Back in the 1990s - in the heady days of favorable reviews, high profits, rising quality, and increased retention and new-customer captures - Chrysler used to run a program called SCORE, along with its Extended Enterprise system. The basic idea behind these programs was that Chrysler would lean on particular, carefully chosen suppliers more for engineering and design work, and expect these suppliers to come up with ideas for saving money; in return Chrysler would share the cost savings and give those suppliers a favored status. The idea saved Chrysler literally billions of dollars while allowing things like a practically free traction control system on the 2000 Neon (when traction control was still very new).

Such frills were slashed by the Daimler overseers, in their infinite wisdom. They preferred to simply pay suppliers less, year after year. Oddly, this did not result in increased profits or reduced costs. Perhaps they never read the articles on Allpar which explained the difference between saving money on parts, and saving money on overall systems. Spending an extra dime on a unit in order to cut a quarter off assembly and warranty costs is a cost savings, but the Daimler people would put it down as tomfoolery.

Some have wondered about Chrysler’s relationships with its suppliers now that the cord has largely been cut. Like everything else, there are two sides. The good side is that Daimler is on the sidelines. The bad side is that Steve Feinberg put Bob Nardelli in charge, and Nardelli brought over the team that expanded and then started to destroy Home Depot with cheap, poor quality Chinese parts. (Not that China can’t make things well; it’s just that, like any factories, they’ll make whatever you ask them to make. Ask for cheap and you’ll get cheap. Ask for good and you’ll get good. That might be one reason why Apple scored so far above HP, Dell, and Acer recent surveys, though they all use components or whole systems from China.)

Some news is starting to trickle out. The ex-Home Depot purchasing maven, Campi, said that Chrysler plans to select up to ten key suppliers for a new “Supplier Choice” program. These companies would be exempt from competitive bidding but would work with Chrysler to set a market price for the contract, and would be involved in vehicle development.

This sounds something like SCORE but without the same method of sharing cost savings.

The first company to join the program, incidentally, is Denso, which is partly owned by Toyota - Denso is essentially Toyota’s version of Delphi. Except, of course, that it makes money.

Campi also said that the company would finally stop its insane (he didn’t use that word!) required annual cost reductions. These were started by Daimler on the assumption that, no matter what raw materials cost, parts suppliers can cut prices by 5% - 15% every year, year after year, without fail. Because, of course, steel is just like computer memory.

We might be seeing some progress.

We know there is a replacement for the Grand Cherokee coming to the North Jefferson plant, based on Tom LaSorda’s statements. This should really be no surprise. It is planned to be lighter than the current model, also no surprise, given gas mileage issues and the reason why the current model is as heavy as it is (rumor has it the Mercedes people demanded changes based on their own needs). This vehicle will most likely end up being worked over and produced as a Mercedes, as the current one is.

Most likely some other vehicle will be built with it á la Nitro/Liberty. Prime candidates are the Aspen and/or the Commander. Maybe the Durango… it all depends how they want to play it. If the Grand Cherokee is the luxury version, a companion Dodge would make more sense than a companion Chrysler. On the other hand the Commander could be the true-luxury version, and the Grand Cherokee the sortakinda Oldsmobile version. They could also make a “lifestyle Dakota” from this.

Small cars… are a big open question. I suspect Chrysler has numerous paths under way and is trying to figure out which will work. There are two pacts in China, one with Chery and one with Great Wall, which might come to nothing or be the next small Chrysler, replacing the Horizon. There is the possibility of using the Fiat 500 chassis, and there is the thought that maybe engineers from Chrysler have been working on their own A-class car and that no matter who builds it, it is still coming from the plans that started to be drawn up last year or the year before. And then there’s the B-car, coming from the future Nissan Cube… and to confuse matters, the Nissan Versa spinoff to replace the Hyundai Atoz.

D-class (Sebring/Avenger) cars are coming, and I believe that they will be sourced from Chrysler, especially since they seem to be planning a whole series of vehicles at long last (the same plans were apparently made for numerous other projects). They’d want to keep control in-house if they were making sedans, coupes, hatchbacks, minivans, and crossovers all from the same source.

Hanging over all these future projects is the question of model cuts. It would not be insane to think that maybe the Durango and Aspen and Nitro will all be allowed to die. The Liberty may not even be needed, if the Grand Cherokee replacement can be built in two varieties - think Cherokee and Grand Cherokee. The old Jeep used to do things like that. I don’t know if the Liberty has a real following, but I doubt the Nitro does.

By the way, I’d appreciate it if your comments focused on what is likely to happen, not what you’d like to happen. You know my opinion, but here it is again:

Dodge - muscle cars (Challenger/Charger), Ram, Dakota, Caravan (sporty suspension tuning).
Chrysler - 300C, extended-wheelbase 300C (”New Yorker”), true-luxury T&C.
Plymouth - small crossover (”PT Cruiser”?), small cars, low-end, V6-only big car.

With regard to why American factories are closing and the reasons why:

Considering that less than 10% of the total cost of a vehicle goes into wages, I would suspect that there has become a huge disadvantage in taxes from an operating standpoint, which I find ironic. Our unfavorable business taxes have been the main reason that lobbyists like the Chamber of Commerce and the Business Roundtable have been promoting off-shoring and outsourcing for years. Labor differences have also been present, but have been insignificant in comparison to the tax benefits. It has just always been more P.C. to blame labor cost differences, as opposed to being upfront and honest about trying to skirt our tax laws, and exploit weaknesses and loopholes. As with any business, it has always been less about how much you make, and more about how much you get to keep for yourselves in the end. The new “Globalization” mantra makes it all seem all right: they are just trying to be competetive.

By citing labor differences, corporations count on a certain amount of resentment from consumers who believe they are paying too much for their cars, and narcissism from jealous laborers in other industries of lesser pay scales, or skilled/educated labor with similar annual incomes. It seems to work well enough: automakers are able to shift the blame and any public resentment for them moving, or outsourcing, right onto the workers themselves.

Professionals that make comparative incomes and are resentful tend to forget the fact that they do not work weekends and work a fraction of the hours it takes to put a factory worker at that income level. They are seldom at risk of harm or repetitive movement injuries, and are unaware of the dangers that are always present inside the plants. They tend to forget that they work in air-conditioned offices, have comp time, flexible hours, and a whole slew of benefits and perks that U.A.W. workers would kill for. They do not know what it is like to be moved, bumped or man-powered from shift to shift, let alone be forced in on weekends that could mean hardships for major family functions, not to mention marriages. Most employees outside of the industry would be in shock at the attendance policies and procedures that have been put in place at many of these plants.

Many do not know what it is like to work inside with building temperatures exceeding 100 degrees Fahrenheit , let alone while wearing mandatory personal protective gear. Many assume that all U.A.W. workers do is push buttons, having never set foot inside a plant to see different. Granted they are not all hard jobs either, and not all U.A.W. workers are deserving of the jobs they have either. There are always exceptions. What is unfortunate that it is those exceptions that always seem to attract the most attention. Negative publicity and perception gets sensationalized and winds up portraying the U.A.W. and all of it’s membership in that same manner. Suddenly every worker at every plant is cast in the same image and is under the same amount of scrutiny. It’s so easy to believe the bad stuff. The cold hard reality is that those exceptions are no different than the bosses kid or relatives that happen to be a screw ups at any other place though. Due to the size of these plants and the number of workers in them I do not believe that the number of screw-ups are disproportionate with that of any other place though, when you calculate the percentage of screw ups versus the number of good workers.

I am by no means complaining or trying to sensationalize how hard the workers in these plants have things, but to bring about an awareness of issues that are seldom portrayed in the media. I know that there are workers in other industries that experience the same hardships for less. I am merely trying to present a human side of the story where, more often than not, the UAW worker is portrayed as a villainous greedy monster.

Most workers are just trying to earn a living and support our families in the same manner expected of everyone else. They show up for work on time and do their jobs to the best of their ability. Most do care about quality and how well the company does as well. They try to hit their production numbers that have been set for them by management and try their best to look for defects and other problems that can cost the company money and create havoc latter. It is in their best interest to do so.

Please bear in mind though that they are not the ones behind poor designs, inferior materials, bland styling, lousy components, cheap plastics, or bad gas mileage figures… the list could go on. They do what they are told to do and work with the materials that are provided to them. They work within the control limits that are given to them by management.

The Jeep Patriot seems to have it all: gas mileage, offroad capabilities, reasonable pep, and a lifetime warranty, with numerous interior features. Sales have, though, been slower than one would expect during these frugal, gas-sipping days. The factory that makes the Patriot, Compass, and Caliber is still on limited capacity. Hopefully, customers will give the Patriot another look now that the Patriot’s gotten an interior workover; the “bulky look” is gone now, replaced by more curves and better-looking materials. We won’t be able to report on personal impressions for a while yet - we do have them! - but we can tell you just from the pictures that this is a much better interior than the current Patriot has. Pay particular attention to the treatment of the glove compartment; the blocky look is gone and textures seem to have been fixed, with chrome accents relieving the plastic. Overall, everything is still in roughly the same place - it’s clear that this was no “unlimited budget” or “from scratch” makeover - but the details have been cleverly reworked for a massive improvement.

You may wonder how we can release this photo (and more at our Jeep Patriot page). First, the details we have on the Patriot were leaked to us before we were bound by the media embargo; second, Chrysler has violated its own embargo with brochures and actual cars showing up at dealerships just a tad early. Is there really a point to our withholding photography when you can go to a Jeep dealer and see the real thing? We sure hope not, because we don’t want them to be mad at us again!

Analysts and autowriters are falling over themselves yet again to talk about how Chrysler could sell Jeep. Partly that’s just to reuse their old “Daimler’s selling Jeep” stories, I suspect; partly it’s because Mahindra is coming to America, with their own vehicles that share common spiritual ancestors.

As a company, Jeep cannot really be split off from Chrysler. Yes, production is (aside from Patriot and Compass) unique to Jeep; the Dodge Nitro is part of the Liberty production line, but it’s not a major vehicle and could be dropped easily enough. The hard part is the shared engineers and components. Jeep is intertwined with Dodge Truck quite thoroughly. It would take a long time to separate Jeep from Chrysler, not that it couldn’t be done with enough time, money, and focus.

But who would really want (and be able to buy) Jeep? Toyota already has an offroad reputation thanks to the 4Runner and Land Cruiser. Ford has marketed its vehicles as being off road ready, and doesn’t need vehicles that can actually go offroad without major modifications to reap the benefits of their years of marketing. GM is trying to get RID of Hummer completely, buying dealerships to avoid lawsuits. Honda rarely buys anything they didn’t invent.

Wall Street seems to think Mahindra or Fiat will buy Jeep - but why would they? Mahindra makes Jeeps already… perfectly suited to their market and far better suited than Jeep itself to higher gas prices. Fiat… they’d be nuts to go into an area so far from their home turf. But analysts don’t think like that; after all, they were very happy with Daimler ruling over Chrysler until the end. (See our earlier Wall Street blog.)

There is one possibility, though.

A more than usually knowledgeable reporter pointed out to me that the Jeep name could be sold without actually selling Jeep. Say Mahindra were to pay, say, $400 million for the name, which has a global reach. Mahindra has the products; they don’t have the name recognition outside of India. They could perhaps buy the Wrangler plans and plants; or perhaps not. It would not really be needed. Chrysler could simply drop the Wrangler and its unique platform, close down another factory (something which analysts always like). The Patriot could be renamed, the Caliber and Compass merged. The Liberty would be dropped and anyone who wanted one would be steered to a Nitro until the factory could be shut down. Finally, the Grand Cherokee is supposed to merge platforms with Durango anyway; so the name could be dropped and Durango would carry the torch. Chrysler would then have just two brands, with Dodge being its Toyota and Chrysler being its Kia.

It’s possible. It’s still not likely, but it’s possible.

Chrysler Corporation in 1998 was ranked among the world’s largest automakers, though most of its sales were within North America (around 200,000 sales were outside the U.S., Canada, and Mexico).

For the first six months of 2008, Chrysler was #12. Toyota has a comfortable lead in the top spot, followed by GM, then Volkswagen, and then Ford.

Suzuki, a minor presence at best in the United States, made more vehicles than Chrysler, in the first six months of 2008.

Given that Chrysler was on an upward trend in profits and vehicle desirability, in both cars and trucks, before Daimler arrived with promises of international sales, expensive technologies, and bags of cash for hard times, the blame can be laid less on Chrysler’s foresight and more on Daimler’s abuse of a once great institution.

Lest we forget, Chrysler saved many lives during World War II by engineering and building highly reliable tanks - making its quota nearly every month, and in many months making up for the production deficits of other companies - as well as increasing the reliability of aircraft engines. They did all this while giving rebate checks to the government when they spent less than they expected to. That’s not even mentioning their contributions to the atomic bomb and rocketry.

Now is the time for investment in the future - the kinds of investments made in the early 1990s, which resulted in the 1993-98 renaissance of Chrysler Corporation. Does Cerberus have what it takes, or will they be happy to have Chrysler a niche player, pretending to be a full-line automaker by restyling other manufacturers’ cars? Will Chrysler be allowed to play to its strengths, or will it buy engines and transmissions from others?

Only time will tell.