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Chrysler: Crafting a Reprieve

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Rumor Mill

Chrysler found itself a poor cousin to the elite Mercedes line, struggling to survive and battling rumors of an impending selloff or even demise.

One speculation called for another auto company, such as cash-rich Toyota, to consider buying all or part of the combined corporation.

But there would be little reason for a Toyota to pull out its check book, even to buy Chrysler vehicle model lines or manufacturing facilities, if the American operations were put up for a fire sale.

Toyota had been constructing manufacturing plants in the U.S., the most lucrative vehicle market around. And those plants were considered the pinnacle in the industry for their ability to assemble as many as six totally different cars and trucks on the same assembly line without ever halting production.

And Toyota vehicles were taking bigger and more obvious bites of American market share as those products gained a more loyal following. There simply would be no reason for Toyota to need a Chrysler in its plans.

Missed Communications

Remaining intact would allow continued mismanagement by Germans who constantly misread the American culture and its workers.

Daimler's Dieter Zetsche was recently installed at American headquarters in Auburn Hills to stem the tide of red ink and turn around morale. Among top industry executives, he is considered knowledgeable about the product side and is highly regarded.

"We had to move and we moved decisively," said Zetsche, in announcing the layoffs.

"They're going to do pretty much what they want to do," said Lonny Smith, a 58-year old Chrysler hourly worker for 18 years who said he will probably opt for retirement. The January announcement calls for the Mound Road Engine Plant in Detroit where he works to close by the end of next year, and many jobs will be eliminated rather than transferred to new locations.

"I kind of worry about the young guys," said Smith.

And a complete shutdown of Chrysler, should it ultimately go under, would impact more than the U.S. economy, according to industry futurist Dr. Sheila Ronis, with the University Group, a think tank in nearby Birmingham, Michigan.

"It has to do with military readiness," she said. "There are national security issues here."

Rescued Before

Back in 1979, when the loss of Chrysler threatened to derail much of the economy, the situation was severe enough to bring support from an unexpected ally - U.S. Congress. Now, according to Ronis, it was time to look there again.

"There are multiple ways the U.S. government could choose to have an impact on this," said Ronis, a consultant for the Pentagon and NASA. "One is they could decide that the Chrysler Group is a strategic asset of the United States. If they do that, they might choose to have a committee of some kind develop strategies whereby the federal government actually provides loan guarantees as they did in 1979."

At that time, the U.S. felt the mushrooming effect of job cuts. Early layoffs in the auto industry gained momentum, and ultimately became widespread throughout the economy.

A white paper, "Economics: Private and Public Choice" (Dryden Press), representing four U.S. colleges (Florida State, Montana State University, Occidental College and West Virginia University) explains the Keynesian theory behind the phenomenon.


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