Wednesday, April 18, 2007
Selling Chrysler supported
Toyota exec says it could help industry
(WILLIAM ARCHIE/Detroit Free Press)
Jim Press, president of Toyota Motor North America, was in Detroit to accept an award.
April 18, 2007
Jim Press, president of Toyota Motor North America, said Tuesday that the potential sale of the Chrysler Group could be good for the Auburn Hills automaker and the overall industry.
Press was in Detroit to accept the 2007 Automotive Executive of the Year award, sponsored by the Automotive Industry Action Group, a trade association of suppliers and automakers. Last week, Press was named the first non-Japanese member of Toyota Motor Corp.'s board of directors.
The possible sale of the Chrysler Group by DaimlerChrysler AG is forcing the division to focus on what Press called the "root causes" of problems -- structural issues such as overcapacity where supply and demand do not match up."I think the company has solid products," Press said. "They're not doing that poorly. They're doing a lot to come out much stronger.
"I think that whoever winds up owning it -- or whatever the combination will be -- will be a better, stronger future, but it will also write for all of us a new chapter in how our companies can prosper in the future."
Magnitude 5.5 - HOKKAIDO, JAPAN REGION
Earthquake Details
| Magnitude | 5.5 |
|---|---|
| Date-Time | = Coordinated Universal Time = local time at epicenter |
| Location | 42.672°N, 141.930°E |
| Depth | 119.7 km (74.4 miles) set by location program |
| Region | HOKKAIDO, JAPAN REGION |
| Distances | |
| Location Uncertainty | horizontal +/- 5.1 km (3.2 miles); depth fixed by location program |
| Parameters | Nst=153, Nph=153, Dmin=480.5 km, Rmss=0.76 sec, Gp= 65°, M-type=body magnitude (Mb), Version=6 |
| Source |
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| Event ID | us2007bha6 |
Plastic Omnium makes leap into China
| Plastic Omnium makes leap into China | 18/04/2007 |
| | |
| By David Eldridge | |
| String of automotive ventures set to boost revenues by 2012. | |
18 April 2007 – Plastic Omnium is aiming to have significant income from China in just five years, generated by a series of ventures in the country’s burgeoning automotive sector. In 2012, the French company expects to generate revenue of around €200m in China, having had no operations in the country at all before 2006. Measured against its group revenue of €2.33bn in 2006, this would account for a 9% share. The latest in a series of deals involves a joint venture between Plastic Omnium Auto Exteriors and Yanfeng Visteon (which is itself a joint venture between tier one company Visteon and Shanghai Automotive Industrial Corporation). Chinese authorities have granted an operating licence to Yanfeng Plastic Omnium Automotive Exterior Systems (YFPO). Plastic Omnium will acquire a 49.95% stake in YFPO, which will consolidate the exterior components businesses of Yanfeng Visteon. The joint venture is scheduled to start operating late in the first half of this year, supplying multiple customers from two production facilities in Anting and Chongqing, and will employ about 500 people. Three other projects are contributing to Plastic Omnium’s presence in China. Its HBPO business is set to open an assembly plant in Fuzhou at the start of 2008, which will supply front end modules to Daimler Chrysler. Inergy Automotive Systems, the company’s joint venture with Solvay, is also building a plant in Wuhan, Hubei Province. This is scheduled to come on stream in 2008 and will deliver fuel systems to Nissan and General Motors. Plastic Omnium has further exposure to the Chinese automotive market through Inoplast, which specialises in hatchbacks, floors and boot lids. France-based Inoplast last year acquired a 60% stake in XieNO, which operates four plants and mainly supplies truck manufacturers FAW and China National Heavy Trucks. Inoplast is co-owned by Plastic Omnium and Diaz SAS (PRW 2 May 2006). | |
Dodge Challenger Super Stock Concept
Dodge Challenger Super Stock Concept Video (Photo by Scott Jacobs)
Photos
2008 Dodge Challenger Super Stock Concept. (Photo by Scott Jacobs)
Hold the line lock and mash the loud pedal — the Challenger is at home in the burnout box. (Photo by Scott Jacobs)
2008 Dodge Challenger Super Stock Concept: low, mean, wide and Hemi powered. (Photo by Scott Jacobs)
Seen here with Brian Monkhouse's 1971 Challenger R/T, an original super stock drag car, the lineage between old and new is obvious. (Photo by Scott Jacobs)
Brian Monkhouse's 1971 Challenger R/T is an original super stock drag car. (Photo by Scott Jacobs)
That's right. It's got a Hemi. Well, as much as any modern DaimlerChrysler has a Hemi anyway. (Photo by Scott Jacobs)
2008 Dodge Challenger Super Stock Concept. (Photo by Scott Jacobs)
Brian Falzon, the Mopar engineer on hand, shows the author data from a previous run. We learn later that the Challenger only spends about a third of a second in 1st gear. (Photo by Scott Jacobs)
The modern 392 Hemi crate engine uses a 10.5:1 compression ratio, forged internals and twin-plug heads to generate 525 hp and 510 lb-ft of torque. (Photo by Scott Jacobs)
The Challenger's three-speed automatic transmission uses a reverse manual valve body. Upshifts are executed by pulling the shift lever toward the rear of the car. (Photo by Scott Jacobs)
A Dana 60 rear axle with positraction replaces the LX platform's multilink rear suspension. (Photo by Scott Jacobs)
The rear tires are Goodyear slicks sized 29x10.0. Beadlocks keep the tires from slipping at low pressure. (Photo by Scott Jacobs)
Five-point harnesses and a serious roll cage add to the experience. (Photo by Scott Jacobs)
It's all business inside the Challenger. A large tachometer dominates the instrument panel which is made up of Mopar/Auto Meter gauges. (Photo by Scott Jacobs)
Brian Falzon, left, and David Hakim, right, from DaimlerChrysler made our runs in the Challenger possible. (Photo by Josh Jacquot)
The 11-second lesson in cool
Date posted: 04-17-2007
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"Everdragracebefore?"
These words, like everything David Hakim, Mopar's performance parts manager says, come in a direct, rapid-fire burst and make no attempt to hide his obvious concern for what's at stake. In this case, what's at stake is Dodge's 2008 Challenger Super Stock Concept car, which we came here to drag race.
"Well, um..."
Hakim isn't interested to know that we've driven plenty of cars as fast as this one. Or that just last week we wheeled a $120,000 Porsche for the camera — sideways, even. Nope. None of that matters. Because this Challenger is one of only two in the entire world. Which, as far as we can tell — and certainly as far as DaimlerChrysler is concerned — makes it priceless.
Risky business
The 2008 Challenger Super Stock Concept is the sister car to the orange Challenger Concept which has been on the show circuit for 15 months — the car which inspired DaimlerChrysler to actually produce the Challenger as a 2008 model. And the car which has every Mopar geek worth his pushrods foaming at the mouth.
It's justified, too. Both cars are stunning carbon-fiber-bodied examples of how a muscle car should look. They're low, wide, have huge rear haunches and Hemi power.
I sheepishly admit that I've never really done any competitive drag racing. I don't mention that this is by design. I've secretly shunned it as a less-than-involving motorsport for those who bang pushrods together for fun and will never fully understand the true pleasure that comes with actually driving a car...around a corner.
Mopars at the Strip
We've come to the "Mopars at the Strip" show, a three-day homage to all that was and is Mopar, to drive the Challenger on its maiden racing voyage. This show and drag race is a deadly serious collection of expensive Mopar muscle. Everything, and we mean everything, in the Mopar family can be found at the Las Vegas Motor Speedway drag strip this weekend.
But we aren't here to browse. We're here to drive. Racing priceless cars is better left to those who have earned it and I don't rank. Hakim knows this and is no less subtle as he segues into a diatribe on burnouts, line lock and shift strategy. But his words fade to insignificance as he walks us over to the Challenger.
Sitting in the late afternoon light, it has to be seen in person to be fully appreciated. It looks better than when we saw it at the SEMA show last year. Back then it was wearing the early 1970s red, white and blue Sox and Martin Plymouth Barracuda super stock colors. Now it's flat black. Bad-ass flat black. With a subtle but effective gloss-black stripe down its flanks.
The hood, which wears a huge scoop, is sitting on the ground beside the car. On the side of the scoop in white and orange letters are the words "392 Hemi." Chrysler introduced the original 392 Hemi in 1957 to replace the 354-cubic-inch Hemi. Soon thereafter, Don Garlits piloted his 392 Hemi-powered Swamp Rat 1 to more than 180 mph in the quarter-mile without forced induction. He was also the first to break 200 mph in the quarter-mile using the 392. So the Challenger is powered by an engine with a legacy of speed so deep that simply printing "392" on the scoop will make disciples out of most show-goers.
Hemi power
Of course, the Challenger Concept's engine isn't an original 392 Hemi. No sirree, this mill comes straight from the Mopar catalog as a crate engine that's available to the public.
And it's serious. There's a cast-iron block with aluminum heads housing two spark plugs per cylinder. A forged crank, rods and pistons give it race-engine credentials. The compression ratio is 10.5:1 and it's available in fuel-injected or carbureted versions. It comes with a complete wiring harness and a programmable engine management computer.
The mill in the Challenger is injected and rated at 525 horsepower and 510 pound-feet of torque. According to Brian Falzon, the Mopar engineer on hand, the Challenger's engine has undergone substantial dyno tuning to ensure that its wide-open throttle operation is dialed in perfectly.
It's got leaf springs
But the engine is just the beginning. This is a dedicated drag car — it's got a Dana 60 rear axle suspended by leaf springs. The LX platform's multilink rear suspension wasn't as effective or as durable as an axle in this application so the Challenger's builders simply did away with it. Plus, the Dana 60 was an option on the original Hemi-powered Challenger in 1970. The 4.56:1 final drive is backed up by a Spicer Power Lock posi-traction differential.
The transmission is a TorqueFlite A999 three-speed automatic with a reverse manual valve body. For the uninitiated, that means upshifts are executed manually by pulling the shift lever toward the driver.
There's no shortage of high-end race parts. Mark Williams axles fill the Dana 60 housing and the company's four-piston brake calipers and rotors are at all four corners. Height-adjustable coil-overs are installed on the front double-wishbone suspension and set to give the car an aggressive rake. The whole package weighs 3,588 pounds.
Mean-looking Goodyear rear slicks sized 29x10.0 are wrapped around 15-inch American Racing Trakstar wheels. Beadlocks ensure they don't slip at low pressure.
All this, of course, is to say that there's no reason even a novice drag racer should go slow in this car.
Get in, fire it up
Hakim gives me the rundown on the importance of heating the tires. This requires a big burnout and involves a fairly complex regimen of brake torque, gear selection, engine speed monitoring and line-lock operation. Hey, it's only a priceless prototype so at least there's no pressure.
Sure.
After Hakim machine-guns instructions about driving the Challenger we move on to the "hands-on" drill. This involves riding around the parking lot as he demonstrates the Challenger's basic controls — neck-snapping throttle bursts included. It's clear he likes this car and doesn't want some journalist who's never drag raced sticking it in the wall or puking its crankshaft out the oil pan.
"Does it go straight?" I ask, half expecting to hear a white-knuckle story about wrestling it down the track. Instead, Hakim's answer is simple: "Yup, like an arrow." In fact, he tells me it made an 11.6-second pass at 113 mph just the day before.
But driving around a parking lot hardly prepares one for an 11.0-second pass in a multimillion-dollar concept car. "It's easy to drive. Just punch it and pull the shifter back," says Hakim. Yeah, easy, like piloting reentry in the space shuttle after watching it from the comfort of your couch. No problem.
Get ready
And with that, it's time to race. Or at least make a solo pass which, it turns out, is all we're going to do. Apparently there's no class for priceless one-off concept cars powered by virginal crate engines.
Getting in reminds me that this is a racecar. There's a complex roll cage that connects the front and rear shock towers via braces supporting a center hoop, a five-point harness and a series of switches on the dash in place of a traditional key.
The starting procedure is cool. Flip on the ignition followed by the fuel pump and cooling fans, then hit the starter. After a few revolutions, the 392 bursts to life. Its high-energy exhaust pulses clearing dust off the tarmac in a 30-foot diameter. It sounds like Garlits himself tuned this thing, all bumpy idle and instant response.
Once running it's obvious this is a one-off racecar. The plastic windows rattle in the doors, which themselves are sorely missing any sort of pull handle. The exhaust barks and burbles and stinks in a wonderfully purposeful way and the whole car shifts and shudders with every millimeter of throttle travel.
The burnout isn't as easy as Hakim described. I pump the brakes a few times to build line pressure, hold the line-lock button on the shifter and gas it until the rear wheels gain speed. Then the fun begins. I lift off the brake pedal, but keep my thumb on the line-lock button to avoid shooting through the staging area like a Battle of the Imports rookie. I even remember to shift to 2nd during the burnout to keep the engine off the rev limiter. It's a weak burnout but at least I don't send the pistons through the hood.
When Hakim gives the signal, I roll forward toward the staging area.
Go
Now is when instinct takes over for a real drag racer and when everything that is unnatural about the staging process weeds out rookies like me. But, miraculously, as the yellow lights blink their way down the Christmas tree, I remember the words I've heard a thousand drag racers (including Hakim) repeat about launching: "As soon as the last light turns yellow, wood it."
I do and the Challenger makes a sound so American I almost break into the national anthem inside my helmet. All 510 lb-ft of torque go straight through Goodyear's best and into the heavily treated Las Vegas Strip. There's very little wheelspin, and like Hakim said, it goes straight as an arrow. The crew at DaimlerChrysler engineering and Mike Pustelny Racing (who did the final assembly) built one hell of a drag car.
But it's over so fast I'm not sure I did anything right. Or anything at all for that matter. I notice the transmission is in 3rd gear as I'm on the return road so apparently I remembered to shift. Hakim is waiting to tell me the news and is visibly relieved to see the Challenger running on all cylinders. The result? An 11.53-second pass at 114 mph.
What's cool
I'm told when I return to the pits that this pass is a record-setting run — as quick as the car has ever gone. I learn later, through the miracle of data logging, that 1st gear only lasts about one-third of a second and 2nd gear is over before the eighth-mile mark.
I make three more passes in the Challenger, including one early the next morning, with the sun warming the desert track. And it is there, with the lights blinking down the tree, the Challenger's brakes straining against the power of its Hemi V8, and the thousands of Mopars maniacs filling the grandstand, that I find clarity.
My impression of drag racing has been wrong. All wrong. This is cool. And this one-off American muscle car proves it.
Just then the last light turns yellow, so I wood it.
The manufacturer provided Edmunds this vehicle for the purposes of evaluation.
Oil falls as refineries come back online
Higher refinery output puts pressure on gasoline prices; surprise drop in inventories provides support.
NEW YORK (CNNMoney.com) -- Oil prices fell Wednesday after a government report said refinery output is increasing, putting downward pressure on gasoline prices in futures markets.
U.S. light crude for June delivery fell 21 cents to $64.25 a barrel on the New York Mercantile Exchange. Oil had traded down 5 cents just prior to the report's release.
In its weekly inventory report, the Energy Information Administration said oil and gas refineries ran at 90.4 percent capacity, up from 88.4 percent a week ago, and far higher than oil analysts had expected.
The news caused the June reformulated gasoline contract to fall by nearly 4 cents to $2.0015 a gallon on NYMEX.
The government also reported a surprise drop in oil and gasoline inventories that helped limit the selloff in the oil markets.
EIA said gasoline supplies, closely watched ahead of the summer driving season, fell 2.7 million barrels. Analysts were looking for a drop of 2.1 million barrels, according to Reuters.
Crude supplies showed a surprise decline, falling by 1 million barrels, while distillates, used to make heating and diesel fuel, declined by 800,000 barrels. Analysts were looking for a 500,000 gain in crude stocks and a 400,000 barrel decline in distillates.
Refinery problems and strong demand have cut gasoline supplies in recent months, helping push oil and gasoline prices higher.
While pump prices remain high, averaging $2.87 Wednesday and up 30 percent since the start of the year, gasoline futures have fallen in recent days, indicating prices at the pump may have topped out, for now.
Earlier this week refiner Valero said its 158,000 barrel per day McKee 158,000 refinery in Sunray, Texas, came back online. And Sunoco plans to bring its 90,000 barrel per day Philadelphia refinery back to full production by next week, Peter Beutel, an oil analyst at Cameron Hanover, said in a research note.
The demand side of the equation remains strong. In its report, EIA said gasoline demand averaged 9.4 million barrels per day over the last four weeks, up 2.5 percent from the same period last year. The average rate of demand increase is about 1.5 percent.
Last week EIA said nationwide average summer gasoline prices should peak at about $2.87 a gallon sometime in May, which is earlier and about 11 cents lower than the peak last year. Gasoline hit an all time non-inflation adjusted high of about 3.06 a barrel in 2005 following Hurricane Katrina.
Oil prices have traded in the $55 to $65 range the last few months, but have swung widely over the last year. Crude hit an all time trading high of $78.40 last July, not adjusted for inflation, then briefly fell below $50 a barrel at the start of 2007.
Oil prices and the stocks of major oil companies like Exxon Mobil (Charts), BP (Charts), Chevron (Charts) and ConocoPhillips (Charts) are closely related, with crude prices up about 15 percent since the start of the year and the AMEX Oil and Gas Index up about 10 percent. 
Chrysler Group leads push for diesel engines
As the auto industry moves toward more fuel-efficient, cleaner vehicles, there's a cluster of automotive, environmental and energy experts rooting for the diesel engine.
Perhaps their biggest challenge is to convince drivers that today's diesels aren't the slow, noisy, smelly diesels of the past.
A leading voice in that effort is DaimlerChrysler AG's Chrysler Group, which in January started producing its second diesel vehicle for North America. A diesel version of the Jeep Grand Cherokee will be hitting dealerships soon. It comes after the automaker sold more than it expected of the diesel Jeep Liberty last year, Robert Lee, vice president of powertrain product engineering for DCX, told more than 100 people at the Society of Automotive Engineers World Congress today at Cobo Hall in Detroit. The Liberty diesel was an experiment to see whether consumers would be willing to pay an extra $1,500 for a diesel vehicle.
It worked well enough for Chrysler to release the diesel Grand Cherokee, which costs an extra $3,000 and is expected to save drivers $592 a year on fuel.
Diesels make up less than 0.5% of the cars produced in North America. Diesel car production is expected to increase to 15% by 2015 and 18% by 2020, according to estimates from the University of Michigan’s Transportation Research Institute.Offering an average of 30% better fuel efficiency than gasoline engines, diesels are a good gasoline alternative for highway driving, compared with a hybrid, which is ideal for stop-and-go city traffic, said Jim Eberhardt, a scientist with the Department of Energy.
But the movement toward diesel won’t be easy, said Jim Williams of the American Petroleum Institute. Ramping up diesel production would take five to 10 years and cost $500 million to $1 billion in infrastructure changes to each oil refinery.
"It is not something you can do quickly or cheaply," Williams said.
This Day in Auto History: 18 APRIL
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 | Source: Automobile History Day By Day, by Douglas A. Wick |
Chrysler CEO Tries to Keep Focus
© 2007 The Associated Press
AUBURN HILLS, Mich. — At every meeting, in the hallways as he travels between them, and every time he ventures off Chrysler's gleaming headquarters campus north of Detroit, Tom LaSorda knows he's being watched.
Rank-and-file employees. Dealers. Members of his management team. All are looking for a sign of depression, a facial expression or body language that shows the chief executive is exasperated or afraid of what lies ahead because of that "for sale" sign in the front yard of DaimlerChrysler AG's U.S. operations.
"Unfortunately I get watched a lot," the 56-year-old LaSorda said Tuesday in an interview with The Associated Press. "People can read you every day. Do you have the energy or are you depressed? But I'm extremely excited and I have more energy than I had maybe five years ago."
LaSorda, who has run the company since 2005, said the days have been long and he's worked weekends as well for about five months, well before DaimlerChrysler's Feb. 14 announcement that all options, including a sale, are open for the struggling Chrysler.
In his first interview since the day after the announcement, LaSorda said he tells people in meetings and one-on-one that the only thing they really can control is the company's recovery plan.
"Regardless of what happens, we have to deliver a baseline performance of the company, which is returning to profitability" and a 2.5 percent return on sales by 2009, LaSorda said.
He wouldn't answer questions about the potential sale of the company, but said the possibility of DaimlerChrysler keeping Chrysler remains one of the options.
LaSorda admits to worrying about losing key employees because of the uncertainty, but said he doesn't get depressed and doesn't have to catch himself fighting off a frown.
"I would be foolish not to say that one wouldn't be concerned about losing people," said LaSorda, who proudly adds that no key workers have left despite uncertainty over the company's future.
"And that's after two months," he said.
Chrysler Group, like other Detroit-area automakers, was caught flat-footed with too many inefficient truck-based vehicles when gasoline prices rose in 2005 and 2006. The company lost $1.475 billion in 2006 and said it expects losses to continue through 2007. DaimlerChrysler, however, earned $4.26 billion in 2006.
In the interview, LaSorda said he's disappointed that he couldn't deliver the performance that the company is capable of. But he said many of the company's new products, while not blockbuster hits like the Chrysler 300 sedan, are performing well and together are capable of carrying the company to profitability.
He also said acceptance of buyout and early retirement offers designed to reduce the company's work force by 13,000 is running slightly ahead of plan. And he said that reducing Chrysler's health care costs will be a topic of the upcoming national contract negotiations with the United Auto Workers union.
Chrysler spends $2.2 billion per year on health care for its roughly 80,000 employees, and it has an estimated $19 billion in long-term retiree health care costs. Its Asian competitors, mainly Toyota Motor Corp. and Honda Motor Co., don't have the same costs and make more money per car.
Chrysler didn't get the same health care concessions from the union that its U.S.-based competitors got, but the UAW has reviewed Chrysler's finances for a second time. The union and LaSorda would not say whether a deal is imminent.
"It's going to be an ongoing dialogue just because of the cost structure that's coming at us," he said, adding that government and the health care industry will have to be involved in the solution.
Setting up a trust controlled by the union to handle the retiree health care costs should be open for discussion with the UAW, he said.
"It's an option that we wouldn't discount," LaSorda said.
He said there aren't many books on how to run a company in Chrysler's current state.
"This isn't an experience anybody often writes about because it's not too often this 'all options are open' scenario comes up," he said.
LaSorda tells his managers that they, too, are being watched, and that generally the CEO is the only one who has to worry about their job when a company is sold. Most other employees, he said, keep their jobs.
LaSorda's challenge, while difficult, is not unprecedented for a chief executive. Many have had to lead companies during takeover attempts or as multiple bidders compete for controlling interest, said Robert Wiseman, associate professor at Michigan State University's Eli Broad College of Business.
Still, running a company that's up for sale is a CEO's nightmare that requires frequent communication with employees.
"You really have to be as honest and open with your employees as possible because the rumors and the speculation will inevitably be worse than the reality," Wiseman said.
Chrysler will suffer the longer the sale talks go on, he said, but LaSorda appears to be doing a good job of keeping the company focused.
"I think he's doing the best he can. I haven't heard any complaints from the Chrysler people about him," said Wiseman.
Reports about the Chrysler sale have been numerous in the past few weeks. One to surface recently came from a German newspaper that said Canadian auto parts maker Magna International Inc. was in intense negotiations with DaimlerChrysler. Magna and a private equity partner reportedly bid $4.6 billion to $4.7 billion for Chrysler in late March.
In addition, General Motors Corp. has discussed a potential purchase, and private equity firms Cerberus Capital Management LLC and Blackstone Group, each have reviewed Chrysler's finances and were expected to submit bids. Private equity firms Apollo Management LP and the Carlyle Group, also are said to be interested.
Billionaire investor Kirk Kerkorian, who tried to take control of Chrysler in the 1990s, has made a $4.5 billion bid.
LaSorda wouldn't say when he thought a decision might be made, and some industry analysts have said it could be months off.
All LaSorda knows is that he has to deliver no matter who owns the company. That's all he can really control.
"My job is to deliver the day-to-day performance," he said. "I have to deliver with my team the recovery and transformation plan. We cannot lose a beat going forward. If were not careful, we could."
Chrysler plans new engine plant in Trenton
Josee Valcourt / The Detroit News DaimlerChrysler AG's Chrysler Group, forging ahead with its turnaround plan, is expected to announce Wednesday that it will build a new engine plant in Trenton to produce the automaker's next generation of V-6 engines, code-named Phoenix, according to sources familiar with the plan. The announcement comes after the Michigan Economic Growth Authority approved tax credits today worth more than $11.2 million over nine years to pave the way for the new factory. Chrysler is expected to announce the Trenton project along with plans for a new axle factory in Marysville during a press conference Wednesday at the company's Auburn Hills headquarters. The Detroit News first reported Chrysler's axle factory plans today. "We applaud the state's move," Chrysler spokesman Dave Elshoff said of the tax credits. "Incentives of this nature are an important part of the business-case building process to move forward with any investment." Elshoff would not confirm that a new engine plant will be built at the Trenton site. The automaker has been looking at several sites in and out of Michigan for a factory to build the new V-6 engines, which would equip Chrysler, Dodge and Jeep and Mercedes vehicles by 2010. The axle and engine plant projects are part of Chrysler's plan to invest $3 billion in engines, transmissions and other powertrain components to improve fuel economy as part of its recovery plan. The automaker lost $1.5 billion last year and is cutting jobs, closing one factory and reducing production at several others to restore profits. Trenton Mayor Gerry Brown said the city is offering Chrysler an incentive package worth more than $62 million to build a new plant there. "We made it very hard for them to walk away," he said in an interview Tuesday. Brown will be at Wednesday's announcement, along with Gov. Jennifer Granholm and United Auto Workers President Ron Gettelfinger. The new Trenton plant would be built adjacent to the existing engine factory. It would start production in April 2009 for the 2010 model year, according to a briefing of the project prepared for the Michigan Economic Growth Authority. The tax credits would keep 485 jobs in Trenton with an average weekly wage of $1,403, the briefing said. In exchange for the tax break, Chrysler would invest at least $500 million in at least two other Michigan facilities that were not identified, but one likely is the new axle plant. The new engine plant is not expected to replace the existing Trenton engine plant in the next few years, but that could happen eventually. The existing Trenton engine plant sits on 136 acres near Van Horn Road and employs 1,630. Several V-6 engines are built there that are used in Chrysler and Dodge minivans, the Chrysler Pacifica sport wagon and the Jeep Wrangler and Dodge Nitro sport utility vehicles. Workers at the plant, hoping to bring the new factory to Trenton, ratified work rule changes last year to reduce costs and make the factory more flexible, including scaling the work week back to four 10-hour days, limiting overtime and reducing the number of job classifications to two, allowing workers to do more than one task.
BREAKING UP IS HARD TO DO
DaimlerChrysler Ponders The End of a Not-So-Beautiful Friendship
By Dietmar Hawranek and Frank Hornig
The impending breakup of DaimlerChrysler is fraught with risks for both sides. The Americans face the threat of a fire sale, while the Germans are more vulnerable to a corporate takeover. But investors are lining up to get a piece of the action -- and CEO Zetsche has a secret plan.
AP
Does DaimlerChrysler Dieter Zetsche have a secret plan for disposing of Chrysler?
The Jefferson North assembly plant came at a price tag of more than $1 billion. When the first Jeep Grand Cherokee rolled off the assembly line in 1992, it was still cause for celebration. As helicopters circled overhead, the CEO of Chrysler and the mayor of Detroit, accompanied by a large police escort, personally drove the vehicle from the plant to the exhibition halls at the North American International Auto Show. Once there, they drove up the steps and, bursting with pride and high spirits, crashed it through a large glass wall. That was in 1992, but it seems like yesterday to Dale Hunt. "We worked in three shifts," he says. "It was a huge success."
Now, 15 years later, Hunt sits in an office at the United Auto Workers (UAW) headquarters, across the street from the plant. As a regional manager at the powerful trade union, his current job requires that he deal with management initiatives which bear promising-sounding names like SMART -- and which ultimately mean job cuts.
When asked how many jobs have been cut so far, Hunt sighs loudly. He pulls out his calculator, makes a few phone calls and comes up with an answer: Almost 5,000 layoffs in his plant a few years ago, and now another 2,700. "And there's more on the way," he adds.
The worst part of it is that neither the union nor the employees have any idea what exactly is going to happen. The DaimlerChrysler restructuring plan currently calls for layoffs totaling 13,000 jobs at Chrysler. But how many more jobs will have to go if Stuttgart-based Daimler completely divorces its erstwhile dream partner?
How many factories will be closed if financial investors like Blackstone or Cerberus take over the company? What happens if Magna International, a Canadian automotive supplier, acquires a stake in Chrysler? Does Chrysler even stand a chance of surviving without Daimler in the long term? And what will happen with the remaining German part of the group?
There is just as much uncertainty in the offices of the German part of the group, Daimler, as there is in Detroit. It's true that many executives and staff at Daimler can't wait for the expected separation to finally become reality and put an end to former DaimlerChrysler CEO Jürgen Schrempp's dream of building a "Welt AG" ("World, Inc.") global corporation. The American partner has long been seen as a hugely expensive burden for Daimler. But all euphoria aside, even senior management at Daimler's Stuttgart headquarters aren't quite sure what will happen next, once Daimler suddenly finds itself on its own again.
Fear of a black hole
It seems like Mercedes-Benz and Chrysler just can't get along. But since CEO Dieter Zetsche began looking into a sale of Chrysler, the two companies suddenly seem terrified of going their separate ways, with both apparently afraid of falling into a black hole.
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Graphic: How the two companies will shape up if DaimlerChrysler is split.
According to one of Grube's diagrams, Mercedes, as a premium manufacturer that sold only about a million cars a year, was spending far too much money on parts. But by combining its parts procurement system with mass producer Chrysler, the Stuttgart-based firm could save billions, Grube argued.
Another chart showed that Mercedes-Benz could hardly afford to invest in new technologies if they would only be used in the relatively small number of luxury vehicles the company produced and sold each year. A more efficient approach, according to Grube, would be to install the new technologies in Mercedes vehicles first and then in the three million cars rolling off the assembly lines at Chrysler each year.
If all those PowerPoint slides weren't just smoke and mirrors to push through the merger, then employees and shareholders must now be seriously concerned about the future of Mercedes-Benz.
According to the analyses of former Daimler-Benz CEO Edzard Reuter, Mercedes-Benz, as a premium manufacturer, was in the long term too small to survive in the cutthroat automobile sector. Reuter's plan was to transform Mercedes-Benz into a technology company by acquiring businesses in the aerospace sector, with the idea that Mercedes-Benz automobiles would benefit from the technological expertise of the new affiliates.
DaimlerChrysler Ponders The End of a Not-So-Beautiful Friendship (2)
By Dietmar Hawranek and Frank Hornig
DPA
A DaimlerChrysler employee works on a Mercedes-Benz car.
The Daimler Group, as the company may well call itself if it splits with Chrysler, could soon become the kind of business Daimler-Benz was in 1985: a producer of cars, trucks and busses. The company will drop from the second to the sixth spot on the list of the world's biggest car manufacturers. But this would not necessarily be a tragedy -- size is no guarantee of success. The problem, however, is that Daimler cannot simply turn back the clock and become what it was once was.
Daimler isn't as well prepared for cutthroat competition in 2007 as it was when Schrempp launched his ambitious experiment. Even worse, Mercedes-Benz has since been forced to relinquish its position as the world's leading luxury carmaker to BMW, partly because executives in Stuttgart were distracted by Chrysler and allowed quality to slip.
The group now has far fewer reserves than it once did. To raise cash, it has already sold off its Adtranz rail business, as well as holdings of Debitel, MTU, Temic and many other companies, for a total value of more than €10 billion. And the group can no longer fall back on Deutsche Bank since the German banking giant reduced its stake in DaimlerChrysler from 12 to just over four percent.
What all this boils down to is that Daimler minus Chrysler is a potential takeover candidate. And what about Chrysler without Daimler? Why should the US company suddenly be more successful than it was when it had the considerable financial and technological support of its Stuttgart parent?
This is why Chrysler's future depends in large part on who becomes its new owner. Some fear that the company could face being carved up if it is taken over by a private equity firm such as Cerberus or Blackstone.
The current restructuring plan calls for shutting one plant to bring Chrysler back into the black. Under that plan, the company is expected to be earning a return of 2.5 percent by 2009. This is unlikely to be enough for either Cerberus, which has secured the services of former DaimlerChrysler and VW executive Wolfgang Bernhard, or its competitor Blackstone.
Both potential buyers must rely on the cooperation of the powerful autoworkers' union, the UAW, which will have an important say in the sale. This is because one of Chrysler's problems is its commitment to pay healthcare and pension benefits worth about $15 billion to its employees. Only if the UAW agrees to a reduction of these benefits will Chrysler's new owner stand a realistic chance of successfully restructuring the company.
UAW President Ron Gettelfinger, who wants to limit the number of layoffs, has already discussed the matter with the financial investors. One of the proposals on the table is especially interesting: In return for cuts in health insurance benefits, Chrysler employees would receive a stake in the company, in the form of stock.
DaimlerChrysler Ponders The End of a Not-So-Beautiful Friendship (3)
By Dietmar Hawranek and Frank Hornig
But instead of Blackstone or Cerberus, Magna International Inc., a Canadian automotive supplier, is currently considered the frontrunner in the race to acquire Chrysler. The German daily Frankfurter Allgemeine Zeitung reported Tuesday that the company was in advanced talks with DaimlerChrysler about a possible purchase of its America unit.
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Graphic: Daimler key figures
Magna has a significant interest in Chrysler's survival. But it is probably also the spectacular nature of the deal that attracts self-made man and billionaire Stronach to acquiring a stake in Chrysler.
Stronach's daughter Belinda, a former cabinet minister and, in recent years, a member of the Canadian parliament, has even decided to end her political career and return to help manage her father's company -- all because of his planned investment in Chrysler.
US billionaire and former boxer Kirk Kerkorian, 89, may well be forced to look on from the sidelines during the upcoming sale of Chrysler. Kerkorian, considered one of the most dazzling players on the stock markets, has already been a major shareholder at Chrysler and recently at General Motors; he buys and sells massive company stakes the way other people buy and sell cars.
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Graphic: Chrysler key figures
Zetsche envisions Mercedes-Benz and Chrysler continuing to procure batteries, tires, dashboards and many other parts jointly in the future. To achieve this goal, he has developed a secret plan to ensure that Mercedes-Benz will still enjoy the benefits of cooperation with Chrysler in the future. However, he intends to limit the risk that billions in losses at Chrysler could jeopardize the entire group.
After Zetsche announced that he would "examine all options," including the sale of Chrysler, it was considered a fait accompli that Daimler would divest itself of the US company completely. But Zetsche actually intends for the new Daimler Group to retain a minority stake in Chrysler after the US firm is spun off. This would enable Zetsche to safeguard its cooperation with the new company, and the Stuttgart company would only be partly affected by losses at Chrysler.
This plan is unlikely to engender much enthusiasm in the markets, at least initially. Hopes of a complete divorce between the German and American partners have triggered a sharp rise in the price of DaimlerChrysler's stock in recent weeks. Some investors could be disappointed if Chrysler is only partially sold off. Zetsche will have some convincing to do if the decision is to be made in May as expected.
However potential buyers Cerberus, Blackstone and Magna also want to see Daimler retain a share of Chrysler, because, even with a new investor, the US carmaker would still depend on support from Mercedes-Benz. Chrysler has drastically limited its investments in recent years, so much so that the company will only be able to develop a sufficiently wide range of new models if it is able to acquire engines, transmissions and other parts from Mercedes-Benz or another partner in the auto industry in the future.
"We could face a massacre here," says Buzz Hargrove. He is head of CAW, the Canadian autoworkers' union, which represents more than 11,000 Chrysler workers on the Canadian side of the Detroit River. "Long-term trends, not quarterly results, are what is important in our industry," he says. Hargrove is worried that private equity firms would come in, cut jobs and then sell what's left of the company at a profit -- but "at the cost," he says, "of thousands of workers and their families."
This prospect is so unappealing that Hargrove has only one hope: "We should remain part of the Daimler family."
FAB Design Mercedes-Benz CL 600 V12 Biturbo
Attractive bodywork design in optimal harmony of forms: FAB - DESIGN makes the new Mercedes CL-class even more exciting
Enough is never enough: This is the motto behind FAB DESIGN’s extensive refinement treatment of the grand Mercedes coupe. The new wide body aerodynamic program fits in harmony into the entire picture and gives the vehicle a more sporty appearance.
The FAB DESIGN wide body front bumper forms a unit with the new wide front fenders and takes up the line guidance at the new CL. A big opening placed in the middle provides a lot of fresh air for the coolers. The left and right side intakes serve a lot of cooling for the brakes. Despite the enlargement of the fender the harmony and elegance of the basic CL is fully preserved. The front fender side-openings behind the salient enlargements act as an additional cooling element. The lightly overstanding sideskirts at the door bottom edge, make the CL look not only sporty but also dynamical and stylish. The sporty and dynamic looking rear fender with the intakes provides a lot of ventilation for a sufficent cooling of the rear brake system.
The sophisticated and unique design of the rear bumper convert the CL next to the efficent aerodynamic also a breath taking optic. The shape of the lower section of the rear bumper produces an excellent downforce value.
The new shape of the four integrated slightly horizontal placed exhaust endpipes, is just another way to reflect the unique way of FAB DESIGN inspiration.
FAB DESIGN goes own ways also for the light alloy wheel.
The 3-pces forged FAB DESIGN type 6 EVOLINE wheel fascinates through its own and athletically optic. The aluminium wheels look through the low bed particularly big, the wheels are completely painted in the car color (titanium brilliant grey). The visible chromed screws look technical and give a sporty finish. The front axle is fitted with wheels in dimensions of 10J x 20, the rear axle even with 12J x 20 inch. Dunlop Sportmax tires in the dimensions of 255/30 ZR 20 for the front axle and 305/25 ZR 20 for the rear axle, providing sufficient "Grip" by all speeds. Combined with the modificated suspension results in an indescribable curvening pleasure without influencing negatively the straight run. The interior is another new way from FAB DESIGN.
The complete interior is in light beige FAB DESIGN leather/alcantara and the middle sections of the seats in FAB DESIGN crocolook light brown. This crocolook imitation is made of genuine car leather and respects all the required norms. The new developed FAB DESIGN sport seats in the front give to the interior a very luxury and sporty touch.
The performance: the engineers from FAB DESIGN have developed a costly conversion that upgrades the performance of the V12 Biturbo to 650 PS and the torque to fabulous 1120 Newtonmeter. In the FAB DESIGN S60 BT performance kit only strengthen or new constructed parts are used, which in spite of high strain guarantee a long life duration, as they are usualy in the (OEM) set. The mechanic and electronic of the gear unit belongs also to the extend of the upgraded performance package as well as the power of the adaptation of the brakesystem.
Source: Internal
SNIPPET FROM FORBES EUROPE NEWS:
Shares in DaimlerChrysler dipped 0.5 pct to 60.61 eur as The Frankfurter Allgemeine Zeitung reported that Canadian car-parts supplier Magna International may be in advanced talks with DaimlerChrysler about the potential acquisition of its Chrysler unit.
The newspaper said that Magna may be aiming for a majority stake in Chrysler together with investment firm Onex, and says Daimler would probably keep a minority stake in Chrysler.
Kerkorian sets the bar for bids
Kerkorian sets the bar for bids
His Chrysler plan calls for cooperating with unions and fixing the carmaker
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Kirk Kerkorian
ADDITIONAL INFORMATION
Chrysler's road map?
Kirk Kerkorian's offer to purchase the Chrysler Group could show what other potential buyers might being considering, too. But the ideas proposed by Kerkorian's Tracinda Corp. would face hurdles, experts say:
Idea: Give unions an ownership stake in exchange for concessions.
Hurdles: Unions traditionally oppose giving up benefits. Canadian Auto Workers President Buzz Hargrove has pledged to fight Kerkorian's offer and those of other private equity bidders.
Idea: Speed up Chrysler's new-vehicle introductions.
Hurdles: It's easier said than done.
Idea: Improve the quality of Chrysler vehicles to better compete with Asian brands.
Hurdles: Chrysler and others have been working at this for years.
Idea: Shift product lineup to more so-called green vehicles.
Hurdles: Chrysler's truck-heavy lineup reflects American consumers' long-standing tastes. Some experts wonder whether smaller or hybrid cars can be made and sold profitably to U.S. consumers.
Idea: Patience to wait for Chrysler's turnaround.
Hurdles: Most successful turnarounds kick in quickly, if at all.
Kirk Kerkorian's $4.5-billion offer to buy the Chrysler Group does one thing no one else has done publicly: provide a strategy to fix the struggling U.S. automaker.
Auto industry observers say the ideas laid out, such as partnering with labor unions, make sense and other bidders, if they're smart, should propose some of the same things.
"That's the road map the other three players have probably laid out in a similar fashion," analyst Joseph Phillippi of AutoTrends Consulting said.What's unknown about the other bidders, especially the private equity groups, is whether they plan to keep Chrysler as one company and try to fix it or cut it up into pieces, selling the best parts for the highest price.
Top DaimlerChrysler officials met last week with interested parties about Chrysler, which lost $1.5 billion last year, but apparently excluded Kerkorian's Tracinda Corp.
Canadian auto supplier Magna International Inc. confirmed it is interested in Chrysler, and an analyst has said the company -- teamed with a private equity partner -- is offering as much as $4.7 billion.
A German newspaper reported that Magna executives will meet this week with DaimlerChrysler counterparts about Chrysler's future.
Private equity firms Blackstone Group and Cerberus Capital Management are also supposedly in the hunt, but those groups have not been commenting on their intentions.
Kerkorian, who has a storied past with Chrysler, is making the case that he is in it for the long haul, willing to invest in the business and wait five, six or seven years for Chrysler to turn around.
Kerkorian confidant and former Chrysler Chief Financial Officer Jerry York made that case in a letter to DaimlerChrysler Chairman Dieter Zetsche. The letter was made public last week.
York said private ownership would have advantages. "The right private ownership can do things that are difficult for both public companies and the wrong private ownership," York wrote, describing the difference between patience and impatience.
Most notably, Kerkorian has proposed an ownership stake for the UAW in exchange for concessions on the growing expense of health care.
In addition, York talked about "necessary investments" required for product development. He wrote that Chrysler needs to more quickly renew its product line, improve its quality and gear its product mix toward so-called greener segments.
"It sounds wonderful," said professor James Brock of the Farmer School of Business at Miami University in Ohio. "Sure those are things that would be very important to do, but the issue is and the question is ... are they going to actually be able to do anything along those lines?"
He added Kerkorian may be able to achieve those goals if he can gain the support of Chrysler's management and workers.
So far, Kerkorian hasn't been greeted with open arms. DaimlerChrysler executives in Germany purportedly do not look at his offer as favorably as others, in part because it is considered low.
"By stepping up and saying, 'Here's what we think needs to be done and here is what we would like to do,' they are hoping to get back into the mainstream because so far they've been shut out," Phillippi said.
Beyond the Jeep brand, Phillippi said there are few elements at Chrysler for a buyer to strip off and sell. "This is obviously a buy, fix and take it public in five to seven years," he said.
Gerald Meyers, University of Michigan business professor and former chairman of American Motors Corp., said the letter was likely a strategy by York to slow down the sales process and allow Tracinda a chance to enter the fray.
"They wanted to get it across that they are deep thinkers, that they are willing to approach the Chrysler problem in a broad, longer-range, thoughtful way," Meyers said.
Deal Or No Deal, Chrysler Has A Plan
| Tom Lasorda | |
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DETROIT -
Chrysler Group Chief Executive Thomas LaSorda is putting in 20-hour days, fueled by a drawer full of bite-sized chocolates, in an urgent bid to reshape the smallest of the struggling U.S. carmakers.
His vision: transform the regional manufacturer of trucks, SUVs and minivans into a larger global player through a series of partnerships with companies like China’s Chery Automobile Co.
The new business model, he says, will reduce vehicle development costs and allow Chrysler to expand internationally.
But will any of LaSorda’s plans matter if Chrysler changes hands in a few months? Its German parent, DaimlerChrysler AG (nyse: DCX - news - people ), is in active discussions with several potential buyers, including Canadian parts-maker Magna International (nyse: MGA - news - people ) and private equity funds Cerberus Capital Management, Blackstone Partners and Centerbridge Partners, all of which can be expected to make substantial changes if they take the wheel.
LaSorda says he can’t worry about whether his strategy, endorsed by DaimlerChrysler’s management board, will pass muster with one potential owner or another.
“You absolutely can’t second guess your plan,” the fourth-generation Chrysler employee said in an interview Tuesday with Forbes.com.
“We cannot sit back for one day or one week and speculate. We have to deliver, regardless of what option is ultimately picked.”
So even as DaimlerChrysler moves to sell the company out from under him, LaSorda is pushing ahead with his transformation strategy.
On Wednesday, he is to announce $1 billion worth of investments in a new axle plant and a new engine plant in Michigan. Both are part of a $3 billion initiative to speed more fuel-efficient vehicles to showrooms — what LaSorda calls a “missing link” for Chrysler.
“We are proceeding as if nothing is happening,” insisted LaSorda. “If I wait, and there’s a miss in the marketplace because we sat back on our heels and wouldn’t make decisions for three to six months, that’s huge in today’s marketplace.”
LaSorda has already announced plans to cut $1.5 billion in material costs, reduce production capacity by 400,000 units and eliminate 13,000 hourly and salaried jobs at Chrysler, which lost $1.5 billion in 2006. His goal is to return to profitability by next year and achieve a modest 2.5% return on sales by 2009.
But LaSorda’s long-term vision for Chrysler has been largely overlooked, mostly because it was announced the same day his boss, DaimlerChrysler CEO Dieter Zetsche, stunned the industry by putting Chrysler up for sale.
LaSorda’s strategy is twofold: reduce Chrysler’s dependence on gas-guzzling trucks by adding more fuel-efficient cars to its lineup, and use strategic partnerships to expand its presence beyond North America, where 90% of its vehicles are currently sold.
Though Chrysler’s overseas presence is still small, it is building sales momentum in foreign markets. Last year, Chrysler’s international sales rose 15% to 207,000 vehicles. In China, where vehicles sales are expected to rise 18% this year, Chrysler recently started selling locally produced versions of its 300C and Sebring sedans.
LaSorda is spending much of his time trying to identify other opportunities for international growth. “We need to get into markets like Russia,” he said. Last year, Chrysler sold 5,500 vehicles in Russia; LaSorda envisions sales of 40,000. To get the most from limited resources, it recently sold some of its older factory equipment to a Russian partner, GAZ, which will begin producing the Chrysler Sebring and Dodge Stratus sedans, using older designs that have been updated for North America.
Because Chrysler is relatively small (one-third the size of General Motors (nyse: GM - news - people )), it must rely on global partnerships to ignite international growth, LaSorda said.
The tentative deal with Chery is an example. The fledgling Chinese automaker will produce a mini-car that will be sold under the Chrysler and Dodge brands in North America and Europe.
Another Chinese partner, China Motor Corp., is producing a small cargo van in Taiwan that Chrysler will sell in Mexico starting this fall. Also in Mexico, Chrysler is selling a small Hyundai-produced car called the Dodge Atos.
In Europe, Chrysler will produce a version of its next-generation minivan for Volkswagen (other-otc: VLKAY - news - people ). A German company, Getrag, is producing a new fuel-saving, dual-clutch transmission for Chrysler.
Such partnerships are going to become more common across the industry, predicts LaSorda, because automakers can’t afford to chase every market opportunity by themselves.
And no matter who ends up owning Chrysler, LaSorda says its joint engineering programs with Mercedes to develop fuel cells and diesel engines will continue.