FRONT PAGE CONTRIBUTOR
Chrysler asks for billions, loses hundreds of millions…but can afford UAW bonuses?
On Thursday, Reuters reported that Chrysler is lobbying Washington for $3 billion in subsidized loans from the Department of Energy that it was promised in 2009 to spur the development of
Al GoCarts fuel efficient cars.
Chrysler’s $3 billion loan application is still pending, denying the automaker a chance to refinance its pricey bailout loans before an expected initial public offering this year.
“It just underlines the special challenges for Chrysler,” Sean McAlinden, chief economist for the Center for Automotive Research, said of GM’s decision to withdraw its application.
“They’ve got another really tough year and they need the money.”
On Monday, however, when Chrysler reported its 2010 numbers, it revealed the company lost $652 million for the year.
This makes handing out bonuses to its workforce somewhat perplexing.
To be clear, Chrysler’s CEO Sergio Marchionne is not calling the $750 bonuses to UAW workers profit-sharing (how could he?). Instead, he’s calling them performance award payments because…well, you know, that just sounds better.
To be fair, Chrysler’s CEO is predicting a better year for 2011. According to the Detroit News:
Chrysler’s net revenue of $41.9 billion for 2010 was slightly below the $42.5 billion called for in the five-year business plan that the automaker announced in November, 2009, and just short of some analysts’ expectations.
“What Chrysler delivered last year, on both the product and financial fronts, surpassed many expectations,” Marchionne said in a statement issued by the company.
And the automaker is forecasting a better year for 2011, now that its dealers have a new stable of vehicles to attract shoppers.
Meanwhile, Chrysler’s biggest shareholder, the United Auto Workers seems just fine with the performance payments:
United Auto Workers President Bob King said he is “pleased at the turnaround that Chrysler and the other domestic automakers have made. The dedication and hard work of UAW members at Chrysler have contributed greatly to this success, and we appreciate the company’s recognition of the contribution made by employees. We are convinced that Chrysler has a great future and look forward to more opportunities for our members to share in that success.”
General Holiefield, UAW vice president of the Chrysler Department, described the collaboration between company and union in achieving strong 2010 results as “a testament to what can be accomplished when all employees recognize that their jobs are at stake and pull toward a common goal.”
The common goal is repayment of government loans, Holiefield said. “We have more work to do, much more, but with focus and determination, we can reach any goal.”
Ken Lewenza, president of the Canadian Auto Workers union, expressed surprise that CAW employees will be rewarded as well. “Chrysler is on the right track and gaining momentum with our new products, and I expect this success to continue into 2011.”
Of course, there’s probably no chance of that government loan falling through, is there?
Photo: Chrysler ecoVoyager
“I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes.” Thomas Paine, December 23, 1776