The recent troubles of the “Big Three” automakers have received plenty of attention but a lot of local eyes are on Chrysler. The company had a stake in the New Venture Gear plant before selling to Magna and this week’s events could be significant to locals with stock or pension ties to the company.
The Obama administration set a deadline of April 30th for Chrysler to finalize a partnership with Italian automaker Fiat, gain concessions from their unions and get their creditors to reduce the amount the company owes. The government was clear that it would not continue to lend money to Chrysler unless those conditions were met. The company was able to announce major progress today as four banks agreed to significant reductions in Chrysler’s debt. "This is kind of an example of the banks and the company working together,” says Economics professor Don Dutkowsky. “Let's see if we can make something work given that you've got a better business model."
Sources close to the talks say that Chrysler and Fiat are very near to that much needed agreement. Professor Michael Wasylenko from Syracuse University’s Maxwell School says it is clear Chrysler will need to be a different company. "Long term have they fixed the real model? That is, can we right size the company, make the right number of cars and still be viable and make them at a reasonable cost,” says Wasylenko.
Today’s progress is seen as crucial for Chrysler’s long term viability. Experts say that a structured bankruptcy is still an option for the company but they appear to have avoided a messy liquidation. Chrysler could clear one more hurdle tomorrow when UAW members vote on a deal that would give the union a fifty five percent stake in the company. Union leadership unanimously recommended it to the membership.
