Marchionne's Message To Chrysler: Shape up

Sergio Marchionne
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Sergio Marchionne

The comments are blunt.

Some would say they are long overdue.

But most importantly, they reflect the sobering reality facing Chrysler and it's workers. They've got two weeks to show they want to get a deal done with Fiat or they can roll the dice with bankruptcy.

Addressing a question about the need for lower labor costs at Chrysler, Fiat CEO Sergio Marchionne told the Toronto Globe and Mail, "The dialogue is out of sync. I think they need to see what state the industry is in. Canada and the U.S. are coming in as the lender of last resort. No one else would put a dollar in. This is the worst condemnation of the viability of this business."

Let's put his comments in even more stark terms: Chrysler's auto workers (both in the U.S. and Canada) have two weeks to get in line. They can claim they are getting railroaded. They can claim Marchionne is just negotiating for a better deal. They can claim they are getting the shaft. None of that matters.

The fact is, Marchionne is the only game in town. If Chrysler's workers truly think they can get a better deal in bankruptcy court, they're in for a rude awakening. Ask anyone who has worked for a company that has gone through a chapter 11 bankruptcy.

Sergio Marchionne is a shrewd businessman who knows he has a unique opportunity with Chrysler to expand Fiat's footprint in North America. So of course he's going to hammer for the best deal possible. That said, in this case he also needs Chrysler to lower its costs if this proposed marriage is going to work. The U.S. Government won't give Chrysler any more money unless it has a deal by May 1st, and without a lifeline from Washington, the auto maker is dead in the water.

It's your move Chrysler auto workers. The choices aren't great, but they rarely are when the end game is at hand.

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