Chrysler Hopes To Turn Around After Bankruptcy

Chrysler workers and everybody else learned yesterday that the troubled automaker would file for bankruptcy, and that it is partnering with Fiat. While Chrysler is in bankruptcy proceedings, the company is shutting production down for one to two months.

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STEVE INSKEEP, host:

Yesterday was a tough day for the people who work for Chrysler. They learned that the Italian carmaker Fiat would take over their company and that Chrysler would end up in bankruptcy anyway, and during bankruptcy for at least one to two months Chrysler would completely shut down.

NPR's Frank Langfitt reports from Michigan.

(Soundbite of phone ringing)

Mr. BOB STUGLIN (President, United Auto Workers Local 1264): 1264. Yeah, how you doing?

FRANK LANGFITT: For the past two days, this has been Bob Stuglin's life, yielding phone calls from anxious and confused Chrysler workers. Stuglin runs United Auto Workers Local 1264 in Sterling Heights just north of Detroit.

Mr. STUGLIN: My phone hasn't stopped ringing. And I've got calls that I haven't been able to answer. My voice message is full.

LANGFITT: The man on the line now is named Rudy(ph). He's thinking of retiring this month. The company is offering him $50,000 to do so. But now that Chrysler is in bankruptcy Rudy wonders, will workers still be able to get that money out of the company?

Mr. STUGLIN: There's no guarantee of anything, but it's still, you know…

(Soundbite of phone ringing)

Mr. STUGLIN: …as far as I know we still can.

LANGFITT: Stuglin urges patience.

Mr. STUGLIN: Okay. You have until the 25th to think about it. So if we hear anything different, you know, I'd wait until about a few days before that and see if anything else happened. Okay, Rudy, take it easy. Okay. Bye-bye.

LANGFITT: Yesterday afternoon, Stuglin's members got another jolt. When some showed up for work at Chrysler's nearby stamping plant, management turned them away.

Mr. STUGLIN: They're nervous. You know, when you hear the word bankruptcy, then a few hours later you hear that the plant's going to be shut down, people don't know what to think.

LANGFITT: Chrysler said it idled the plant after a supplier refused to unload parts following news of the bankruptcy. In a conference call, Chrysler CEO Bob Nardelli also said the company would shut down all its plants for a month or two during court proceedings. One reason, he said, is to sell off all those vehicles piling up in dealer lots.

Mr. BOB NARDELLI (Chief Executive Officer, Chrysler): We have done probably one of the best jobs in the industry getting inventory down already. This gives us the opportunity to really come out the other side as lean in inventory as an automotive company may have seen.

LANGFITT: And Nardelli insisted that Chrysler won't leave its partners high and dry.

Mr. NARDELLI: The fact that we idle the factories for a period of time doesn't mean we aren't gong to continue to pay all of our obligations to suppliers, that we aren't going to continue to pay wages.

LANGFITT: In fact, workers will receive most of their salary during the shutdown. Their longer term worry? Job security. Companies that go into bankruptcy tend to come out with smaller staffs. Yesterday, a White House official said there were no immediate plans for layoffs. And for now Chrysler workers may have some breathing room. The company has already laid off tens of thousands of people in recent years.

John Casesa is a longtime auto consultant.

Mr. JOHN CASESA (Managing Partner, Casesa Shapiro Group LLC): Chrysler has already shrunk enormously. And although it has excess capacity, the whole idea of this combination is to use Fiat's strength to fill up that excess capacity by supplying more competitive product.

LANGFITT: Fiat will provide technology so Chrysler can build smaller, fuel-efficient cars here. At the same time, Chrysler president Jim Press said more of Chrysler's poor-selling vehicles will be junked.

Mr. JIM PRESS (President, Chrysler): We will continue to do that, eliminating certain models and eliminating duplication products.

LANGFITT: And that could create a game of musical chairs for some workers. For instance, Local 1264 in Sterling Heights stamps panels for various vehicles. But it could lose at least one - the Chrysler Sebring, an unpopular sedan. So that has local president Bob Stuglin and his members hoping - hoping they get a prize from their new boss - a chance to stamp a Fiat.

Frank Langfitt, NPR News, Dearborn, Michigan.

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