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Friday, March 13, 2009

GM yes, Chrysler no

I am not a no-government-intervention sort of conservative, and generally support a reasonable amount of government regulation and other minimal/judicial intervention in the economy. However, for the life of me I cannot see the benefit of doling out billions to Chrysler Canada Inc.

Any money we give Chrysler Canada, including loans, will be lost. Chrysler was in deep trouble long before the current recession hit. Way back in early 2007, Daimler-Chrysler, the former parent company tried to unload the Chrysler portion of their operations.

Obviously Daimler saw that Chrysler was not likely to turn the corner as they did the last time they had to be rescued by the United States government with USD $1.5 billion in loan guarantees to avoid bankruptcy.

Daimler knew that this time, there was not then and is not now a Lee Iacocca sitting in the wings ready to lead a rescue and return the company to profitability. And so Daimler sold off some 80% of it holdings in Chrysler. Then, in Oct. 2008, Daimler announced that its stake (about 20%) in Chrysler had a book value of zero dollars after write offs and charges.

Chrysler reported losses of USD $1.5 billion in 2006. It then began to lay off thousands employees from 2007 on. None of this has turned their operations around.

Chrysler is a goner. Prime Minister Stephen Harper’s and Premier Dalton McGuinty’s governments should put the money aside to assist directly those families and individuals who are all going to lose their jobs rather than wasting it trying to save this company.

And as far as Chrysler’s recent attempt to blackmail our province and country—tell them to get stuffed!

7 comments — This is a moderated blog and comments will appear when approved. Please don’t resubmit if your comment doesn’t appear immediately, and please do not post material that is obscene, harassing, defamatory, or otherwise objectionable.

  1. We would be doing everyone a favor by letting them go under. I pity the fools who buy one of those vehicles.

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  2. The reason Daimler got rid of Chrysler was they were done looting it. The first thing Daimler did when it aquired Chrysler was to take the $7 billion it had in the bank and pay off Mercedes debts to the Duetsche Bank. The Chrysler 300c is the highest profit margin car ever produced by Chrysler, and continued to have strong sales even into 2006.

    Rather than invest the profits made off the LX platform in R&D and designing the next LX line of cars, Daimler instead took the profits to design the newest line of Mercedes. By this time car sales had already begun to slide in the U.S., and Daimler decided that had gotten all they could out of Chrysler, and threw it to the curb like a cheap one-night stand.

    Google Chrysler 200C proto-type. It was a major hit at the recent Detroit auto show and had the journalists drooling. This car was actually ready to go a few years ago and Daimler was worried it eat into Mercedes sales in the U.S.

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  3. Now Cerberus, the vulture fund out of New York if I'm correct, owns Chrysler. Their history is one of buying up companies in distress, trying to ring out every penny that they can get, chopping it up and piecing it out.

    They should not get one penny as Chrysler already owes something around a billion in back taxes. If they pull out of Canada I imagine they'll have to forfeit some real estate to cover their debt to the Canadian taxpayer.

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  4. Chrysler no and GM no

    GM's concessions are ludicrous;
    5 less spa days and a wage and inflation freeze - that's it ?? Some sacrifice. No way I want my tax dollars bailing them out on those terms.

    I worked there as a summer student, my father worked there, my uncle has his pension there.

    If they want my money they have to be serious. Their heads are still in the clouds and their feet are firmly planted 6 inches above the ground.

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  5. I have to disagree with you also. Daimler destroyed Chrysler. The company was designing and building some great cars. They were also making a profit at it. Is that not why the mighty Daimler wanted to "merge" with Chrysler. The true idiots her are the board of directors at Chrysler that allowed Daimler in. I believe Chrysler is worth saving, more then GM. GM has no focus, and is a dinosaur in all senses of the word. The auto industry is in for some really hard time and will have to go threw major changes, like the steel industry has. Some companies, or divisions will fall and others will have to merge.

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  6. Cerberus is a vulture private equity fund who tries to buy low and sell high. They screwed up and now wants the GOC to help bail them out.
    Let them cross the river styx

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  7. There's lots of blame to go around in this fiasco. Going to get very interesting before it's all over...especially for the CAW.

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