Re: [Amc-list] CHRYSLER SALE

[Archimedes <Freedom@xxxxxxxx>]

Joe Gray <Jgray_55@xxxxxxxxx> said:

>HMMMMM...Maybe it is a fair turn of events...since Chrysler treated AMC so crappy in 87-88??? Hate to see another American company go away though!! But..They DID treat AMC like crapola to be disposed of!


I'm not sure that's true, in retrospect.  Chrysler kept a lot of AMC alive after the buyout.

What was worth keeping wound up being worth billions to Chrysler, but AMC never had the capital to set the ball in motion and get the value out of them that Chrysler did.  AMC would never have made any breakthough on these things; they simply didn't have the money to make them work.  For instance:

- the engineering staff.  Those guys were so used to doing every $100 job with $1 that they could work miracles with very little cash.  When they got to Chrysler, the world was their oyster.  At last, development money was available.

- the stylists.  A lot of them found themselves designing some of the cutting-edge Chrysler designs of the early nineties -- cars that AMC could never have afforded to build.

- the 4.0.  This engine was so good for its time that it survived the buyout and kept right on powering Jeeps through 2006 - twenty years after its basic development was completed.

- the Premier.  This was a great concept car that AMC couldn't get all the bugs out of because it didn't have the money to do so.  Chrysler did, and the result was a complete re-skin and overhaul of basic systems that resulted in the Chrysler LHS, Eagle Vision, and Dodge Intrepid.  In a sense, the Eagle Premier -- the AMC product -- set the stage for the huge Chrysler earnings of the early nineties.

- the Bramalea plant.  It was the most advanced plant in the world when it opened; and by some measures it still is.  And it's still producing automobiles.

Chrysler did screw over some of the old-time mom-and-pop dealerships that had stayed with AMC through thick and thin, and I thought their decision to dump in a landfill several million dollars worth of AMC parts was just plain stupid -- but for the former Chrysler couldn't justify supporting a dealership that was only selling ten or twenty cars a year; and for the latter, blame US tax laws that turned AMC parts dumped in a landfill into a tax deduction.

Daimler, when it bought Chrysler, bought it for one main reason: Chrysler at the time had billions of dollars in cash in the bank (as it does now, about $11 billion, which is why GM wants it).  The real estate and manufacturing facilities it owns are worth billions more.

Cerberus, as a private company, had an opportunity to give Chrysler a two or three billion-dollar, energetic shakeout when it bought the firm in 2007; liquidating all of the things that were causing it to fail, like exhorbitant health care costs and inflated labor costs (these alone put the Big Three at a $5000 disadvantage to the foreign makers).  They should have bought out all of the old contracts and told everyone that wages (about $85 per hour, including all benefits) -- if the workers wanted to have a job after the deadline -- would be cut by two thirds.

They also should have closed many of the production plants that are still in the US:

http://www.autohobbydigest.com/tables.php?51_Chrysler-Plants-and-facilities

... and either relocated them to other areas of the country where tax and labor laws are more favorable, and where they can operate with a non-union work force; or contract out as much of their labor as possible.

I know there are some who won't like the idea, but in a downturn, you can't expect to keep getting paid the equivalent of $85 per hour in an industry where there are people getting paid $10 to $15 per hour elsewhere, and still have a job in a few months.  Autoworkers have literally priced their labor so high that their industry has no hope of being able to compete.  Line workers are as much to blame for a failing industry as the executives.

http://money.cnn.com/2007/01/26/news/companies/pluggedin_taylor_ford.fortune/index.htm

I think there is a market ready and waiting for the American automobile manufacturers, but labor costs need to get a big-time reality check and all of the featherbedding rules need to be eliminated.  When my wife and I went shopping for a new minivan in 2003, I looked at the Big Three products, but Kia was selling a van that was about $5,000 cheaper, plus it was heavier, had a better crash safety rating, and ran like a batouttahell.  Plus we had just finished struggling with an older Dodge Caravan that was always having some problem or other (notably costing us $1400 for a transmission), problems which Chrysler was no help with.

We bought the Kia.  Had the Chrysler been on top of its quality control better, and priced its products somewhere close to the Kia, we would have bought the Mopar.

-- Marc



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