Well, it’s official. Chrysler will be filing for bankruptcy. Is anyone surprised? Not me. The only surprise is that it took 30 days for it to occur. The writing was on the wall for one of North America’s “Big Three” auto manufacturers and now that it’s done maybe the economy will start to improve.
While it’s not likely that this will help the economy anytime soon, I think that it will provide a definite boost as some of the uncertainty is now removed from the marketplace – but that won’t occur til sometime in the future.
The next big question is who really cares about Chrysler filing for bankruptcy? I’m sure the employees and the dealerships do and maybe their families. However, everyone else had seen this coming for years … that is everyone except Chrysler.
With the North American automobile industry now in total chaos, maybe, just maybe, this sad industry and its leaders will recognize that they have not met market demands for some time. Consumers have demanded better service and better quality vehicles with better fuel economy. What did the North American manufacturers produce - Pieces of crap vehicles with crap warranties and poor fuel economy that nobody wanted.
Why would anyone in their right mind purchase a vehicle with a 60,000 KM warranty when problems started occurring with these vehicles at about kilometer 10? I should know, I’ve had many vehicles produced by Chrysler, Ford and GM and everyone of these vehicles had nagging problems that continued until the warranty expired and being “loyal” to North American businesses I would trade and buy North American again. Big mistake!
My wife recognized her mistakes and switched about 5 years ago to foreign when she purchased a Hyundai Santa Fe. Her reward was over 90,000 KMs of worry free driving. My Ford truck, was about 4,000 KM and 11 weeks in the garage to fix a problem with the air bag system.
So I’ll ask again … who cares that Chrysler is going to file for bankruptcy? Look at what led to this anyway. My views on poor quality vehicles, poor warranties and lack of response to consumer demands, but the fact they’re filing for bankruptcy has more to do with what was offered their creditors. With over $6.9 billion in debt, Chrysler’s idea of restructuring and getting its debt in order was to offer $2.5 billion in cash.
Wait, isn’t that about 75 percent of what they owe? The $6.9 billion is in SECURED debt.
The creditors had a choice, take the $2.5 billion or force Chrysler into bankruptcy where they would force portions of the company to be sold and get their entire $6.9 billion. Don’t get me wrong, I’m all for companies and individuals getting a bargain but what did Chrysler do to deserve a $4.4 billion in savings? Nadda … the executives and the people in charge of this company just didn’t get what President Obama was saying when he gave them 30 days to get a deal done. Did that happen? Guess not! Chrysler is filing for bankruptcy!
I’ve gotten emails saying that I’ve been overly hard on the North American automobile manufacturers. Many have said they pity the workers that will lose their jobs and the families that will be impacted.
Hey, I’m all for protecting jobs and the families. It’s a sad day when anyone loses their job and a standard of living is put in jeopardy. We’re going through something similar here in Newfoundland and Labrador right now as Abitibi Bowater has declared bankruptcy and are now refusing to pay severance to mill workers and cancelling pension payments for those who have been receiving pensions for over 30 years. It’s disgusting.
The government’s responsibility during this Chrysler Bankruptcy is to protect the workers, any severance package and pensions and to facilitate a smooth transition to whatever comes out of this bankruptcy. The government has to be proactive and do more than what they have been. It’s more than just providing billions in funding and loan guarantees, they have to ensure that if the auto manufacturing industry is to survive and emerge from where it is now, FREE MARKET CAPITALISM has to be allowed to work!
Chrysler’s bankruptcy is a start to this and whatever comes about in the next few days will be very interesting.
