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
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“I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes.” Thomas Paine, December 23, 1776
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Dan Spencer
Dan McLaughlin
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No, they cannot...
smitch61 Tuesday, February 1st at 9:30AM EDT (link)I believe they did it for an incentive here. The UAW did not request the bonus in this case. FORD employees are receiving a large bonus, and regardless of what we may think of the entire situation the employees (the one’s left) have been through the wringer here. The UAW is not everyone’s favorite union, but remember up until the bail out the UAW was a private sector union between employer and employee. It is not SEIU. The public sector unions remain the real problem.
I have never worked for the car companies, or have worked anywhere where I have been represented by a union.. so I guess I can not really speak on that. I will say I could be biased. These individuals do work hard, and this state has been through so much. If it helps the employee morale, then I am okay with it.
Once "we" the taxpayer loaned that company money...
LaborUnionReport (Diary) Tuesday, February 1st at 11:47AM EDT (link)and the UAW wound up the majority shareholders in the process, until that money is paid back, they are either “public sector”…or welfare recipients. You choose.
Pay back the loans first, then they can give the entire factories to the UAW if they so choose…Then it will be private property that they can dispose of at their discretion.
“I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes.” Thomas Paine December 23, 1776
In any compromise between food and poison, it is only death that can win. In any compromise between good and evil, it is only evil that can profit.-Ayn Rand
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I agree
smitch61 Tuesday, February 1st at 2:08PM EDT (link)wholeheartedly, 100% and I love all your postings. It’s just hard for me to be objective on this subject because I live here. You are however; exactly right.
Simple solution
maindependent Tuesday, February 1st at 9:58AM EDT (link)Lets just put this dog out of its misery now. If Chrysler’s products were so great, they’d be on back order.
Save a ton of money and help the environment. Chrysler’s Chairman flies back and forth between Europe and Auburn Hills frequently. Save Fiat money and help the environment by doing away with all the jet engine heat.
Sounds like the UAW
izoneguy (Diary) Tuesday, February 1st at 10:09AM EDT (link)Is draining the accounts as fast as possible.
With $750 they could throw a really big beer bash.
Those who had once simpered: “I don’t want to destroy the rich, I only want to seize a little of their surplus to help the poor, just a little, they’ll never miss it!” – then, later, had snapped: “The tycoons can stand being squeezed; they’ve amassed enough to last them for three generations” – then, later, had yelled: “Why should the people suffer while businessmen have reserves to last a year?” – now were screaming: “Why should we starve while some people have reserves to last a week?” – Atlas Shrugged
If Chrysler needs $3 billion....
jiminga Tuesday, February 1st at 10:54AM EDT (link)why doesn’t Fiat provide it? After all, Fiat was given Chrysler on a silver platter with no investment on their part. This means Fiat’s only contribution is their “expertise”, the same expertise that caused them to fail the last time they tried to sell cars in the US.
And the UAW bonuses? Just more raiding the pantry, aka taxpayers’ wallets.
Truth in advertising...
itrytobenice (Diary) Tuesday, February 1st at 11:10AM EDT (link)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.
In banking this is known as a cash out refi. Great use of our tax dollars there, congresscritters. Just great. I’m tickled to death to give my earnings, that you confiscated in the tax code, to some union thugs.
#cantwaituntil2012
Proper grammar saves lives.
Let’s eat Grandma.
Let’s eat, Grandma.
Chrysler Bailout Memories
GreyCloak (Diary) Tuesday, February 1st at 2:18PM EDT (link)In better times (for America), Chrysler got a bailout. CEO Lee Iacocca set his salary at $1 per year, appeared in commercials, dug the company out of its ditch, and eventually returned a profit to the taxpayers who bailed him out. That provided the excuse for more recent bailouts.
Government Motors got its bailout. CEO Rick Wagoner cut his own salary to $1/year(, but was booted by Obama. Replacements have and are receiving much more, courtesy of our Federal Government, who owned 60% of the company (Canada and the UAW owned/own the rest … citizen stockholders in the old company were left with nothing).
Fiat (Italian) bailed out Chrysler, modelled on the Renault (French) bailout of American Motors (which included Jeep at the time) and the Daimler-Benz bailout of Chrysler</a) years later. Who profited? Cerberus Capital … a sweetheart of retired politicians … owned and controlled by George Soros.
Just sayin’ … follow the money.
Iacocca For Pres (sarc. off)
Repair_Man_Jack (Diary) Tuesday, February 1st at 2:34PM EDT (link)I remember a brief movement to draft LI as the Dem opponent to Reagan in 1984. I forget what he said to scare all these fans off, but I imagine it got memory-holed pronto.
Mr. Obama is pretending that an economic “recovery” is underway when he knows damn well that the banking system is just blowing smoke up the shredded *** of what’s left of that economy – James Howard Kunstler
Bonus for sucking less
kliff Wednesday, February 2nd at 9:25AM EDT (link)More like ‘bone us’, the taxpayer.
Unions and Such
sammyc Wednesday, February 2nd at 10:34AM EDT (link)But the workers were NOT willing to do any givebacks, so truthfully if they lose their jobs because the company goes belly up I have no sorrow for them. Lots of other companies were forced to close without govt. help or elser they tightened their belts and figured it out. Ford did not take bailout money so so it is right that they should get bonuses. The unions whether they are SEIU or other have gotten too big for their britches. Why should we subsidize them since they seem to be the only ones who are still working? Give me a break.