TWISTS AND TURNS
Yesterday's post highlighted an op-ed that provides a different perspective on the current travails of the U.S. auto industry. Today, a sobering article in the Wall Street Journal explores how one iconic U.S. auto company, Chrysler, came to this dramatic end of a very long road:
Chrysler's filing sounds a conclusive rattle in the long, painful decline of Detroit's Big Three auto makers. Like its age-old rivals General Motors Corp. and Ford Motor Co., Chrysler suffered from costly and inflexible union contracts, poor quality, bad management decisions and an economic downturn that put the brakes on consumer spending. In Chrysler's case, the seeds of its downfall, including the piling on of debts that proved to be overwhelming, were planted unknowingly in crises of the past."
There are some pretty dramatic moments in the story, and the piece needs to be read in it's entirety to capture their full import. Here are some that stood out for me, starting with this one in 2006:
"The union took a harder line with Chrysler. Despite the U.S. unit's losses, it argued, parent company DaimlerChrysler was still making money..."
"...Within weeks of the union rebuff, senior German executives began exploring the possibility of selling Chrysler. Mr. Zetsche acquiesced. About six months later, the buyer was named -- the secretive Cerberus, which had made billions of dollars with a blueprint of buying troubled companies, slashing costs and selling again quickly."
And then this one in late 2008:
This is of course startling considering that Cereberus also owns substantial stakes in GMAC, the other major auto finance company. As of today, the company is in the process of consolidating these finance businesses, as this other WSJ piece reports.
The Chrysler story has a lot of lessons to be learned and re-learned, for a whole host of constituents, and this piece is but a starting point to get a handle on it all.