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Chrysler Appears Headed Closer To Bankruptcy

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Chrysler Appears Headed Closer To Bankruptcy


Chrysler Appears Headed Closer To Bankruptcy

Chrysler Appears Headed Closer To Bankruptcy

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Chrysler could be headed for bankruptcy. Reports indicate talks between the troubled automaker's lenders and the Treasury Department to reduce nearly seven billion dollars in secured debt have fallen apart. Over the last several decades, Chrysler has been no stranger to the ups and downs in business.


This is MORNING EDITION from NPR News. I'm Renee Montagne.


And I'm Steve Inskeep. Good morning.

The expected next step for Chrysler is closer to becoming reality today. Chrysler is expected to file for bankruptcy protection. That's according to a source familiar with negotiations over the company's future. This is a deadline today from the government to overhaul Chrysler's business.

And talks with some of Chrysler's creditors broke down as that deadline approached. Now, bankruptcy does not mean that Chrysler is closing down. It is, though, another huge challenge for a company that's had many ups and downs.

As NPR's Frank Langfitt reports, no Detroit automaker has had a wilder ride over the years.

FRANK LANGFITT: To appreciate the anxiety of Chrysler workers, listen to this.

Mr. DAVID JACOBS(ph) (Welder): A lot of people are, you know, really scared, I think, and a lot of people are really worried about the future.

LANGFITT: That's David Jacobs, a laid off Chrysler welder. He wasn't speaking yesterday or even last week. NPR interviewed him back in 1979. And then, as now, Chrysler was fighting for its life. This week, Chrysler workers sounded a lot like Jacobs did so many years ago.

Tom Cleland runs the United Auto Workers Local 212 in the Detroit suburb of Sterling Heights. This is how he summed up the mood of his members.

Mr. TOM CLELAND (President, United Auto Workers Local 212): A lot of fear with the people, wondering if there's going to be a job, not be a job. There's a lot of uncertainty out there.

Professor CHARLES HYDE (Automotive History, Wayne State University): It seems like about every 10 years there's yet another crisis. This one is coming a little bit earlier than normal.

LANGFITT: Charles Hyde teaches automotive history at Wayne State University in Detroit. He's written a history of Chrysler called, "Riding the Roller Coaster." Hyde says the company story is one of crisis and recovery. And he says one reason for all the drama is Chrysler's size.

Prof. HYDE: Since the 1950s, they have been the smallest of the Big Three -American three - automakers, which meant that they have less margin for mistakes, for error. When Chrysler has a new line of cars fail, it may send the company right to the brink of bankruptcy. When that happens with Ford or General Motors, yes it's uncomfortable but they get through it.

LANGFITT: Hyde says the other reason Chrysler tends to get in trouble is bad strategic moves. To compete against far bigger rivals, the company has had to take risks. Hyde says Chrysler's most recent strategy was to focus on minivans, pickups and SUVs.

Mr. HYDE: They sort of bet the company on those products. They really stopped being a car manufacturer in a lot of ways.

LANGFITT: That bet paid off for a while. Chrysler made a lot of money off minivans in the 1990s. And it produced other hits, like the retro PT Cruiser. Tom Fisher recently retired from Chrysler after 15 years, where he worked as an emissions engineer and worried about fuel economy. He says the PT Cruiser had problems that haunted other Chrysler cars - poor quality and low gas mileage.

Mr. TOM FISHER (Retired employee, Chrysler): The PT Cruiser is a car that we got a great grab on. When people first saw it, they loved it. But it was always a very heavy vehicle and it had a lousy engine in it. If we'd lightened the vehicle up and if we'd put a better engine in it, we could've gotten great fuel economy out of it. But there was no interest in doing that.

LANGFITT: Chrysler plans to kill the PT Cruiser this summer. And more passenger models, like the Sebring, a sedan, could be headed for oblivion as well. But union leaders remain hopeful. Local president Tom Cleland says Fiat will give workers new cars to build.

Mr. CLELAND: What we're hearing is is that it may be as many as five vehicles. And if it is to five vehicles, most of the people in the assembly plants will keep their jobs because we'll be selling a Fiat car with a Chrysler skin on it.

LANGFITT: And in a revamped company, the union would also get something it never imagined: a majority share of Chrysler. Under the government's most recent plan, a union-controlled trust fund would get a 55 percent ownership stake. So I had to ask the local president Tom Cleland: Is that a weird thing for the union to kind of own the company?

Mr. CLELAND: I think so, you know? I mean, things are changing, you know? And I think that the whole face of the industry is going to change.

LANGFITT: I wondered if Cleland thought Chrysler would, once again, rebound from this, its deepest crisis. But before he answered I knew he'd say yes, because if you work for Chrysler you kind of have to be an optimist.

Frank Langfitt, NPR News, Dearborn, Michigan.

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