Chrysler In Crisis?
For Sale? Broken Up? A Union-Busting Ploy?
If you can hack your way your way through all the media idiocy about Anna Nicole Smith, you may have heard DaimlerChrysler Chief Executive Dieter Zetsche say that “all options 
are on the table” when he announced a recovery plan for ailing Chrysler early in February 2007.
Chrysler lost $1.5 Billion (US) last year, and part of the recovery plan is cutting 13,000 jobs. How they went from a $2.02B profit in 2005 to this upside-down state was unexplained. Chrysler’s losses are expected to continue apace in 2007, and the company is trying to reduce vehicle production by 400,000 units per year (!!!!). Not exactly a stellar outcome from “the merger of equals” when Daimler bought the U.S. brand for $38B 10 years ago.
When that “all options” phrase went out into the world from one of the prime champions of the merger, the rumor mill about DC hit hyperdrive. We’ll sort and explore some of them – as best as we can at this writing. The playbook on the potential deals makes an NFL one look like “See Spot Run,” and the revisions/additions are almost daily.
For example, the following was announced while I was writing this article. To sum:
DaimlerChrysler has approved an agreement with China’s Chery Motor (which grew about 65% last year) to sell Chinese-built cars in the U.S. The deal is likely to be OK’d by the
Chinese government next month, and DC would work with Chery to engineer subcompacts that would start arriving in 2009. This agreement has no affect on the “all options” strategy.
Didn’t think you’d ever read those words in your lifetime, did you? Welcome to the global economy. Meanwhile, pundits across the media have let loose a tornado of rumors on what is going to happen to Chrysler.
The latest is that MAGNA International, a Toronto-based auto parts manufacturing giant, is looking to buy the company from Daimler – which is its biggest customer. DaimlerChrysler accounts for almost ¼ of all of MAGNA sales, and they build cars for DC in Austria. No prices are being talked about, but one would think it would have to be on the low side for a supplier to be able to buy an entire automaker. Could be a fairly stable deal for all involved, though.
