Chrysler Plants Shut Down Until Bankruptcy Over; CEO Nardelli Out
By Bill Visnic April 30, 2009By Bill Visnic
Less than an hour after confirming it filed a petition for Chapter 11 bankruptcy, Chrysler LLC issued a press release with initial details of its proposed alliance with Italy's Fiat S.p.A.
Most intriguing is a statement (near the bottom of the release) saying most Chrysler manufacturing operations will shut down starting Monday -- and, although the language is vague, presumably not restart until the restructured company emerges from bankruptcy.
Also, Chief Executive Office Robert Nardelli will leave the company "following the emergence of the new [Chrysler] company from Chapter 11 and the completion of the alliance with Fiat."
The immediate shutdown of Chrysler's manufacturing operations was a point not discussed during early mass-media coverage of the company's bankruptcy filing. Chrysler release says:
"As a part of the restructuring, most manufacturing operations will be temporarily idled effective Monday, May 4, 2009. Normal production schedules will resume when the transaction is completed, which is anticipated within 30 to 60 days."
Chrysler said it has filed a motion under the much-discussed Section 363 of the U.S. bankruptcy code for the "swift approval by the court of the agreement with Fiat and the sale of Chrysler's principal assets to the new company."
Other noteworthy early details from Chrysler's release regarding the proposed alliance with Fiat:
- During the bankruptcy and restructuring process which "should allow a leaner new company to emerge in 30 to 60 days," the U.S. government will supply debtor-in-possession financing and the company claims it will be "business as usual."
- Fiat powertrains and components will be produced at Chrysler manufacturing sites. The release does not specifically say Fiat will manufacture entire vehicles in Chrysler facilities, but one criteria for Fiat to increase its ownership stake in Chrysler is the manufacture of a high-efficiency platform in the U.S. (see below).
- Chrysler will continue to build vehicles under its three Chrysler, Dodge and Jeep brands.
- Financing of new Chrysler vehicle purchases will be handled by General Motors Acceptance Corp. Undisclosed is the future of Chrysler Financial, the company's own captive finance company.
- Fiat is to obtain an initial 20 percent stake in the "new" Chrysler. But key metrics provide for an eventual increase to as much as 35 percent.
Those metrics include: a 5 percent increase for bringing a 40-mpg vehicle to be produced by Chrysler in the U.S.; 5 percent for producing a fuel-efficient engine family in the U.S. and 5 percent for providing Chrysler access to Fiat's global distribution network.
Photos courtesy Chrysler LLC
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