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Fiat Ready To Say 'Basta!' On Chrysler Deal, Thanks To Unions

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Fiat's Sergio Marchionne

Fiat's Sergio Marchionne

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No one would say that Chrysler's been doing well in recent months, but at least its situation hasn't been as dire as GM's. Smaller than The General and engaged to a sexy, Italian brand, Chrysler has clung to the promise of a modestly rosy future--until today.

In an interview with this morning's Globe and Mail, Fiat SpA's CEO Sergio Marchionne says quite plainly that he's prepared to break off partnership negotiations with Chrysler unless the company's unions in the U.S. and Canada agree to labor concessions. Specifically, Fiat wants to bring UAW and CAW wages in line with workers at Japanese and German automakers' plants on both sides of the border.

That's one stumbling block. The other? As you likely know, the Fiat/Chrysler engagement has an expiration date: if the two companies can't agree on a feasible partnership deal by April 30, Chrysler will likely be forced into bankruptcy. As of today, Marchionne sees only a 50/50 chance of such a deal going through:

“Absolutely we are prepared to walk. There is no doubt in my mind,” he said. “We cannot commit to this organization unless we see light at the end of the tunnel.”

Mr. Marchionne, 56, said Chrysler workers on both sides of the border have to end their sense of entitlement if the wrecked auto maker is to have any chance of repairing itself.

“The minute you talk to me about historical entitlement in an organization that is technically bankrupt, it's a nonsensical discussion,” he said.

We're guessing that Senator Bob Corker and his union-unfriendly GOP pals have already cracked open a jug of moonshine to celebrate.

[source: TheGlobeAndMail]

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Comments (8)
  1. "7%"

    7% is the amount add to the cost of a car made by a union worker. that is before they took any cuts in pay or benefits. that fig. was from the automakers them selfs. so now its even less. so why are they still hammering the workers? i'm sure there or other places in a big company to make cuts? it just seems as the workers get the blame for anything bad that happens to a company. but when things or good its the "C.E.O.'s" who got them there. i don't understand that. i am just wondering something? if a company makes it or breaks it, it take both.

  2. "Cut The Entitlement"

    All I have to say is cut the UAW entitlement. Let them go bankrupt and then the UAW will be SOL. The CEO's also need to take a cut. If they dont wake up the will not have a job to worry about what their entitlements will be. At this point I would not buy a Chrysler or GM.

  3. "which is it"

    If the union isn't the problem, then how do you explain the demise of the unionized American auto industry, vs. the relative health of the foreign automakers who produce cars here and are not unionized? And don't forget the pension costs negotiated by the unions for retired workers.
    When Chrysler dies, the UAW can declare victory.
    GM, C, and F all have terrible product portfolios, and their problems don't end just with union issues or product. There are FAR too many dealers, terrible dealership experiences, and problems with real or perceived quality.
    GM & F quit the minivan business; C doesn't have an economy car or a decent mid-size car. GM has evolved badge engineering to an art form, with a dizzying array of same products. Mercury is totally irrelevant. The recall parade is ridiculous. Most GM cars of interest are actually imported.
    But with inventories at 6 months on most models, and up to 24 months on some, why should Fiat be the latest celebrity to join Chrysler in a doomed marriage?

  4. "Doesn't sound like it's fully the UAW's fault"

    Maybe I've misread you, gslippy, but it seems like you've answered your own question. No, the UAW hasn't been a great friend of the Big Three, but as you point out, the F/C/GM portfolios, dealer networks, and other factors have also contributed heavily to Detroit's growing irrelevance and gradual demise.
    In short, I wouldn't want to blame the current state of affairs solely on the UAW. However, it seems that the UAW is emblematic of a bloated, bureaucratic corporate structure that's stifled creativity and put a big, hulking wall between the Big Three and their customers.
    Bankruptcy and restructuring won't be pleasant, but it'll offer GM/Chrysler and the UAW a chance to get leaner, meaner, and more competitive. Assuming that they're able to stop their bitching long enough to grab the opportunity, that is.

  5. "Wage comparison"

    Check out the wage and benefits comparison of the Big 3 ($70-$75) to Toyota/Honda ($45) to the national average ($27) here:
    An interesting perspective...

  6. "UNCLE !!!!!!"

    How much longer will this painful drama play out? Do the UAW cut off their only chance to play the leading role for survival? Do they think any players will survive if Chrysler (or GM)change the plot and go belly up? Will the union villans continue to play "CHICKEN" with their memebers jobs? I love my Daytime MoPars, lets end this soap opera as all good ones end, with a healty Chrysler and a fair deal for workers. Enough! Time to kiss, make love and live happily ever after!

  7. "still..."

    Detroit hasn't been paying attention to any Americans--maybe they will listen to an Italian? In all seriousness, at this point the Chrysler dealer network is really the burden.

  8. "Chrysler worker"

    re Cut The Entitlement Why is it you think the auto workers need to lose what they have worked for ? Soime individuals that don't know what is going on in a factory should not be the first ones to judge ! Big business CEO's ,executives have taken this country for a nice ride ,and it is all being dumped on the workers ! Executives need to take pay cuts ,and their bonuses should be voided indefinitely ! You can't tell me they haven't got enpugh money to live on with just their salaries ! They cry poverty to the government and they get what they want ! It all comes down to the middle class paying for everything ! Immigrants have more rights than american born citizens ! American workers are being replaced by the government with immigrants ! That is how they are trying to lesson the debt they have to China , 9 trillion dollars !

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