Why Chrysler matters

cnnmoney.com ^ | April 2, 2009: | Chris Isidore

[kellynla]

NEW YORK (CNNMoney.com) -- It's easy to think that Chrysler LLC is no longer too big to fail.

The embattled automaker has already cut its U.S. workforce by more than 60% since the start of the decade, leaving it with just under 39,000 employees in America.

To put that into context, that's only five thousand more people than electronics retailer Circuit City had when it went out of business this year -- and few thought the demise of Circuit City would cripple the economy.

Once a pillar of the Big Three, along with General Motors (GM, Fortune 500) and Ford Motor (F, Fortune 500), Chrysler now trails Toyota Motor (TM) in U.S. sales and is struggling to stay ahead of Honda Motor (HMC).

So the news that the company could be forced out of business in the next 30 days if it can't work out a combination with Italian automaker Fiat strikes some as not that big of a deal.

"This is a company we can do without at least for the next couple of years without missing its production," said Kevin Tynan, auto analyst with Argus Research.

[kellynla]

"Suppliers won't be the only ones hurt if Chrysler goes out of business. According to the turnaround plan Chrysler has filed with the government, a liquidation would leave $20 billion in health care coverage for employees, retirees and its family unpaid, as well put $2 billion in annual pension payments at risk. The closing of its dealerships would cost 140,000 jobs.

Due to the domino effect that would create, Chrysler estimates 2 million to 3 million jobs would be lost nationwide within three years, reducing household income by $150 billion a year, and cutting tax collections by an average of nearly $40 billion a year."

[mysterio]

[MrEdd]

The big two will be more healthy, now that the third hanger on is vaporizing.

[umgud]

I’m not buying the extent of gloom and doom, should Chrysler close. I also don’t buy all the bailout crap in any event. Let the automakers go bankrupt, some to reorginize and others to dry up.

[KevinDavis]

I don’t recall the wording in the Constitution that Chrysler has to stay in business..

[Petronski]

Why does Chrysler matter? Let me spell it out for you:

H-E-M-I

[freedumb2003]

I don’t recall the wording in the Constitution that Chrysler has to stay in business..

You are reading the wrong document. You need to be reading the one the TOTUS is using:

[geege]

Love their Challenger’s

[Chet 99]

It is in one of those invisible penumbras.

[I_Like_Spam]

The real problem is that, unlike Circuit City, Chrysler’s work force pays union dues.

The supposed loss of jobs at the dealerships is rubbish. People will still be buying the same total number of cars, just not Chryslers and people will still be needed to sell and service them.

[hellbender]

Did the death of Studebaker and American Motors make the Big Three healthier? Japan has less than half our population, yet they have not just Toyota, Honda, and Nissan, but Suzuki, Subaru, Isuzu, Mazda. That means more competition and choice for the consumer. (Can anyone name a significant difference between Ford and GM products?)

[AnotherUnixGeek]

"Suppliers won't be the only ones hurt if Chrysler goes out of business. According to the turnaround plan Chrysler has filed with the government, a liquidation would leave $20 billion in health care coverage for employees, retirees and its family unpaid, as well put $2 billion in annual pension payments at risk. The closing of its dealerships would cost 140,000 jobs.

If numbers such as those above mean a company has met the "too big to fail" threshold requiring government bailouts when they are in trouble, then taxpayer interests would best be served by requiring the breakup of any companies before they reach "too big to fail" size.

I just can't believe that keeping companies that should die alive through taxpayer cash is healthy for the economy in the long-term.

[mysterio]

Me too. Would consider one if I had the means.

[Cheetahcat]

Now Imagine that with a nice 4 Cylinder Fiat motor A la Zippy.

[broncobilly]

Where were these guys when we needed to save Studebaker?

[ken21]

this guy must have money invested in cerberus.

[Paladin2]

"I don’t recall the wording in the Constitution that Chrysler has to stay in business.."

Somebody will have to keep making Jeep Wranglers, or America will be changed forever.

[Paladin2]

"Can anyone name a significant difference between Ford and GM products?"

Uh, GM's warranties are personally backed by Barrack?

[Paladin2]

"Where were these guys when we needed to save Studebaker? "

The Avanti lived on.

[Gorzaloon]

Where were these guys when we needed to save Studebaker?

Exactly. I still have dreams about my Golden Hawk.