Chrysler executives have returned to Washington, DC with a plan -- learn what is behind their most recent request for government assistance.
Chrysler LLC has been receiving a lot of heat lately,
in part for their awful performance before Congress last month when they first asked for government assistance. Back then, the executives of Chrysler, Ford, and General Motors all showed up in Washington, DC via private jet, a move that many considered to be oddly contrary to the financial hardship the Big Three automakers insist is their current plight.
These days, auto executives are arriving in our nation's capital via commercial airliner or, in the case of GM CEO Rick Wagoner, are driving. Leading up to their appeal for funds, each automaker has issued press releases and made other very public statements to give the American populace an idea of what their proposals for reformation include. These proposals were ordered by Congress who chastised the automakers for showing up before them without a plan of action.
For Chrysler, a significant portion of their pitch to lawmakers is there detail of what they've done so far to reign in costs. These points include:
The elimination of over 1.2 million units of capacity, or 30 percent;
A reduction in fixed costs by $2.4 billion and, separated over 32,000 employees - including 5,000 on the Wednesday before Thanksgiving.
Investing in product improvements - over half a billion dollars in their first 60 days since taking ownership of the company in 2007;
An improvement in their latest JD Power quality scores, reducing warranty claims by 29 percent;
New alliances and partnerships to produce vehicles for VW and for Nissan.
Chrysler says that they need financing because of a wholesale collapse in the U.S. selling rate from 17 million vehicles at the beginning of 2007 to 11 million today. Chrysler also says that they lost nearly twenty percent of their business virtually overnight when the credit markets soured, putting financing out of the reach of many buyers.
What Chrysler wants from the federal government is what they are calling a “bridge loan” monies which would help the automaker get through the current economic downturn while being able to pay employees, suppliers, meet health care and legacy costs, and tend to capital expenditures. For its part, the company says that they have 24 product launches planned from 2009 through 2012 with each vehicle being more fuel efficient than the one that is being replaced.
When will Chrysler actually begin to repay their bridge loan? According to company executives first payments will be made sometime in 2012, about three years after the loan money is received.
