Bleak Forbes Editorial
The February 24, 2009 Forbes issue had an article regarding the plight of the American auto industry. Here is what it had to say about Chrysler:
"Understand that without support, Chrysler and General Motors could go out of business. If those companies collapse, the country could easily lose another half a million jobs as the impact spreads to suppliers, dealers and other workers tied into those companies. Such a scenario could negate the hundreds of billions in government spending to restart the economy.
Even with generous amounts of government aid, including the extra money asked that would push the bailout total to $39 billion, the surviving industry would be nothing like the Detroit of just two years ago.
Chrysler may manage to avoid bankruptcy and a total collapse, but it will likely lose its independence. The Auburn Hills, Mich., company is in serious negotiations with Fiat (nyse: FIA - news - people ), in which the Italian automaker will gain a 35% stake and the right to raise it to 55% in the future.
That aside, Chrysler is likely to benefit more from a deal with Fiat than it has under the yoke of its current owner, Cerberus Capital Management. Fiat's chief executive, Sergio Marchionne, is a sharp businessman and auto executive who led that company's brilliant revival.
Chrysler has thinned its employee ranks so severely that it probably cannot create new cars on its own. New vehicles are the key to survival in this business. Chrysler had only 10,891 salaried employees at the end of the year and only 38,257 in all. That is less than half the 94,875 head count Chrysler had in 2000. The company has said it would cut another 3,000 jobs and kill three more modelstwo big SUVs and its famous PT Cruiser. The relationship with Fiat could provide Chrysler with crucial design and engineering talent to create new small cars and other vehicles."