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Cerberus/Chrysler Deal a Snow Job?
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In "Chrysler at the Gates of Hell," on the Huffington Post blog, Automobile Magazine’s Jamie Kitman ventures to say that after Cerberus Capital LLC, the owners of the newly named Chrysler Holdings LLC, is through with Chrysler and the UAW, publicly traded companies — often maligned for having short-term returns in sight with long-term strategies left to suffer — will look benevolent in comparison. He also speculates that more predatory loan practices are just around the corner as Cerberus, which bought GMAC last year, now also has access to Chrysler Financial.
But more importantly, one tidbit that Kitman mentions, which has been a sin of omission for many news outlets in recent weeks, is that three ex-politicos, each fallen from grace in the political realm, are involved with Cerberus, with formerly much-ridiculed Vice President Dan Quayle helping steer the well-stocked ship. Quayle is Chairman of Cerberus’ Advisory Board, and has been heavily involved with the investment firm since 2000. Additionally, former Treasury Secretary John Snow and former Defense Secretary Donald Rumsfeld are also involved in Cerberus.
In recent years the once much-ridiculed VP has served as the door-opener for Cerberus, helping to get the group into new markets that would be otherwise difficult and buying them direct access to high-ranking execs. In fact, Quayle helped the private firm establish an office in Germany in 2003 (in of all places Frankfurt), according to information in the former VP’s official bio.
Kitman remarks, “The man who forgot how to spell potato is chairman of Cerberus' global investments unit. Can you imagine corporate officers accountable to shareholders choosing him for an important job?”
UAW president Ron Gettelfinger has been widely criticized in recent weeks for accepting (and endorsing) the purchase of Chrysler by Cerberus before even meeting with the group. Cerberus had provided a written statement saying that there were no plans for additional job cuts directly connected to the sale, but in recent weeks there has been widespread speculation that the group is contemplating how to streamline, or possibly outsource, a significant portion of Chrysler’s production.—Bengt Halvorson
Chrysler At The Gates Of Hell—HuffingtonPost.com
Responses (16 total)
By Dave | Posted: Aug 6th 2007, 02:42:06 PM
In addition to being unnecessarily rude, In the know is apparently oblivious to the fact that ordinary mortals with under a billion cannot buy Cerberus or Chrysler stock. That priviledge is by invitation only.
By In the know | Posted: Jul 7th 2007, 09:41:25 AM
BUY CERBERUS/CHRYSLER STOCK WITH EVERYTHING YOU HAVE!!!!
I'M FUCKING SERIOUS!!!!
By Charles Turner | Posted: Jun 8th 2007, 07:09:05 PM
It's easy to be a critic. Few people have the courage to step up to the plate. That explains why the Monday morning quarterbacks don't own Chrysler.
By bill dobbins | Posted: Jun 4th 2007, 12:56:06 AM
My point, Mr. Koenig and Skip, is that Mr. Quayle is not a businessman who earned his income. I have no problem with inherited wealth but let us not confuse someone who inherited it from one who has business savvy and earned his fortune the old fashioned way. I have owned both imports (Honda) and American. But the American car companies are marketing companies, not motor companies. And Mr. Koenig, I understand Adolf Hitler was charismatic and charming in private also. For that matter, my dog is charismatic and charming in private. I am simply stating that this is a financial deal, not a car deal. Now if only there was a way for a modern day Walter P. Chrysler to come onto the scene and take control. But control by financial committee, naaaah, I do not think so. Btw, my grandmother bought Ford when it came on the market in the mid 50's and we still own that stock and have driven Fords and Chryslers through the years. But gosh that Honda Accord was a lot more fun to drive than the domestics.
By don zuchowski | Posted: Jun 1st 2007, 09:19:00 PM
this is a good thing for chrysler
By Skip C. | Posted: Jun 1st 2007, 12:00:35 PM
Mr. Dobbins, your reply show the intolerance people like you have. So what if he inherited money? If his grandfather earned it, then he has every right to leave it to whomever he chooses. You don't come off sounding intelligent, you sound envious. And no, I didn't inherit a fortune.
And your remark about GM products...what does that have to do with the conversation? You revealed yourself as a domestic automaker-basher by doing that. You might want to check the news, by the way. Check out Toyota's broken engines in the new butt-ugly Tundra. Great product they have there. GM is making products people want and getting better all the time.
And the last time I looked, even the imports were offering financing deals.
By Klaus Koenig | Posted: Jun 1st 2007, 12:13:09 AM
I think the attack on Mr. Quale's foutunate birth are unfounded. I have meet him personally and while not a carasmatic as a Bill Clinton, I found him to be very intelligent, though unfortunally for him, the passion he has for issues concerning the future of our counrty really comes through when you talk to him face to face.
As for Cerberus/Chrysler my hope is the the ego of owning one of America's great brands, trumps the drive to flip parts of the company for a fast buck. I actually heard that the CEO was geeked that Americans once again own Chrysler.
By bill dobbins | Posted: May 31st 2007, 08:42:09 PM
Mr. Qualye inherited $100 million from his grandfather. He won the ovarian lottery. He does not have any business sense except through osmosis. Mr. Rumsfeld and Mr. Snow are like the dogs that once hung around the county courthouse trying to find what tax dollars they can collect for themselves. Chrysler will be stripped, sold for parts, and dumped. The only people who will buy GM or Chrysler will be suckered by finance deals, not the products. Americans have already decided with their purchasing power that Toyota and Honda and Nissan are the future in the automotive industry.
By Harvey | Posted: May 31st 2007, 06:06:42 PM
Enough about Quayle! I didn't hear anyone question that angusburger, Al Gore, about his qualifications as a financial fund advisor.
H
By B_ | Posted: May 31st 2007, 04:04:05 PM
Outsourced production? Hmmmmm..... I suppose I can see it. Semiconductor companies do it all the time. On one hand, it is a benefit cause you sign a contract, you know the cost, and it is the company doing the actual assembly that has to worry about productivity, quality, manpower, retirement benefits, etc.
With that said, I'm not so sure I like the idea in the automotive world. By doing that, you add a layer that can create friction between two companies. What if the outside vendor doesn't care about quality like you want them too? What if they cost too much? What if they put you on the back burner because another company wants their capacity and is willing to pay more? All that stuff.
I understand the money benefits, but I think it gets lost sometimes that each time you do something like this, you lose a layer of control over your operations. I do believe there is much value in being able to trace a part from start to finish. I do believe there is value that you have control of the final piece of machinery before it rolls of the line and to a dealership (you can catch a bad part before the customer gets it) because it is your name on the sheet metal. An outsourced vendor might not give a beans about it, but you will still get the bad rap from a dissatisfied customer. This isn't a $0.10 microchip, it is a $30,000 automobile. People expect stuff to work. And lastly, who knows how to manufacture and automobile more efficiently than an automobile company? Some of them have been doing it for over 100 years of mass production. Will an outside vendor really be able to understand everything that goes into building an automobile? Will they really have the expertise to do it just as well or better than an automobile company? I'm not so sure.
It has proven time and again that automobiles are not toothpaste, microchips, tvs, or any other consumer product. I'm just concerned that Cerberus thinks it can apply those standard private-equity principles it has used in other companies and make them work in autos. Maybe it can be done, but the beast is completely different here.
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