The stress that Chrysler workers are under these days is unbelievable. The whole 'will I or won't I have a job tomorrow' seesaw is, to be sure, a tremendous strain on the employees, their families, and their communities.
Chrysler filed for bankruptcy protection in the USA yesterday. Chrysler LLC, the company's Canadian arm has not yet followed suit, but is under court ordered creditor protection and announced just today that both its Windsor and Brampton plants would be shut down for 30 to 60 days to allow for restructuring.
Both the US and Canadian governments have offered financial aid totaling tens of billions of dollars to the ailing number three carmaker in return for an ownership stake; 8% in the case of the US government, 2% for the Canadian government. Why are they doing so?
The answers are twofold and really quite simple. The employees and the economy. Chrysler currently employs about 54,000 people in the US and about 9,400 in Canada. Both countries are suffering the effects of a reduced economy and the automaker's sales are in the toilet. Competitors GM and Ford are not doing much better. In simple terms, the logic behind the government funding is that it is better to bailout the automaker and keep the workers employed during the restructuring period than have the plants shut down permanently and its employees file for unemployment benefits. If this were a booming economy, Chrysler wouldn't have a hope in hell of receiving bailout dollars and would be allowed to die a quick death while its assets were sold and its workers absorbed by other industries. But were not. North American manufacturing in general is in decline and there simply aren't enough well paying full time jobs available to sop up over 60,000 autoworkers.
This isn't the first time that Chrysler has had to bailed out. In 1979, Chrysler's Chairman Lee Iacoccia approached the US Congress with a request for loan guarantees in the amount of 1.5 billion dollars. Congress agreed and out of that reprieve Chrysler manufactured some of its most successful lineup including the Dodge Aries and Plymouth Reliant, the so called K-cars, and North America's best selling minivan, the Dodge Caravan and Plymouth Voyager. The K car and the minivan eventually turned the company around and Chrysler repaid the government backed loans seven years earlier than estimated.
But these are different times. Sales of Chrysler's current lineup of less than fuel efficient cars, vans and trucks took a nosedive during the gas price surge of the last few years, and never recovered. Even a deal with Fiat, ostensibly to give Chrysler access to Fiat's small car designs is unlikely to succeed. The global marketplace is full of small, fun to drive and easy on the pocket small cars, including products by Suzuki and Subaru, in addition to Honda and Toyota, not to mention GM and Ford. It would take several years for a Chrysler-Fiat small car to hit the North American market, and that begs the question; how will the company survive in the mean time? Once the bailout money has been spent, how will the company sustain itself in the long term?
Restructuring will definitely have an impact on Chrysler's labor costs, both in the US and Canada, and will alleviate its debt load. But for all the talk about restructuring and debt load, I've heard precious little about the need for investment in 'green' automotive technology and the massive amounts of money needed to retool the plants to build these cars.
Fresh innovative thinking is needed to save not only the North American carmakers, but carmakers worldwide, and I'm really not sure that Chrysler has the vision, or the resources, to make this happen. Mired as it is in today's problems, it hasn't the energy to look too far down the road.
