>Fiat and Chrysler beat a dying horse.


Yet again Chrysler looks to be the dullard. American auto unions have enjoyed post-war advantages for far too long. American Labor cost continue to be too high compared to the quality of product produced. So foreign investment groups choose to build in the pro-business South, not Detroit, and American auto makers continue to stick to the old business model. Retire at 50, collect a pension, and never go back to work. These seems backwards.

Many, not most, union members enjoy a retirement check life, that is at least, if not longer than, the actual period of employment. (If I work for 30 years, I should have 30 years of retirement, not more!) This may seem anti-labor but the fact is that a generation of workers who start at 18, retired at 55 are now in their late 70’s they will quickly be approaching the balance point of retirement and work but still demand equality of pay, 30 years after leaving the factory floor. Meanwhile, their children are getting laid off because they demand the same and the companies know they cannot pay. I don’t know, but this seems extremely out of balance.

 My mother worked as a nurse for over 40years, more thirty as a government employee. She retired at the age of 70, not because she wanted to but because she just couldn’t kee up anymore. Where is her pension and lifetime achievement award? If this was the par for autoworker’s work ethic, Fiat, VW, and anyone else would be happy to buy American factory workers contracts. Of course Americans would probably be happy to buy the cars anyways.

Fiat CEO warns Chrysler unions: cut costs or we walk | Reuters

By Gilles Castonguay

MILAN (Reuters) – Fiat SpA‘s chief executive, facing a two-week deadline to work out a partnership with Chrysler LLC, warned the troubled U.S. carmaker’s unions he would ditch the idea unless they agreed to cut labor costs.

In a clear message to U.S. and Canadian unions, Sergio Marchionne told Wednesday’s Globe and Mail newspaper a deal on the partnership had only a 50-50 chance of succeeding because of lack of progress in talks with union leaders.

“Absolutely we are prepared to walk. There is no doubt in my mind,” Marchionne said in an interview posted on the Toronto newspaper’s website.

Nomura analyst Michael Tyndall said Marchionne was probably not bluffing in talking tough with the unions.

“He’s playing hardball,” he said, adding that the unions’ position would make the deal too costly for Fiat. “We want them (Fiat) to walk away … I don’t see any benefits in this deal.”

The two carmakers are under pressure to reach a deal on the proposal with Chrysler’s unions and bondholders before an April 30 deadline set by the U.S. government.

Chrysler has been warned by Washington that it would go into bankruptcy if it fails to complete the deal, designed to save the smallest of Detroit’s Big Three car makers.

But its lenders have so far refused efforts to eliminate most — if not all — of the $7 billion owed to them.

If a deal is reached, Chrysler would get at least $6 billion in extra government funding, having received $4 billion so far.

Fiat would get access to the U.S. market and gain the scale it needs to survive the worst industry crisis in decades. It would bring to North America its popular Cinquecento (500) car next year, while its premium Alfa Romeo brand would make cars in Canada or the United States, Marchionne said.


Short of having Fiat inject cash into Chrysler, Marchionne vowed to do whatever it took to save the U.S. carmaker, including becoming chief executive.

“Fundamentally, that’s possible, but the title isn’t important,” he said. “What’s important is that they hear me.”

He expected some of Chrysler’s plants to close under the partnership.

“(The market) liked it because he reiterated that Fiat would not take out any money,” said one Milan dealer.

Many analysts still think the partnership will eventually cost Fiat money even if the terms of the deal do not oblige it to put up any cash.

U.S. private equity firm Cerberus Capital Management owns 80.1 percent of Chrysler and Germany’s Daimler AG 19.1 percent.

(Reporting by Gilles Castonguay; Editing by David Cowell, John Stonestreet)

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