This will be choice. Obama is proposing that that senior secured lenders will be subordinated to union workers in ownership of the Chrysler company.
Eight US plants are to be closed and sold. These same plants are obviously in areas where the UAW workers live. The factories are at the epicenter of the major problem, which is unsustainable union demands, work rules and ethics.
The workers at these factories are being promised transfers to other Chrysler factories.
Who is going to buy these factories? To get the highest value, they would have to be used for what they were designed and that is automobiles or trucks. Anyone think that BWM or Toyota is going there?
The machinery equipment will be sold into a worldwide glut of used and obsolete depreciated capital equipment. There is more of that available than there are deserted sub prime houses. Most of it will be bought for scrap and end up being cut up to be used in China. They will not recover more than 5% of the original cost, most of which was spent on setup and installation.
Who is going to buy the cars?
While the bankruptcy case drags on will the Chrysler line up get better?
Will their service and parts be more available?
Will Team Obama allow the payment of retainage bonuses to demoralized but skilled people?
How about affirmative action on hiring and promotion, staffing and suppiers?
Here is what a modern car assembly plant looks like. Where are the workers? Are the UAW and government owners going to allow Chrysler to build a factory such as this?
The UAW workers and future shareholders point of view. They have some legitimate complaints, but how are you going to change this culture to a dynamic and profitable company? At what cost?
May 2, 2009
Bankruptcy reality settles in at Chrysler
Automaker warns of likely trouble ahead
BY JUSTIN HYDE and GREG GARDNER
FREE PRESS STAFF WRITERS
The promise of a surgical bankruptcy turned into a gritty reality for Chrysler LLC and its workers Friday, as the company outlined its immediate hurdles and workers dealt with plant closings and -- in some cases -- canceled pension checks.
The factory shutdown will push the critical launch of the 2011 Jeep Grand Cherokee back by up to six months. Replacement parts for repairs on some Chrysler vehicles could run low in the next 60 days. And Chrysler needs court approval to spend $753 million in the same period on incentives for dealers to sell its vehicles.
Lawyers submitted more than 150 separate filings in the first full day since the filing, underlining the complexity that will challenge all parties to complete the process in the desired 30-60 days.
Chrysler is to use $10.5 billion from the U.S. and Canadian governments to consummate a marriage with Fiat SpA, in which Fiat eventually will own 35% of Chrysler while a health care trust fund for UAW retirees owns 55% and the United States and Canada own the rest.
The first day of hearings in the bankruptcy court in New York moved quickly. More serious objections could arise Monday, when Chrysler begins legal moves to seal the Fiat deal.
To bolster its position, Chrysler outlined the lack of options in its bankruptcy case.
Vice Chairman Tom LaSorda said the company had held talks with several automakers -- including General Motors Corp., Toyota, Honda, Nissan and Volkswagen -- that failed to produce a partner.
In recent weeks, Chrysler held what amounted to a five-day bazaar for Chinese companies, offering to sell engines, transmissions and entire vehicle lines.
All of this, LaSorda said, shows that the Fiat deal is the only way out for Chrysler.
"With Fiat, Chrysler has a way forward," he said.
As part of its filing, Chrysler named eight U.S. plants that would be closed by 2010 and sold to settle debts of the old Chrysler.
Three of the plants are in metro Detroit -- Detroit Axle, Conner Avenue Assembly and Sterling Heights Assembly.
Chrysler said Friday that virtually all of the workers at the affected plans would be offered jobs at the new Chrysler.
Frank Ewasyshyn, Chrysler's executive vice president of manufacturing, outlined the delay in the Grand Cherokee and other dangers from the immediate hibernation of its factories.
The government has guaranteed Chrysler's warranties, but Ewasyshyn warns that Chrysler dealers could run short of parts such as oil filters, usually built by the company or its suppliers, within 28 days if payments aren't restored and some production restarted.
"So, four weeks from today, a customer who purchased a Chrysler 300 will pull into his local dealer to have a taillight repaired ... and will be unable to get the parts necessary," he said.
He added, "The longer the sale to Fiat is delayed, the more likely this devastating scenario will occur."
Dealers learned Friday that Chrysler Financial, which is independent of Chrysler, no longer would finance their inventories. That work has been turned over to GMAC, also an independent company, as part of the bankruptcy.
About 1,800 Chrysler retirees were shocked to discover that their benefit payments were voided Friday morning.
Lynn Feldhouse of Rochester Hills actually saw the deposit disappear as she checked her bank account online. "This can't be good," Feldhouse said. "I called the bank, and they told me there was nothing they could do because they got a message from Chrysler telling them to reverse the entry."
The problem affected people who have a supplemental pension, which is not insured by the Pension Benefit Guaranty Corp. Because that portion is backed only by Chrysler, it becomes part of Chrysler's asset base in the bankruptcy.
Chrysler is aware of the problem and is telling those affected that they will receive the PBGC-insured portion by May 18.
Contact JUSTIN HYDE: 202-906-8204 or email@example.com. Free Press columnist Susan Tompor contributed to this report.
Chrysler's judge has dealt with big cases before
The judge overseeing Chrysler's bankruptcy filing is no stranger to high-profile cases.
Arthur Gonzalez presided over the closely followed bankruptcy cases of energy company Enron and telecommunications giant WorldCom.
But the Chrysler case presents a new twist for the New York bankruptcy judge: the involvement of the federal government and President Barack Obama. The president describes the case as a "surgical bankruptcy" and hopes for a quick resolution of the case.