Filed under: Government/Legal, Chrysler, LLC., Earnings/Financials, FIAT, UAW/Unions
With the clock ticking down on Chrysler's restructuring deadline from the Obama administration, Fiat's CEO, Sergio Marchionne is getting blunt: Cut costs, or else.
According to
Reuters, unless the United Auto Workers and Canadian Auto Workers agree to cut labor costs within the two weeks leading up to the April 30 deadline, Fiat will pull out from its planned stake in Chrysler, all but assuring bankruptcy for the Auburn Hills automaker. In fact, in an interview with Canada's
Globe and Mail, Marchionne estimated that the chances for a deal are only 50-50, saying "Absolutely we are prepared to walk. There is no doubt in my mind." Thus far, union representatives have been resistant to lowering labor rates to be more in line with that of Asian and European automakers.
In addition to labor cost issues, Chrysler has massive debt to contend with - some $7 billion is owed to lenders. If the company is to have any hope of making a dent in those obligations without seeking bankruptcy protection, it will need the to secure the second $6B tranche in government loans (it has already taken in $4B) that the White House says will only be offered if they come to terms on restructuring.
On the subject of the possibility of simply 'cherry-picking' from the bin of for-sale brands in the States as a way to re-gain entry into North America, Marchionne has reportedly been dismissive - particular of General Motors' Saturn division, about which he remarked: "It's not a brand I have any affinity for."
[Sources:
Reuters;
Automotive News (subs req.) | Image: AFP/Getty]
REPORT: Fiat's Marchionne says Chrysler deal odds are 50-50; warns unions to cut costs originally appeared on Autoblog on Wed, 15 Apr 2009 10:00:00 EST. Please see our terms for use of feeds.
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15-04-2009, 05:30 PM
