Michigan's upcoming Republican primary has made the Bush and Obama administrations' bailouts of General Motors and Chrysler a political football that both the Republican candidates and Pres. Obama are kicking around. The Seattle Times published an Associated Press fact-checking piece that was fairly balanced in that it pointed out that both the Republicans and Pres. Obama might be stretching the truth in their respective claims about the bailout. On one point, though, I think that Calvin Woodward and Tom Krisher of the AP themselves told a bit of a fib, so I thought I'd run it by the B&B for your opinions. In discussing Rick Santorum and Mitt Romney's criticism of how Pres. Obama's team, headed by Ron Bloom and Steve Rattner, structured the bankruptcies and reorganizations of Chrysler and General Motors, the AP addresses the notion that the companies were given to the UAW and, in Chryslers case, Fiat as well.
Though I think they minimize the ties between the UAW and the VEBA it owns that manages members' health care, Woodward and Krisher do a decent job of explaining the structuring of the UAW's stake and what obligations it took on in exchange for equity stakes in the companies. I think, though, that they conflate the genuinely complex health care and pension obligations of the companies to their UAW employees and retirees, and the manner in which Fiat gained control of Chrysler. I believe that they also exaggerated Fiat's skin in the game. The $11.2 billion in loans to Chrysler that have been repaid, were not paid back by "Chrysler and Fiat" (emphasis added). As Sergio Marchionne told a flock of business and autojournos at the NAIAS last month, the auto market in Europe, upon which Fiat is heavily dependent, will continue to be flat for the next two or three years. Fiat's not making the billions needed to pay back those loans. That revenue was generated by Chrysler's operations in North America. Okay, so you can say that it's Marchionne and Fiat's management that has brought Chrysler back from the brink. Actually, as Pete DeLorenzo is wont to say, most of the new Chrysler product that's behind the company's reversal of fortune was developed by a skeleton crew of "true believers" in Auburn Hills during the dark days when the company was financially failing and being restructured. DeLorenzo sometimes is a bit of a one note Johnny when it comes to the rock star known as Sergio, but he has a point. It was Chrysler, not Fiat, that made the product that has quite possibly has brought the Walter P.'s company back from the dead. Where I really think Krisher and Woodward fall down is when they try to say that 60% of Fiat's controlling share of Chrysler was paid for. The article admits that Fiat paid not on thin lira for the first 35% of Chrysler they were awarded by Rattner's team. For the purposes of accounting, a value was placed on Fiat's "management expertise" and "technology", two things they would have brought to the table even had they paid real money for Chrysler, in exchange for their first 20% of the Auburn Hills automaker, and then 15% of Chrysler was given to Fiat for meeting artificial targets that TTAC's Ed Niedermeyer has shown to have been essentially a rigged game relating to the production of high gas mileage vehicles. So what do you say, Best and the Brightest? Did the US government "give" Chrysler to Fiat?
Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don't worry, all the photo and video players in use at the site have mono options. Thanks – RJS from The Truth About Cars http://www.thetruthaboutcars.com | |||
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Tuesday, February 21, 2012
Ask The Best & Brightest: Was Chrysler “Given” to Fiat?
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