Chrysler. DB also dumped old production lines and designs on Chrysler like the old CLK which became the Crossfire.
As much as I favour Dodge/Chrysler…it is time for the Chinese take them over. GM should go into protection and shed themselves of about half of the company. Ford can probably make it, they should also cut down the number of models, lines, and platforms.
Why’d we lend them money again?
For me, American cars were never the same after Studebaker died…
#1 for the win
“When you lose money on every car you build, you should try building fewer cars.
8,
Put down the crack pipe!
First off, Daimler wanted an SUV platform, and Chrysler was just cheap enough to sell it to them. At the same time, Chrysler has 0 foreign exposure and they knew they needed some. GM and Ford can fold up ops in the US and still have production and profit overseas. Ford is VERY successful overseas. They actually make desirable cars that are successful.
The Daimler deal was the best thing that happened to Chrysler. In fact, Mercedes was the car that took a hit. I saw it like this “The Mercedes is now a Chrysler. But the Chrysler is now a Mercedes.”
Anyhoo. Cerebus bought them for 9 billion. Cerebus, according to their own PR is a 100 Billion dollar revenue corp. That means they don’t need a bailout. And at 9 billion to buy the asset, its no big loss. Kinda like having a hundred dollar bill in your pocket and going for the value meal at McDonalds. And then buying two apple pies.
I find the irony in this is that the UAW demands wages that can’t be sustained and retirement packages that will never be funded.
How is that good for union members?
I read that Ford was unionized in 1942 +/- a year or 2.
The autoworkers have been using government cheese bureaucratic work ethics and salary/retirement expectations for 60 years.
Many of them are 3rd or 4th generation employees that are so deep in the forest that they can’t see the forest from the trees.
After 60 years of this in the auto industry, I bet the whole culture is beyond repair.
Balance = what is good for you must also be good for the company. If it eventually kills the company, it can’t be good for you.
The holiday shutdown used to be as common as a summer shutdown. GE did it when I worked for them. Two weeks minimum starting at giftmas.
BTW – the original Chrysler loan was repaid. I realize most neocons don’t/can’t read; but, the loan was repaid in 3 years – 7 years early – and the gov’t took in over $300 million in interest on the $1.2 billion.
See Ya! You won’t be missed. Who buys Chrysler cars anyway.
#13–HMyers==excellent post. Those same expectations/lack of management response exists even moreso in most if not all government employment contracts. We will have that crises when the baby boomers really start drawing down those bankrupt funds.
And with local, state, and federal government officials causing the problem rather than fixing/avoiding the problem, the IRON FIST of economics will eventually slam down:: massive inflation.
Grab your socks.
#1
I agree with you. America car company’s biggest problem is the crap that they put out. GM is a big at this. Ford is doing better with cars like the Fusion, but I love and hate them because their Euro branch is building better cars and better looking cars. More for your money is the name of the game from what I see in Ford Europe.
…But Ford should be doing better with what they have…they have a money hole somewhere that needs to be closed.
Honestly do we need as many car companies in a depressed economy?
We lost many during the last depression. Why not now?
Cursor_
I blame both senior management and the UAW.
Senior management continued to focus on near terms profits and refused to develop vehicles based on the inevitable rise in oil prices- which will return. Their exorbitant salaries don’t help.
The UAW is equally culpable in the demise of these companies by demanding wages and benefits that are approximately 45% higher than foreign manufactures employing non-Union American workers in merit shop states. The Union has shown little willingness to bring wages/benefits in line with their foreign competition.
As an aside. I found it rather comical how our elected government officials were lecturing the Big 3 execs on capital hill recently on how to balance the budget while they have shown continued incompetence in balancing the government budget deficit.
Also, a concern that I have which is often overlooked, is that should the US get involved in a major action (read: war) we won’t have the industrial base- the auto industry to turn to should we need to quickly ramp up production of tanks, Humvees, etc. to supply this effort as we did in WW1 and WW2.
Wow, I guess my Chrysler warranty ran out just in time.
Woudl you want them to? they make horrible cars. A co worker with a two year old chrystler had her HOOD come off while driving only to find the latch wasn’t built correctly and not covered under warranty.
Just a few thoughts
1) Publically traded US companies are required to return maximum value ($$$) to their shareholders (SEC). Unfortunately the value has been held up by courts as hard cash.
2) Having constraint #1 makes US industry unwilling to invest in research, product improvement. Maximizing profit at all cost is all that matters. Profit yes, but maximizing at all costs?
3) US industry, across the board, produces the lowest cost junk that meets absolute minimum standards (any standard), with built in obsolescence in mind. Buy another, and another, and another . . . ROI is all that matters; products . . . services . . . who cares.
4) Japan, Europe, and others, emphasize long term gain. Gain as measured by reliability, service, technology edge. The key is long term investment.
Look at the results
– Wall street – bundled securities (mortgages). 25 pounds of trash, whether bundled or unbundled is still trash. The idea was to originally bundle good and bad – spread the risk. That idea got lost somewhere and bad was bundled with bad. Maximize profit
– The Detroit automakers, and I say Detroit because the traditional US automakers are not the only vehicles designed and built in the US, have consistently turn out unreliable garbage since at least 1973 – my opinion. Disagree – at least check out Consumer Reports, or ask other people their experiences. Hard to believe that at one time the Detroit products were the envy of the world. In addition, Detroit has followed the product of the moment scenario for their livelihood. Not that I blame them. The problem lies in no thought was given toward the future. This is but one of many examples – why are the Detroit automakers currently licensing / buying the hybrid power plants (engines / technology) from Japanese automakers? Follow the market yes, but to the exclusion of all else is folly. Markets, as we have painfully witnessed recently, are fickle.
– Detroit automakers – reliability . . . Cheap parts, poor design, and slipshod workmanship leads to unreliable products. Japanese automakers, except Nissan – owned by Renault – noted for junk, consistently produce reliable, fuel efficient (compared to Detroit trash), and overall superior quality products.
– Japanese automakers not US – not entirely true anymore. Back during the 1970’s oil crisis the cry to buy American had merit. Times have changed. My Toyota Corolla was designed in Los Angeles, and built in Fulton Ca out of 90%+ parts of US origin by US workers. Granted this is one example, but part of an increasing trend. Detroit products are increasingly built in Canada – lower pay, and increasing in Mexico, and elsewhere where there are no EPA laws, minimum wages, benefits – health or retirement, zoning codes, etc.with 70% or less US parts. Unbridled pursuit of profit. So a question arises – who are the US automakers, hence I call the remaining tradition three – Detroit automakers. A problem with this trend is that profits of the Japanese automakers return to Japan – as expected, instead of being invested here.
Save the Detroit automakers – in the 1979 – 1980s Lee Iacocca had a plan to save Chrysler. It was radical for its day, but it worked – in the short term. Chrysler was able to repay all its debt to the US Government ahead of schedule. During the 1990s Chrysler was noted for being the most profitable Detroit automaker. The leadership that made the Chrysler change work departed, and now, about 10 years later it looks like Chrysler is about to disappear for good– what happened, take a good guess. The remaining three Detroit automakers are offering more of the same old trash, double speak, and hand waving.
I feel for the workers who are ultimately getting screwed both coming and going, and the consumers gullible enough to purchase the Detroit trash. Things can change for the better, GM and Ford are showing some good signs, but this may be too little too late. The current Detroit automaker business model is broke, out of date, and way too focused on short term profit.
THE AVERAGE PERSON SIMPLY NEEDS RELIABLE TRANSPORTATION THAT USES THE LEAST AMOUNT OF FUEL POSSIBLE.
MAKE THAT AND YOU WILL SELL LOTS OF CARS
YOU CAN STILL MAKE WHIZZ-BANG TRUCKS FOR REAL WORKMEN AND JERKS WHO WISH ENZYTE REALLY WORKED.
sheesh, why should we pay to save an industry that flat-out refuses to understand the nature of the marketplace?
I for one like my Dodge truck and my wife’s Chrysler 300.
I don’t like the fact that when a union worker gets laid off for a few weeks all their benefits kept their salary at about 95% of what they make when they are working. WTF, I’d rather be laid off and not do a damn thing.
I get laid off and have to fight just to get unemployment and one time that was denied and even when I did get it the amount was about 25% of my salary.
I guess what I’m saying is fuck the unions full speed ahead.
I can’t say I’m surprised, they deserve to go under, they simply haven’t earned the right to survive. But their blaming the consumer credit market are a bit silly, where is GMAC when you need them? Don’t they offer their own, essentially in-house credit?
Oh wait, they’re going out of business offering home mortgages, I forgot.
Maybe some of the laid-off workers can come and clean my garage floor of all the leaking fluids from my plymouth voyager!
Let em’ file for bankruptcy! That’s what American’s do when they cannot manage themselves. What kind of CEO did not see this coming at least a year ago?
What the big three doing? shutting down plants. Why are they not going to save a lot of money in doing this? They still have to pay the union worker’s not to work? Only in America!
It’s too bad that Ford is the likely survivor. Too many of their models beep incessantly if you don’t wear your seat belt. Plus they are too green as a company.
#16 – Bobbo
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w00t!! :://::==:://::==:://::==:://!!!
#28 – Lyin’ Mike
Yeah. What’s wrong with those commie pinko fag bastards?? Trying to cut down on pollution? They should have their balls cut off.
And beeping when you don’t wear your seat belt? Everybody knows the freedom not to wear a seat belt is the cornerstone of American liberty!! What are they thinking???
btw, if you don’t want to wear your seatbelt, you can always just buckle it across the seat. Until they put car-cams in to see if you’re actually wearing the belt, just closing the circuit will obviate the beep.