Even if Chrysler LLC gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next, its chief financial officer said.
CFO Ron Kolka, in a brief telephone interview, said the company planned for the US$4 billion it received on Jan. 2 to last until March 31.
The company is talking with the White House’s autos task force about getting another US$5 billion and faces a March 31 deadline to complete its plan to show how it can become viable and repay the loans.
Kolka would not say what would happen if the company did not get further government aid, saying only that he was not planning to run out of money.
Chrysler’s viability plan submitted to the US Treasury Department on Feb. 17 calls for the additional government aid, he said.
“Following that, the next critical low point in cash is July shutdown,” he said on Friday.
Automakers generally book revenue from a vehicle once it leaves the factory and heads for a dealership. But when it does not produce cars during the shutdown, the revenue stops flowing.
Kolka said Chrysler planned conservatively, so the company could be viable even at the current US industry annual sales rate of 9.1 million vehicles, the lowest level in 27 years.
Executives with Chrysler and General Motors Corp, which is also using government loans to stay out of bankruptcy protection, met with the government task force on Monday in Detroit, visiting GM’s tech center and a Chrysler pickup truck factory in the Detroit suburb of Warren.
The task force members, led by Wall Street financier Steven Rattner and Steelworkers union official Ron Bloom, asked probing questions of Chrysler executives, but did not express doubts about the company’s plans, Kolka said.
“They were not negative and they were not critical,” he said. “They were asking the right questions.”
Chrysler’s plan submitted to the government has conservative assumptions about industry sales and per-vehicle pricing and does not include the company benefiting from any potential uptick in per-vehicle pricing or a possible alliance with Italian automaker Fiat Group SpA.
Chrysler is in talks about Fiat taking a 35 percent stake in the Auburn Hills, Michigan-based automaker in exchange for its small-car technology.
Kolka also said Chrysler’s tentative deal on labor cost concessions with the United Auto Workers (UAW) union would comply with the terms of the government loans. The loan term sheets set targets for GM and Chrysler to make their total hourly labor costs equal to those of Japanese automakers with US factories.
UAW workers at Ford Motor Co have ratified contract changes that cut labor costs to US$55 per hour including wages, pensions, retiree health care and other benefits. That’s still about US$6 more than the highest Japanese firm.
GM and Chrysler have reached labor cost deals with the UAW, but details have not been released pending a vote by workers.
Both companies are negotiating changes in payments to a union-run trust fund that will take over retiree health care costs next year.
The loan terms also set a target for Chrysler and GM to swap equity for 50 percent of the cash they were scheduled to pay into the trust funds.
Kolka said Ford’s deal on the trust fund did not comply with the terms of the government loans and would not work for Chrysler. He said Chrysler and the UAW had agreed in principle to an equity swap, but the mechanics were still being negotiated.
Ford agreed to swap 50 percent of its payments for stock, with plans to issue more stock to the trust if the price falls.
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
GEOPOLITICAL CONCERNS: Foreign companies such as Nissan, Volkswagen and Konica Minolta have pulled back their operations in China this year Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped US$8.1 billion in the third quarter, data released by the Chinese State Administration of Foreign Exchange showed on Friday. The gauge, which measures foreign direct investment (FDI) in China, was down almost US$13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions,
‘SOMETHING SPECIAL’: Donald Trump vowed to reward his supporters, while President William Lai said he was confident the Taiwan-US partnership would continue Donald Trump was elected the 47th president of the US early yesterday morning, an extraordinary comeback for a former president who was convicted of felony charges and survived two assassination attempts. With a win in Wisconsin, Trump cleared the 270 electoral votes needed to clinch the presidency. As of press time last night, The Associated Press had Trump on 277 electoral college votes to 224 for US Vice President Kamala Harris, the Democratic Party’s nominee, with Alaska, Arizona, Maine, Michigan and Nevada yet to finalize results. He had 71,289,216 votes nationwide, or 51 percent, while Harris had 66,360,324 (47.5 percent). “We’ve been through so
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