Chairman Luca Cordero di Montezemolo said Thursday to the Wall Street Journal's Dow Jones he expects a 50% chance for the Italian car maker to reach a deal with Chrysler LCC, adding that in the 50% event the deal doesn't take place then Fiat has a "Plan B."
U.S. President Barack Obama has given Chrysler until April 30 to find a partner or face bankruptcy proceedings. If Chysler finds a partner then the congress and the president have guaranteed the combined management, Chrysler and its partner, $6 billion from the U.S. taxpayers.
Chrysler was already unsuccessful in getting concessions from debt holders. Now the President's "car czar", whatever that means, appears to be ethically challenged much like the many other super-rich "public servants" and "public company" CEOs, throwing into question Rattner's and the President's statist car industry plans. Enter Fiat.
For its part Fiat CEO Sergio Marchionne told Toronto's Globe and Mail yesterday that Fiat will walk away from the proposed partnership with Chrysler if Canadian and U.S. auto workers don't agree to wage, salary, and pension concessions that align labor costs with foreign-owned "non-legacy" i.e. - no pension, low wage, non union etc. car factories such as Toyota's and Nissan's, which have plants in the less expensive southern states like Kentucky, North Carolina, Alabama. The Canadian union has been seen as being even more resistant than its U.S. counterpart. Many U.S. taxpayers may be surprised to find out how much of Chrysler's factories are in Canada.
The U.S. government's stern warning to Chrysler is it won't be getting any more bailout money unless it completes the partnership deal by May 1. Chyrsler's action today on the stock markets signals that investors and traders, maybe speculators, believe a deal is coming soon. Let's hope so lest catching falling knives wipes the shareholders out 2 weeks from today. WebVisionItaly will continue to monitor the last two weeks of the courtship between Chrysler Fiat.