Re: [A-List] Chrysler at the Private Equity Gates of Hell

[CeJ <jannuzi@xxxxxxxxx>]

WL writes

> Today, hindsight makes it clear that at the time of this strike April 1997,
> then President Bob of Chrysler, had already laid the ground work for the
> purchase of Chrysler by Daimler. Bob career was initially with General Motors  and
> included a significant European tour where he made his international
> connections, but none of us at Mound Engine - Local 51, (my home plant from  where I
> retired) had this information or understood the juncture this our  actions
> expressed.

Perhaps it was sold as a marriage of equals and a chance for Chrysler
to update its manufacturing technology, but I remember at the time
thinking:

1. A company like MMC or VW would be a better source for technology
related to the sort of cars Chrysler showed some prowess at producing
in the 80-90s.

2. Daimler-Benz would very quickly assert management control (with
some Americans helping them), and very quickly this would turn
CONTENTIOUS. For a start, American and even Canadian workers don't
have the same structures that German workers do to try and deal with
management and capital.

3. This whole thing would fail.

When DC then took over MMC it too very quickly asserted control of MMC
and then very quickly showed it had no idea how to operate in Japan.
For one thing, someone orchestrated one of those 'media hysteria'
campaigns about MMC cars and trucks and hidden recalls and coverups.
But the truth is a lot of other companies in Japan have done this too;
it is hard to show how MMC's use of this were especially egregious.
And much of the hysteria over the hubs on trucks were probably most
likely due to the facts that it was an extremely popular truck and
that overloading of trucks (everywhere on Japan's dangerous highways
and streets) and improper maintenance (over- and under-tightened lug
nuts) caused most of the accidents (where a truck under heavy load
would have a hub literally explode).

One is reminded of the hysteria over Firestone tires when much of that
really was Ford under-specifying tires for their SUVs) combined with
users who don't know how to use tires for a mix of offroad and highway
speed driving (many Americans apparently don't know you need to put
air in tires, but you that you need to take it out to do a lot of
offroading).
Once I started to look at the accident rates for other brands, I
myself failed to find anything that anomalous about the Firestone
tires, given the huge numbers of them out on the road, on SUVs that
are often overloaded and being used for both offroading and highway
speed driving. And the Firestone tire doesn't explain what a Ford SUV
did once it had a blow out (but again, many drivers don't know how to
react when they have a  blow out at highway speed).

> The relationship with Mitsubishi and then the German purchase of Chrysler  by
> Daimler is very different - I think, from the purchase of purchase of
> Chrysler by the equity firm of Cerberus. Chrysler relationship with Mitsubishi  and
> then Daimler was rooted in and driven by impulses generated as production
> relations and their non-property aspect. This means rationalization and exchange
> or sharing of existing technology and the need for synergy in flexible
> organization world wide.

True to some extent, but to get to specific terms. DB felt it didn't
know enough about how to produce plebeian autos, and that the network
of dealers and finance company of Chrysler made it a good fit and a
good deal (compare what they paid to what Cerberus is going to pay).
The reasons I looked at MMC was that its fate has been closely tied
with Chrysler, even though the two never ended up merged (for
nationalist and even racialist reasons). But also because MMC has
already gone through the private equity/investment bank phase of its
decline.

BTW, I drive a Mitsubishi here in Japan, and the biggest reason is
that for that particular size, it has the best fuel economy. Flat out,
best fuel economy (if driven properly, no stomping on the pass gear,
for example).

The real breaking up and selling off of MMC started with top-down
pressure (government, and industry groups) on Mitsubishi Group (the
traditional keiretsu would take in many more companies in a looser
network) to help globalize auto production for the sake of good
relations with the US and Europe (since Toyota and Nissan were
penetrating deeply there).
MMC was supposed to be a good sacrifice to force globalization on the
auto industry here. GM took large but non-controlling stakes in a
couple manufacturers, and Ford came to control Mazda (which is now the
number four manufacturer in Japan, after Toyota, Nissan and Honda, I
think). Ford floundered at Mazda for 5 years or so, but new models
have proven popular in Japan and US.

Of course the most famous global takeover was the funny little man
from Renault doing his thing at Nissan, which is a case study that
deserves a book that gets to the truth (that the engineers and modern
management types at Nissan before the takeover were so at war, that
the company had literally ground to a standstill).

CJ