What isn’t going to help either is the anti-corporate rhetoric from the Democrat candidates that if followed through, will drive labor overseas despite promises of tax breaks to the contrary.

And if Chrysler decides to continue on the path of “China or bust” I will never purchase another Chrysler product, ever.

The pressure to cut costs is real, and may yet kill Chrysler. I hope not. But unless they get costs down, they can’t survive in the face of Toyota and Hyundai. Toyota is making 8 billion a year, while Chrysler is losing 8 billion. It can’t continue; and it seems Cerberus may be focusing on cutting too much, for example cutting one of the minivan models. That troubles me. They don’t have the option of getting government to subsidize costs (including health care) or new factories like the Asian brands (such as Mississippi and Alabama tax breaks for Nissan and Hyundai, Toyota in other states). Maybe Chinese production will be a solution.

Yet there are dangers that go beyond quality control. Current thought is dictating that building in China is the way to go. But, like the time when the sure bet was investing in Enron or dot.comes, few are stopping to think it through to where it ends. There are record sales today (see GM’s numbers for China), but that will come to an end. No American company is allowed to own what it invests in China. Everything has to be through a joint venture. My fear is that Chrysler will spend billions to get Chery into the position to manufacture quality, up to date cars, and then Chrysler (as well as all the other Western manufactureres) will get the boot by the Chinese government. As Forbes has reported, in just a few years China will be building 18 million cars a year, and exporting 2 million a year to the US. The growth and profits GM and other are talking about will be gone overnight, when China decides it doesn’t need the US companies anymore.

At that point, will Chrysler have been pared down so small it can only survive as part of a Chinese auto conglomerate? The alliance with Chery may be more dangerous than the one with Daimler-Benz. As nations, the US and Canada (and Mexico) have to decide if the domestic auto industries are vital to their national interests. I believe they are. I believe the good-paying jobs provided by domestic manufactureres are also vital to our nations. In my opinion, we need to have incentives for them to stay competitive. Tax incentives to keep factories here, or incnetives to build new ones in the non-union South. I know that is not what people want to hear. If Michigan wants to stop the bleeding of jobs, maybe it’s time to offer incentives to the Big Three to stay.

We may ahve to transition to a much smaller industry, one that sells American cars based on superior quality and technology rather than volume or price (what I mean is, if the 2015 Chrysler Imperial is truly as good as Mercedes or Rolls, it will have its niche much the way Rolex has its niche the volume Chinese producers can’t compete in; it doesn’t matter how strong the chinese makers are there will be a demand for the superior product).

This won’t be corporate welfare. Asian manufacturers are subsidized by their governments; unless we are prepared to ensure a level playing field we will lose in a battle of unequal trade with China. Unless we do that the reality will continue to dicatate to any smart CEO that he or she can either move to where the pay is $ .50 an hour, or go out of business.

We can’t expect Wall Street to make the best decision for our carmakers: they see only short term: that is, move to China. They don’t appreciate that China spells long term disaster.