Phoenix is alive. Really. Anyone listening?

A couple of weeks ago, we posted a rumor sent to us by someone who seemed authentic, describing how the Phoenix engine plant and all work around it had been dropped. Perhaps foolishly, we ran it — as a rumor, not as a fact — noting that it was a single source. In the past, we’ve never really been mis-led by such sources. This time, though, we were.

Numerous sites picked up on the rumor, and it gained a strong currency, which appears to have had repercussions on the project itself. We apologized before (and we’re doing it again) for the consequences of this article, even though it was always pegged as a rumor.

What I don’t understand, though, is why, when we ran the retraction, some of the others who picked up on the cancellation of the Phoenix didn’t seem to notice. Jim Press even directly addressed it; and while some outlets picked up on that, others didn’t. 

We’re waiting… (tap tap tap).

No big announcements, so far

Numerous sources, including Allpar, predicted a GM-Chrysler merger or takeover announcement on November 4 or November 5. Some major media sources believe this announcement will come with GM’s release of its earnings today. It is possible that an announcement was planned based on actions which have been halted or postponed, but it is also possible that the rumors were incorrect from the start.  Allpar has been given disinformation from multiple sources, and other media outlets may have also been hit with inaccurate predictions.

Until now, Allpar has generally been fairly accurate in its predictions, based on some excellent sources. We’d like to thank oh20 and others who would probably prefer not to be named. 

In the future we will be more cautious. I don’t know whether we’ve been hit with pranks or an official campaign, but there are probably few better ways to dealing with rumor mills than poisoning their sources, so to speak. It certainly makes more sense than Apple’s approach of suing them, which tends to result in wealthier rumor sites. The most likely explanation is the simplest - a combination of pranksters and people panicking based on fragmentary information. Like all the analysts who see GM and Chrysler declaring bankruptcy before the year is out.

Note our new irrelevant cats photo, now in color!

Quick reality checks: Chrysler, GM, and more

General Motors has not acquired Chrysler  - at least not yet.

Chrysler can survive with or without a GM merger. Cerberus has the resources to keep it running.

If GM and Chrysler do not merge, it will not cause them to go bankrupt. 

Analysts are unlikely to have prior knowledge of any events. “You will know what happens when they write the press release.” — duster92

Can you trust analysts? Well, consider that up until Chrysler was sold by Daimler, they were still claiming Daimler had saved Chrysler, ignoring any facts that might come up, like massive profits from 1994 until one year after Chrysler was swallowed up and reliable financials became impossible to find. To quote a newspaper article we can’t find now:

“The truth is Daimler did them no favors,” said Jim Hall, managing director of 2953 Analytics of Birmingham, Mich. “They approved products that previous Chrysler management wouldn’t have approved if they were completely drunk and beaten crazy.”

All the publicity is very damaging, especially because the ignorant armchair-theorist consensus is that Chrysler will go bankrupt without the merger; that nobody wants any of its vehicles; and that it has no assets other than the Jeep name. (We’ve already posted the reasons why all that is nonsense.) Still, there is probably going to be fallout from all the speculation. Oh, and to quote BR Miller:

With all the merger, “alliance,” and bailout talk, all customer faith in Chrysler has been shattered. Mix in the fact that Chrysler management was talking about “exceeding targets” and “positive results” while in private they were trying to arrange a merger, and the message to customers is clear: you can’t trust us. Now, the media is spending all its column inches discussing Chrysler as a completely dead company with nothing new in the pipeline to fix its problems.

Automakers are not going to declare bankruptcy to void union contracts. They already pay new employees less than Toyota’s nonunion plants, as far as I can tell from news reports, and veteran workers are not making enough to make the costs of bankruptcy worth the difference. Bankruptcy would cost far more in lost sales and lawyers than it could gain (at least in a few years) in busted-union labor-rate savings, even if the pension plan and health plans could be totally dropped. 

Besides, Autoworkers are not, in general,  unskilled grunts. They do not build cars like they did in the 1920s at Ford’s Rouge plant.  To quote autoworker “st34:”

Most of those assembly line jobs are not easy “pushing a broom” jobs… try working in a plant in the summer when it’s 100 degrees in the building, as the vehicle goes by you have approximately 48 seconds to correctly put all your parts/components on the vehicle or sub assembly, stock your work area, remove dunage/packing material, enter any defects/problems on your terminal and some must make mandatory positive buyoffs on every vehicle into the plant computer system (required for government mandated safety systems). If one part is defective/damaged and does not fit or can’t be used or is stuck in its packaging it puts you behind, people scramble to complete their jobs “in cycle time”. Every job is timed in tenths of a second. Tools start to wear such as philips tips for screws, a DC tool or pneumatic tool will start to fail and run slower increasing your time needed to complete the job but, the line speed remains constant. Some workers must climb inside the car with power tools, and parts complete their man assignments, get out of the vehicle, enter their data, and grab stock for the next job in the 48 seconds. 

And then the engineer’s perspective:

I couldn’t do my job without the experience and expertise of the line techs.

That’s not to mention some articles that should be mandatory reading before people start talking about dumping all the union guys… here are just two: Empowered work teams and Engineering the Neon. 

Let’s get just a little political for a moment. Regardless of e-mail blasts, I think I can safely say that Barack Obama is not planning to make 60 mpg minicars mandatory, nor will he outlaw any car made before 1980 or having an engine with more than three cylinders. I also believe John McCain will not let GM, Chrysler, and Ford go bankrupt. Let’s be reasonable in what we forward, guys - and let’s run those chain letters by snopes and other anti-hoax organizations a little more often, too! 

Finally, all that talk of a big announcement on November 4 — well, so far, that turned out to be a rumor. Perhaps a deliberately orchestrated bit of misinformation — or perhaps something true at the time, but false now. We’ll see tomorrow, but so far, it looks like Chrysler’s independent for a while longer.

Interesting theory: Daimler decided Dodge death

This was a comment from “Patfromigh” which I found interesting enough to make into its own entry. Keep in mind, I did NOT write it and am not necessarily saying I believe it. But it IS interesting.

Was Cerberus just a middleman to get what Daimler really wanted in the first place?

Remember the Valentines Day Massacre? GM wanted Chrysler then. Cerberus had completed the purchase of half of GMAC. So they were in contact with GM also.

If Daimler simply sold Chrysler to GM it risked a public outcry. The pundits who praised Daimler for “saving” Chrysler a decade ago now acknowledge that Chrysler was bled to death by Mercedes’ thievery. Unfortunately it is mentioned in their eulogies for the American auto industry and Chrysler in particular.

If we look at the activities under Daimler’s stewardship of Chrysler we find evidence for a coverup. Shortly after Mitsubishi was kicked to the side of the road, serious small car development was stopped. Talks were started with Chery and other Chinese manufactures. Jeep engineering was turned into a front man for the Mercedes SUV operations in Alabama. The resulting Jeep and Dodge products, the Grand Cherokee, Liberty and Nitro started tanking in the marketplace before fuel prices took off like a rocket. Dodge trucks became more of a consumer toy in the showrooms while Daimler directed the engineering resources into soon to be gone Sterling.

Somewhere in all this has to be the realization that Plymouth customers were not coming back. My guess is that sometime in 2006 with the Dollar’s slide the celebrated LX sedans started getting pricey to build. The restyled Rams lost some of their edge and the styling on other vehicles exterior and interior was careless. No real money was put into updating the PT Cruiser. The Neon went away and the much loved midsized cars were going away. The platform which was used in the replacement for all these products was a hack job. Final development was again left to the customer.

In 2006, anyone who was paying attention could see the shift in the market. SUV sales had peaked. Truck sales looked OK, but crossover sales masked the consumer shift toward smaller vehicles.

Here comes General Motors. They will help with the disposal of the body. A dead Chrysler will put fear in the ranks of the UAW. The watchdogs at the Justice Department and SEC were neutered by the current regime in Washington, but the union would raise hell. The media would amplify any hell the UAW elevated.

When the odd bidding process began and Cerberus “won” [a buyout offer from Kerkorian involving employee ownership was not even considered], immediately there were promises: “we won’t strip and flip Chrysler” and “we are in it for the long run.” Now the body is beginning to smell. GM was willing to bury it before. The guilty parties apparently didn’t see the financial collapse coming [though Chrysler's own economists did]. The party insiders working for Cerberus certainly didn’t see an overnight shift in voter concerns from defense to the economy. GM is being blackmailed to finish the dirty deed before the new sheriff arrives in town. It was supposed to be quick and easy. There is collusion and a conspiracy to cover it up.

More news coming; keep an eye on Allpar over the weekend

We have now gotten three reports of a “big announcement” on November 4 or November 5, involving GM and Chrysler. Speculation includes:

• the usual “GM giving Cerberus GMAC in return for Chrysler” rumor
• GM being purchased (in whole or in part) by Cerberus
• the formation of a new jointly owned company (”letting the old ones die”)
• both GM and Nissan/Renault linking up with Chrysler somehow
• whatever your imagination comes up with. It’s not likely to be nuttier than what some of the analysts have suggested.

We don’t know what’s happening. However, I’m pretty sure they won’t start a new auto company and let the shells of GM and Chrysler fall apart just to have revenge on the unions for not demanding better executives. Likewise, I somehow doubt Nissan/Renault would want to get too tied up in a three way match.

We suspect there is a way for GM to buy Chrysler’s assets in such a way that either union agreements or, more important, dealer agreements fall apart. We’re not lawyers, though, so we don’t know if that’s possible. You can’t just close down a brand… or can you?

It is possible that all that’s going on is an agreement to consolidate Chrysler Financial into GMAC, completely. That wouldn’t really be worth all the hyperbole, though.

Again, we’ll keep you updated - as far as we can. But be prepared for something to happen on November 4 or November 5.

Oh, and Chrysler is celebrating 25 years of the minivan on Monday morning. If we’d had more notice, we’d be covering it. It should be a fun shindig for the reporters who go there - complete with a 1984 minivan and the original program head.

GM-Chrysler deal to be quietly announced on election night? (Updated)

“The GM executive told me the big announcement will be during election evening… and that it will be very bad indeed for Chrysler.”

This statement made by a source who wishes to remain anonymous reinforces my earlier opinion. To summarize that:

The deal will involve GM getting Federal aid to acquire and largely shut down Chrysler.

The deal will be announced on November 4 because the news media, and the nation’s attention, will be distracted.

Instead of being front page news, the taxpayer financed destruction of a large automaker with a strong history of patriotism and free services to the United States military will be on page B37.

They are counting on Americans not caring, and they are probably justified.

That is — if the rumors are true. We have no reason to believe they are not.

You can find more details on this scenario in my earlier opinion.

Update: It looks like the GM deal might fall through, as the Treasury said they wouldn’t give GM a loan to merge with Chrysler. That said, keep an ear out on November 4… because several people within Chrysler and GM have now been told to prepare for “the biggest event in company history” on November 5. It is possible that Cerberus will be acquiring a stake in - or all of - General Motors. They have the capital to do it… and it’s a lifetime opportunity for a few very wealthy men.