"These brands are staying together," LaSorda said at a news conference at Chrysler headquarters in Auburn Hills, Mich. "They will not be broken up under any circumstances. It's critical that they stay together."
Management Says New Owner Is Committed for the Long Term
Wednesday, May 16, 2007; Page D01
The future of Chrysler under its new management began to take shape yesterday as executives and union officials laid out promises to save the automaker's brands and hold off on more job cuts.
Chrysler chief executive Thomas W. LaSorda said private-equity firm Cerberus Capital Management, which agreed to acquire 80.1 percent of DaimlerChrysler's U.S. unit on Monday, won't phase out or sell the carmaker's three brands: Jeep, Dodge and Chrysler.
LaSorda said Cerberus would invest "a lot of money" to help Chrysler improve its balance sheet, develop new products and expand overseas. He said Cerberus chief executive Stephen A. Feinberg made it clear that "this is a long-term investment for them and they'll be patient as we continue to move this company to profitability."
Chrysler will continue to have access to advanced technology from DaimlerChrysler, including diesel-engine and hybrid technology, LaSorda said. Daimler will retain a 19.9 percent stake in the American carmaker.
Chrysler and Cerberus executives met yesterday with Buzz Hargrove, president of the Canadian Auto Workers union, who had been the most vocal opponent of a private-equity deal for Chrysler. After a session with LaSorda and Feinberg, Hargrove said senior Chrysler officials had signed a letter committing the automaker not to cut CAW jobs.
The CAW, which represents about 9,500 workers, or 12 percent of Chrysler's unionized workforce, had been worried that the Cerberus would back out of commitments to bring new projects to Chrysler's two assembly plants in Canada.
The letter "ensures that the commitment and discussions that we had with Chrysler earlier this year will be carried through," Hargrove said. He said the letter focused on decisions related to the sale of Chrysler. It didn't take into account what might happen in the event of Chrysler "losing a huge amount of market share," he said.
Hargrove called the meeting "very constructive, very positive." He said he came away impressed with Fienberg's knowledge of the industry.
"They have certainly done their homework," Hargrove said.
Ronald A. Gettelfinger, president of the United Auto Workers, Chrysler's largest union, signaled his support of the sale yesterday, saying it was in the "best interest" of UAW members. He hasn't said whether the UAW sought assurances similar to those given to the CAW. A UAW spokesman was not available for comment.
Meanwhile, losses continued to mount at Chrysler. DaimlerChrysler reported yesterday that the U.S. unit lost nearly $2 billion in the first three months of the year.
DaimlerChrysler blamed Chrysler's financial weakness on sales declines and the costs associated with a restructuring that includes closing plants and cutting 13,000 jobs.
Like other Detroit automakers, Chrysler is suffering from a collapse in sales of sport-utility vehicles and trucks and intensified competition from Japanese automakers. The 82-year-old American icon is also suffering under the weight of pension and retiree health-care costs.
Sales at Chrysler fell 18 percent in the first quarter, to $13.69 billion, from the first quarter of 2006. The unit sold 642,200 vehicles, down 8 percent. About $1.2 billion of Chrysler's losses were the result of costs associated with its restructuring plan.
Overall, DaimlerChrysler earned $2.64 billion in the first quarter, compared with $1.05 billion in the first quarter last year. The company recorded a gain of about $2 billion from selling part of its stake in European Aeronautic Defence and Space, the parent of Airbus.
DaimlerChrysler's profit rose to $2.67 billion in the first quarter, a 73 percent increase over the same period a year ago.