It's gut-check time in Detroit, as the highest-stakes game of chicken in automotive history hurtles forward.
What will become of Chrysler? And of General Motors, for that matter?
Chrysler's 80 percent owner, Cerberus Capital Management, desperately wants out of car and truck manufacturing, and will soon sell Chrysler to GM, merge it into the Renault-Nissan alliance, break it into pieces and pawn them, or just crash the Auburn Hills, Mich., auto-maker into bankruptcy court.
GM, careening toward insolvency itself, sees in Cerberus-Chrysler a wad of cash that may help GM buy enough time to see the promised land of 2010, when the U.S. economy is stronger, when retiree health care costs shift to a UAW-run trust, when the electric Volt and other hot, new cars hit the market.
Cerberus would prefer to dump _ er, trade _ Chrysler and some cash to GM in return for the 49 percent of the GMAC finance outfit still owned by GM. But to make the numbers work, GM would have to vaporize a bunch of plants, scores of Chrysler, Dodge and Jeep dealers, and 30,000 jobs _ quickly and ruthlessly.
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We could label GM management with many adjectives, after decades of vanishing profits and declining stock value, but quick and ruthless would not be among them. GM's downsizing under Chief Executive Officer Rick Wagoner and his predecessors has been deliberate. And there's been nothing ruthless about the buyouts of tens of thousands of GM workers with packages that have been generous to a fault.
It's hard to imagine Wagoner or GM's board of directors turning suddenly cutthroat about job slashing, especially as they plead with Washington, D.C. _ possibly led by a President Barack Obama and Speaker Nancy Pelosi _ for billions more federal dollars to survive until 2010.
However, if GM does not have the guts to grab and dismantle Chrysler, then GM must live with the most likely alternative ...
Carlos Ghosn, the superstar CEO who rescued Nissan and cobbled the Renault-Nissan marriage together, longs for an American automaker to complete his three-legged stool vi-sion of a global alliance.
Renault-Nissan has made its interest in Chrysler assets known to Cerberus, and Ghosn's people have made due-diligence visits recently to some Chrysler facilities.
The scary part, for GM, of Chrysler-Renault-Nissan would be twofold:
_ French carmaker Renault, which does not currently sell cars in the United States, would suddenly have a large dealer network at its disposal.
_ Both Renault and Nissan have strong models and engineering resources in small cars, where Chrysler is weak.
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Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, figures that if GM swallows Chrysler, it would operate Jeep and minivan lines and keep about 15,000 hourly workers and 2,000 or 3,000 salaried people. That means more than 30,000 of Chrysler's 49,000 U.S. workers would lose jobs.
If Renault-Nissan does a deal with Chrysler, McAlinden predicts that Dodge Ram pickups and a V8 engine plant would survive, in addition to Jeep and minivans. That would equal about 3,000 more jobs preserved under the Renault-Nissan alternative.
These are both bleak scenarios for Michigan, where more than half of Chrysler's existing jobs would disappear.
There is perhaps a dollop of grim satisfaction to be had from the misfortunes of some high-falutin financial know-it-alls from New York and Las Vegas who thought they could para-chute into Detroit and show the dimwitted locals how to make some money in the auto busi-ness.
Kirk Kerkorian, the Vegas billionaire, is apparently pulling up stakes in his latest Detroit foray. After buying 140 million shares of Ford stock for up to $8.50 a share, he's begun dump-ing Ford shares for $2.43 a share.
David Stockman, former budget director under President Ronald Reagan, was a Wall Street hotshot until he ran auto supplier Collins & Aikman into bankruptcy in 2005. He was indicted in 2007 on charges of defrauding C&A investors and is awaiting trial.
Lastly, we have the wizards of Cerberus, CEO Steven Feinberg, chairman and former U.S. Treasury Secretary John Snow, and their handpicked guy to run Chrysler, former Home Depot CEO Robert Nardelli. They vowed a long-term effort, virtually a patriotic crusade, to revive and grow Chrysler.
That was just a year ago. Nice job, guys.
