As part of the automotive bailout package, the United States government gave both Chrysler and General Motors an ultimatum: Come up with significant cost savings and restructuring plans to prevent or delay falling into bankruptcy. Chrysler was given an additional 30 days to comply – GM was given 60. It seems this disparity may be the death knell for Chrysler, but time will tell.
Prior to this governmental ultimatum, Chrysler had been in talks with Fiat about a possible merger. Those talks had broken down. But, in light of the 30-day deadline, Chrysler seemed to enter panic mode and restarted those merger talks. Within hours after President Obama made his announcement, Fiat CEO Sergio Marchionne flew to the US to participate in the negotiations with Chrysler. It seems again that these talks have become mired because Mr. Marchionne and the unions have reached a virtual impasse over contract re negotiations. Chrysler corporate officials have also looked askance at the bigger share of Chrysler that Mr. Marchionne as now asking for. While both sides are playing hardball with each other, time is running out for Chrysler to secure a deal and present its plan to the government.
Chrysler needs this merger to survive. If Chrysler should fail, the union and the workers lose. Without it, Chrysler will most likely end up in bankruptcy. Perhaps though, once Chrysler has reorganized within its bankruptcy filing, it will emerge as a new, leaner company, without all the excess baggage they are currently fighting to keep.
