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So Chrysler Is (Mostly) American Again - Now What?
Our Buy American Mention of the Week!
by Roger Simmermaker
October 1, 2007

Now that the Germans have finally decided to largely undo their former "merger of equals" fraud they perpetrated in the late 1990s and have allowed Chrysler to be (mostly) acquired by the American-owned, private equity fund Cerebus, there are two main questions for Americans who like to be patriotic with their purchases.

1. How "American" is Chrysler?

2. Is it just as patriotic to buy a GM or Ford product as it is to buy a Chrysler product, which includes Dodge and Jeep brands?

The answer to the first question is that Chrysler is now exactly 80.1 percent American-owned and 19.9 percent German-owned. The answer to the second question is it's still better to buy a GM or Ford if you want the most patriotic bang for your buck. Chrysler purchases are for those Americans who positively can't stand supporting an American company that refused to engage in an entangling alliance with a foreign automaker. Both GM and Ford stared bankruptcy and financial collapse in the face yet refused to give up their American independence by submitting to overwhelming pressure to team up with Japanese-owned Nissan, which is also 44 percent owned by the French.

Chrysler purchases are for those who don't mind the fact that Chrysler plans to start importing complete cars from China next year, which would become a Toyota-type nightmare for GM and Ford, who have no such plans.

Why the nightmare scenario? Because the playing field is already seriously unlevel, with everyone playing by the lowest-cost rules they can. GM and Ford, of course, pay the highest premiums to access and sell to the coveted U.S market since they have taken on the task of supporting health care and pensions for their retirees. This honorable burden they have chosen to bear, from which most Americans feel no direct relief, makes most free market Americans hopelessly and eternally ungrateful since it makes American automakers "uncompetitive."

Yes, I'm aware that Chrysler, like GM and Ford, has to worry about an unlevel playing field. And I'm aware that Chrysler, like GM and Ford, pays more toward funding the health care and pensions for their workers and retirees and their families than Toyota, Honda, and Nissan do.

But GM and Ford aren't taking un-American actions to try to level the playing field. What are some of these un-American actions, other than Chrysler's plans to import cars from China in 2008?

For starters, The Chinese company that Chrysler is teaming up with, Chery Automobile Company, is the same company that fabricated a knockoff of the Chevy Spark, to which it bore a striking resemblance.

GM sued Chinese-government owned Chery in 2004 and settled in 2005 under a cloud of undisclosed terms, but anyone can easily see the obvious similarities between "Chevy" and "Chery" to see what China's intentions are.

But none of that matters, of course, to Chrysler. They weren't even American-owned at the time, as they were still controlled by Germany's DaimlerChrysler.

But that brings us to the next point of Chrysler's un-American ways. It's simply not American to pretend you are something that you're really not. And the whole time Chrysler was German-owned, they still wanted us to believe they were an American company, even to the point of publicly resenting "Toyota wrapping themselves in the American flag," according to one Chrysler spokesman.

How can Chrysler be upset about a foreign company trying to appear American when they're not when they are guilty of the same deceit?

And all the while Chrysler was pretending to be an American company when they were owned by Germany's DaimlerChrysler AG, it didn't bother them that DaimlerChrysler AG was among one of the companies listed (along with German-owned Siemens) that helped Saddam Hussein amass almost $2 billion in illegal kickbacks through exploiting a humanitarian program devised by the United Nations, according to an October 28, 2005, Wall Street Journal article.

It didn't matter that DaimlerChrysler owned a 20 percent stake in the European Aeronautic Defence and Space Co., which is the only formidable competition for American-owned Boeing, America's largest exporter.

It didn't matter that in February 2007 DaimlerChrysler announced it would dole out bonuses of 2,000 Euro to their German employees, at the very height of their struggle to adequately fund a turnaround of their American subsidiary.

It didn't matter that Dubai International Capital invested $1 billion in DaimlerChrysler in 2005 to become the third-largest shareholder or that in that same year the company spent huge funds to erect a huge Mercedes-Benz museum as tall as our Statue of Liberty and house three times the exhibit space of the Guggenheim Museum in New York.

Chrysler purchases by Americans during the Daimler years are for those Americans who don't care about any of these things or didn't know about them. Well now you know!

And Chrysler purchases today are for those who both didn't care what was happening at the company then and don't care about what's happening at the company now.

It doesn't matter to Chrysler now that they've hired former longtime Toyota executive Jim Press, who most recently served as Toyota's North American chief. It was Jim Press who said at the most recent Chicago Auto Show, talking about the perception that the quality gap between Toyota and American automakers might be closing, "I think there's some hope that the gap in quality is closing, but it really isn't." I wonder what he might say now that he has come to represent a company that is actually based in his own country? Will he refute that comment and now tell us about the quality strides of the new American Chrysler company?

You see, GM and Ford may have had their struggles, but they don't try to draw talent from foreign-owned adversaries, like Chrysler has done in drawing Jim Press from Toyota, and then assume their former adversary is now their friend. Yet Jim Press says he relishes the chance to save what he calls an American icon. Too bad he has been busy trying to destroy two or three of them for the last 20 years.

Then there's the hiring of Robert Nardelli, who barely had a chance to verify he had all $210 million of his Home Depot severance package, before being recruited by Chrysler. Nardelli will likely clash hard with the United Auto Workers and cause problems for Chrysler. The new Chrysler clearly has its work cut out for it, and even if investors looking to make a buck by bottom-searching for stocks love Nardelli, when the stakes are so high, as they are now for Chrysler and indeed any other U.S. automaker, you need inspired employees with high moral. Nardelli isn't the one to inspire employees and build worker morale.

In July 2007, at a visit in Beijing, China, speaking about the new combination between China's cheap manufacturing and Chrysler's technology, Chrysler executive, Tom Lasorda, proposed, "I would say there are endless possibilities." My concern is that those possibilities include destroying what's left of General Motors and Ford, which are America's strongest and most American automakers.

Nardelli isn't going to be able to fix Chrysler by doing what he did at Home Depot and replace higher-wage experienced sales clerks with lower-wage inexperienced students, which was a devastating blow to customer service and only drove consumers to rival companies.

It's my opinion that much like in the way GM decided it was time for Oldsmobile to ride off into the sunset, it's time that Chrysler does the same.

Toyota's rise has come at the expense of GM, Ford, and Chrysler, who now have a combined market share of under 50 percent for the first time in their history.

Back in 1992, William Greider warned us in his book Who Will Tell the People: The Betrayal of American Democracy, "Factories worldwide have the capacity to produce 45 million cars annually for a market that, in the best years, will buy no more than 35 million cars." The global oversupply situation isn't any better today. China, with its ability to flood the car market even more with its extra-lean manufacturing, only compounds the problem, and if Chrysler teams up with Chevy-cheating Chery Automotive, the problem compounds even more. If I were a betting man, I wouldn't bet that Chrysler can turn itself around without destroying GM or Ford or both in the process. The auto market is just too crowded for GM, Ford, and Chrysler to all be healthy and profitable.

So I'm advocating to those who want to do the patriotic thing when buying a car to put their preference on GM and Ford first and then on Chrysler as a distant preferred third choice. I would never advocate buying a Toyota over a Chrysler (even when Chrysler was German owned), and it is my view that a Big Three can't survive, but a Big Two can survive.

I hope that any layoffs of hard-working Americans at Chrysler will result in hiring at a prosperous Ford or GM if Americans focus on this strategy. At this point, Chrysler will do anything to get back on track, and that "anything" could be what brings down GM and Ford.

Different people have different perceptions, of course, about supposed "merger of equals" between Chrysler and Daimler-Benz back in 1998. But according to the famous and former Chrysler CEO, Lee Iacocca, everyone can agree on at least one thing. Chrysler was screwed royally by Daimler.

Mr. Iacocca knows that American auto companies aren't at the edge of the cliff due to lack of efficiency but rather because of health care and pension costs that foreign automakers don't have to carry.

The only way Chrysler is going to make it out of their hole, other than churning out whole cars in China, is to slash those American health care and pension costs.

For GM and Ford to survive within such a competition nightmare scenario they would have to do the same thing, and there the downward spiral spins out of control.

And surely the way to create a mass consumption economy here at home is not to take money directly out of the hands of those most likely to buy your vehicles. There simply isn't a way to remove spendable income from American consumers without negatively affecting the American economy. And that's basically what Chrysler will be doing if they significantly slash company health care and pension costs since Chrysler workers will be picking up the tab that used to be picked up by the Chrysler company.

Chrysler is partly banking on expanding into foreign markets (I guess they assume they can keep their market share from sliding in the U.S.), but this is much easier said than done. Chrysler, like Toyota, has been kind of late in trying to penetrate the Chinese market, in particular, according to a December 2006 Wall Street Journal article. It's not going to be easy to make significant, immediate strides in a country where you don't have very much name recognition.

Chrysler may have very well picked the wrong Chinese partner in Chery Automotive if they want a public perception of high quality manufacturing. When Moscow tested Chery's Chinese-made Aumulet in a crash test in 2007, it folded like an accordion. The front door sills crumpled up like newspaper at 40 mph, and one of Russia's car magazines said it was one of the worst performing crash tests ever. Another Russian car magazine scored the Amulet a "zero" out of a possible 16 in 2001.

Russia's AvtoRevu magazine said that the Chevy Spark knockoff Chery QQ does worse in crash tests than similar cars since the Chery QQ uses softer metal. Chery, of course, claims it uses metal they describe as "top-quality."

In any case, American car buyers who buy from Chrysler because they want to do the patriotic thing and save an American icon may destroy one or two others in the process. And in my opinion, it's a dangerous consumer strategy and not worth the risk. Let's stay focused on saving GM and Ford, or we may end up with no American auto industry at all.


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