The Other View

Who do you really blame...??

The financial geniuses who run Cerberus Capital Management and its Chrysler LLC unit have utterly failed thousands of St. Louis families who depend on Chrysler's Fenton plants for their livelihood.

They have failed the city of Fenton and the state of Missouri, which three years ago, in return for the promise of new investment, offered millions in tax incentives to keep the plants open.

They have failed the United Auto Workers, which only last year ended a seven-hour strike to accept a new contract — billed as a "partnership" — to help bail out Chrysler's wreckless and shortsighted management team.

Many people are going to suffer because of Chrysler's decision, announced Monday, that by Halloween it will permanently close the Fenton South plant where 1,500 workers build Chrysler minivans. Another 900 workers will be laid off Sept. 2 when Chrysler ends the second shift at the Fenton North plant, where its employees make Dodge Ram pickup trucks.

Economists figure each job in the auto manufacturing industry helps support anywhere from 4.8 to 7.2 additional jobs. Most of the pain will be in St. Louis, although parts suppliers, dealers and vendors around the country and the world also will feel the impact. The Fenton plants' UAW workers will suffer less than others; because of their union contract, most of the workers have long-term layoff guarantees to cushion the blow.

One place the pain will not be felt is Cerberus' Park Avenue headquarters in New York City. Cerberus is a private equity firm owned by rich investors and investment managers. Its president is a reclusive financier named Stephen A. Feinberg. Its chairman is John W. Snow, a former U.S. Treasury secretary. Chrysler LLC has a chairman and chief executive officer, Robert Nardelli, who was paid $210 million to leave Home Depot, and two presidents, Tom LaSorda and James Press.

It takes a lot of executive talent to drive a company in a ditch.

This is nothing new for Chrysler, which has been badly run for decades. It's just that there's no margin for error any more. The seeds for Monday's disaster were planted long ago.

Chrysler built terrible cars for decades until Lee Iaccoca and a federal bailout turned the company around in the 1980s. When Mr. Iacocca left in 1992, Chrysler's managers reverted to form, consistently failing to anticipate the market.

The 1998 "merger of equals" with Germany's Daimler Benz was a disaster, both economically (Daimler paid $36 billion and last year sold 81 percent to Cerberus for $7.8 billion) and managerially. Daimler ran Chrysler with its left hand. Chrysler became overly dependent on high-profit light trucks — gas-sucking pickups — Jeeps and other SUVs and minivans; today 72 percent of Chrysler's sales are light trucks.

And today gasoline is $4 a gallon and oil is $140 a barrel. Chrysler has no new models planned for the 2009 or 2010 production years. Its only true compact offering, the Dodge Caliber, is a better product than the Neon it replaced, but no real competition to Japanese and Korean imports. And Jeeps recently finished dead last in the J.D. Power initial customer satisfaction index. Dodge- and Chrysler-badged cars weren't far behind.

To blame Monday's news on high gasoline prices is to underestimate the historic failures of Chrysler's leadership. Besides, Chrysler is offering to underwrite gasoline at $2.99-a-gallon for three years to anyone who'll take one of its cars off its hands. And over the long term, the price of oil has nowhere to go but up.

Good managers would have realized that. Good managers would have innovated. Good managers would have created a different product mix, instead of milking trucks for short-term profits. Good managers would have done research and development, instead of focusing on short-term profits. Good managers would have pushed to out-perform congressionally mandated mileage standards, instead of fighting every higher standard. Good managers build; they don't strip and plunder.

The geniuses at Chrysler did none of these things, and Cerberus' chief interest is making profits, not cars. Blaming Monday's bad news on Cerberus would seem too harsh but for the fact that Cerberus' own corporate "commitment statement" reads: "We succeed when our companies succeed, to the benefit of our portfolio companies' employees, customers, suppliers and the communities in which they operate."

Nice words. Empty promises.

I recieved this in an e-mail and it pretty much sums up the fiasco in Fenton..... It's gonna get a lot worse in this country before it gets better......!!

Is there any hope for us.....??