When Cerberus purchased Chrysler less than two years ago, I thought they were totally nuts.
I guess I was right.
These guys bought Chrysler by loading it up with debt in a “leveraged buyout”. Now this debt is about to swallow Chrysler up.
As such, Chrysler (i.e. Cerberus) is more responsible for their present state of affairs, than GM is, since Cerberus recklessly made this gamble. A such, any bailout of Chrysler with tax payer money should see Cerberus’s equity wiped out completely.
Cerberus are simply a bunch of opportunists whose ego got the better of them. If they are such nice guys deserving of a taxpayer bailout of their own financial recklessness, then why did they name their firm (Cerberus) after the three headed dog that guards the gates of hell?
Chrysler threatens to leave Canada
By David Akin, Canwest News ServiceMarch 12, 2009
OTTAWA — Chrysler Canada threatened to close its manufacturing plants in Canada unless it can drop its labour costs in Canada, resolve a tax dispute here, and, on top of that, get a $2.3-billion US loan from the federal government.
Executives said they’d put up factories in Windsor and Toronto as collateral for the loan, and promised to pay back the loan with interest of as much as six per cent per year.
Tom Lasorda, Chrysler’s president and vice-chairman, said his company’s labour cost “all-in” was $75 an hour in Canada — $20 higher than some of the company’s competitors here and in its own U.S. operations.
“We have to close the gap,” Lasorda said Wednesday at the House of Commons industry committee. "As a corporation with manufacturing operations in multiple jurisdictions, we cannot afford to manufacture products in jurisdictions that are not competitive."
But MPs challenged Lasorda’s figures, using data given to them earlier this week by the senior executives of Ford, Toyota, and Honda, as well as from the Canadian Auto Workers.
Chrysler employs about 9,400 people in Canada. The company says another 26,000 Canadian jobs at dealerships and distribution networks depend on Chrysler.
General Motors recently concluded negotiations with the Canadian Auto Workers to roll back some wages and benefits. GM workers were to vote on that deal Tuesday night.
Normally, when the CAW signs an agreement with one of the Detroit Three automakers, it becomes the pattern for similar agreements with the other two.
Lasorda said GM has a different kind of workforce — it has more retirees, for example, than Chrysler — and, as a result, the GM deal represents insufficient savings.
“It’s unacceptable to us, and we have to break that pattern,” said Lasorda.
Chrysler is also unique among car companies in that it’s involved in a dispute over taxes with the Canada Revenue Agency. Until that dispute is resolved — and Lasorda said that could take up to six years — the CRA has a $500-million lien on Chrysler’s Brampton factory, and is also withholding about $300 million Canada owes Chrysler in GST refunds. Lasorda told MPs that dispute is an impediment to Chrysler’s continued investment in Canada.
MPs on the industry committee have now taken testimony from officials at Chrysler and GM — those two companies seek about $10 billion US in loans from Ottawa — as well as officials at Toyota, Honda and Ford, none of which are seeking direct federal assistance.
Every company told MPs that credit markets remain frozen, meaning the auto-leasing business has virtually disappeared. Chrysler said that, just two years ago, half of all Chrysler cars and trucks acquired by Canadian consumers were acquired by lease. Chrysler is no longer leasing cars, because it cannot acquire the cash in credit markets, which it would then use to fund its leasing business.
© Copyright (c) Canwest News Service
Thursday, March 12, 2009
Cerberus (the three headed dog that guards the gates of hell) threatens Canada with Chrysler pull out
Posted by Fillibluster at 1:21 PM