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Random Thoughts On A Satur…. err, Wednesday

I started writing this a couple of weeks ago, and figured i might as well dot the “T”s and cross the “I”s and finish it off. This is a thread that might expand as more info crosses the wire.  Or maybe not. That could be a different thread.

The Government Forced Chrysler and Fiat Merger:

Since 2000, me and the Sonic-Mate, who works in the financial side of the industry, have foreseen the inevitable slide of the American auto sector into the abyss (we’re not clairvoyant or anything, it’s not like it was difficult to see this coming). When the shite hit the fan this winter. I was struck by a couple of things.

First, lets look at Ford. They are in what looks like a winning position at the moment. Why did this happen? Unlike GM, Ford took some bad hits early on in the decade, such as the Bridgestone tire / Explorer SUV roll-over fiasco. Ford had less of a cash reserve than GM, which forced them to deal with labor on realistic terms earlier than GM. Theses and other problems have caused a high turnover rate at the top of the company. Ford has had something like twelve CEO’s in the last nine years (OK it’s three) while, until he was forced out by the government, Rick Wagoner was the only CEO for GMthis decade. The GM board, like the Oakland Raiders owner Al Davis, tend to want to only hire “yes men” and hire CEO’s from within the company structure. Ford’s latest CEO, Alan Mulally, is an outsider, and steered Boeing from the brink of disaster. Ford also has one advantage that neither GM or Chrysler have. Ford’s European auto division…. ROCKS. It always has. From the 1970’s imported Mercury Capri, to the 1986 Ford Scorpio and Sierra, imported and stupidly re-branded as the Merkur Scorpio, and really stupid Merkur XR2Ti (I always though the cars were given short shift by corporate, who really didn’t like the competition for the American models, and were set up to fail). Ford has slated three hot Euro-cars to come across the pond within the next year. GM has sold off it’s Euro unit, Opal, and does not have the same resources.

Chrysler is in much worse condition than GM because it has fewer assets, and they are still reeling from the failed Daimler merger. What are their assets. They do have a couple. They have the Jeep brand, which is a valuable asset. And, for what it’s worth, they still build the best minivan out there. That’s all I can think of at the moment.

Fiat is in an interesting position. They are just emerging from a near extinction themselves. They are now a soundly run company and have built up a decent cash reserve. They still have an issue with quality control, ranking last or near last in surveys in Europe, though some economists suggest the low ratings are more reflective of their troubled past, and the surveys don’t reflect on Fiat’s latest offerings. And many question whether little Fiat is even capable of rescuing Chrysler. Stanger things have happened. Keep this in mind – It was Renault, of all companies, that brought Nissan from the brink of disaster. Unlike Glen Beck, or this guy, I’m keeping an opened mind.

Fiat’s internals isn’t the only hurdle facing this merger. Yesterday, the Supreme Court refused to interfere with the Chrysler / Fiat merger on the behalf of some pension holders in Indiana. Their attempt to block this through the courts was cynical at best. The gyst was that they wanted to stop the merger because the end result might… might be a reduction in the pension payments they recieve. This may not even be the case, as the may get even less if Chrysler goes under, though I think that the feds are bound to cover those in the case of bankruptcy. Anyway, it was nice to see that they would rather see a company go under, with a possible domestic jobs loss at over 100,000, rather than take a hit in their pensions, but I’m sure this group or others like it will thow out some more speed bumps to derail this thing. 

PS. As I’m writing this, I realize I sound like a Ford fan-boy. Let me assure you, I’m not. We had a 1999 Cougar. It was fun to drive, but, man, the quality sucked. Rack and Pinion split in two; due to crappily engineered wiring harness the fuse module almost fried up; again due to poor engineering, alternator went out four times in three years (it helps if you don’t put it right next to the firewall and exhaust pipe – heat builds up, which is an enemy to alternators; all sorts of knobs broke. We were not sad to get rid of it a few years ago. And besides that – I’m a Subaru nut through and through. That said, the one Ford I would get would be a 1967 – 1969 Mercury Cougar.

That’s it for now. More thoughts later.