MILAN – Automaker Fiat Group SpA will walk away from a deal to take a 20-percent stake in Chrysler LLC if the U.S. automaker's unions don't agree to major cost cuts, Fiat CEO Sergio Marchionne said in an interview published Wednesday.
Fiat and Chrysler are up against an April 30 deadline for Fiat to take a stake in the failing U.S. automaker in exchange for small car technology, but Chrysler first needs concessions from creditors and unions to ink the Fiat deal. If the Fiat alliance isn't finalized by then, the U.S. government has threatened not to provide any more aid and let Chrysler be sold off in pieces.
"The dialogue is out of sync," Marchionne said. "I think they need to see what state the industry is in. Canada and the U.S. are coming in as the lender of last resort. .... No one else would put a dollar in. This is the worst condemnation of the viability of this business."
UPDATE 4/27/2009 (SEE BOTTOM OF POST)
Rewind 20 or 30 years. Think anything like this could ever happen?
Chrysler is defnitely an American-auto-hating whipping boy, for sure. For a German/Italian car loving guy, it's easy to completely disregard Chrysler and maybe even scoff at them. But haven't they also been an accurate sign of the times in the US? In the 70s, they represented a company that refused to change even in the midst of much higher oil prices than their cars could handle, and needed a government bailout. I think there was another bailout in there somewhere. Now they need $6billion - and then more to make this deal work, with two weeks left before D-Day.
Chrysler hasn't learned a thing over the past 30 years. They've had some nice vehicles in that time, but most of them are run of the mill and don't even compare to Japanese or German counterparts. And now, in typically American fashion, they are ready to allow unions to do all the talking for them in another "save our asses" deal.
Sure, Fiat won't inject cash or buy stock from Chrysler...but why should they? The government has offered $6billion to help Chrysler, and apparently even that is not enough to bring them out of bankruptcy and allow Fiat to take the reins & run with a freshly bailed out American auto giant.
It's sad, and shows just how far America has fallen internationally - not only in cars, but as a trade partner and in terms of asset value. Thirty years ago, Fiat would have jumped at the chance to buy Chrysler and would have offered stock, bonds, cash, anything it could throw to have such a large American base.
For my part, I'd love to see this deal go through - DaimlerBenz lost their patience with the Chrysler brand, but Fiat seems to be more about completely remaking the company if they have the opportunity, while also selling Alfa Romeo vehicles here in the States again for the first time since 1995. This could only be a good thing for the American consumer, and yet again, we see labor unions getting in the way. They would apparently rather lose their jobs and see the company completely fail than give concessions to at least keep some of their huge pensions and disproportionate benefits.
This update was just posted on most of the major news sites. Looks like we may see Alfa Romeo & Fiat models here in the next few years after all! I guess the unions would rather make concessions than, ya know, join the ranks of the unemployed...surprisingly easy logic to follow after you think about it!