Chrysler sale O.T.

Well here's hoping they aren't just a "knacker" firm, but probably few here have much faith in conventional modern business practice.

There's a huge-dollar competition on for a "Mine-Resistant Ambush Protected" military vehicle ("Me-Rap?"). A certain company had the second-biggest tank plant in the country (well, the ONLY OTHER tank plant...)and couldn't wait to get rid of it. Now the business is back, and nobody has the production capacity to bid for 17,700 APC's. Call me old-fashioned, but that looks like a lost business opportunity: ISTR International Harvester, Allis-Chalmers, Ford and White being big players in that market once, and they made money on it.

Chrysler has shed a lot of the talent that made them a contender (I see them at SDC meetings every month), and is busily buying out the rest of its experienced staff. What will be left, if nobody 'thimks outside the box"? (sp.deliberate)/ Real estate, and the bankable good will of the Plymouth brand. Meepmeep: Jack Smith, call your office.

I think the unions might have a bit of trouble with the new owners. I just saw on the news that the benefits and hourly wage package for auto workers is $70 hour. The "legacy costs" (health care and pensions) is $1360/car, while #1's Toyota's US plants is $100.

snipped-for-privacy@bex.net wrote:

I just googled Cerberus Capital Management. The Wikipedia entry notes that Dan Quayle (always wondered what happened to him) has been one of Cerberus' chief spokesmen and runs one of Cerberus' international units. Who knew? Also John Snow, former Secretary of the Treasury, joined the firm as CEO in October '06. My recollection of Snow is that he's the guy who did a crappy job of running CSX. Skimped on maintenance as I recall. This can't be good for Chrysler remaining or should I say becoming an American car company again. Hope I'm wrong...

Mickey Mouse would have done a better job of running Chrysler than "Press Darlings" Schrempp, Zetsche and their henchmen. Daimler even realizes that, by selling the company for 21 cents on the dollar compared to what they paid for it in 1998.

Chrysler did all this to themselves by squandering their independence.

Chrysler's long term chance of survival is far better now with Cerberus than it ever was with Daimler. Cerberus won't fool around with decisions either. They will close plants and cut workers at will without having worry about stockholders, the NYSE, and boards of directors. The UAW hasn't seen the likes of this since Henry Ford was still alive, and they know hardball will be returned in kind now. The reason they fear private equity.

Cerberus owns Air Canada, Blue Bird Bus, and National and Alamo Rent A Car. Time will tell, but this was a much better turn of fortune than former Daimler failures like Fokker Aircraft met.

Interesting details of the deal. Daimler is actually paying Cerberus to take it: Cerberus will invest $5 billion in cash for improvements to the automotive group and put $1.05 billion into its financing unit, DaimlerChrysler AG said on Monday.

Cerberus will also pay $1.35 billion to DaimlerChrysler, bringing the total purchase price to $7.4 billion . For its part, DaimlerChrysler is actually losing money from the purchase, dishing out $677 million in payments as a result of the proposed deal. It will retain a 19.9 percent stake in the company. But the agreement was less about Daimler getting a cash infusion and more about shedding the U.S. unit and its billions of dollars of worker liability costs that Cerberus will assume.

"This was never about making money. It was about getting rid of Chrysler and they've done that with no contingencies.