Chrysler suppliers demanding COD
With Chrysler's cash dropping to $2.5 billion as we race to the end of the month, suppliers to the automaker have begun asking for immediate payment for delivered parts. When suppliers demand COD from struggling companies such as Chrysler LLC instead of extending payment terms, it wreaks havoc with the company's financial structure. Chief Financial Officer Ron Kolka and Vice Chairman Tom LaSorda told the Associated Press that the company is "fending them off." In order to work out a viable agreement, the company has scheduled meetings with the suppliers today.
Although $2.5 billion sounds like a nice chunk of change, it's the bare minimum the automaker needs to make payroll and pay suppliers (as of now, Chrysler pays $7 billion to suppliers every 45 days). With the failure of the bailout last night in the Senate, Chrysler is in dire straits – without an immediate cash infusion the company could run out of funds by the end of the month.
[Source: Automotive News, subs. req'd]
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Reader Comments (Page 1 of 2)
jv2k 2:02PM (12/12/2008)
Chrysler suppliers must really love Call of Duty
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SPF 2:04PM (12/12/2008)
ROFL
steveboss 2:16PM (12/12/2008)
Chrysler has been using all the wrong perks.
Cellien 2:31PM (12/12/2008)
Lol, thought the same when I read the headline. Chrysler demands Call of Duty.
2007RC46SP2 2:04PM (12/12/2008)
DOA?
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Mobius_1 6:28PM (12/12/2008)
RIP
Samurai Jack 2:08PM (12/12/2008)
Cerebus has money. There's no reason for them to play chicken with Chrysler or to blackmail the government. They should be the ones to recapitalize Chrysler, not the taxpayer.
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Samurai Jack 2:09PM (12/12/2008)
That should be "Cerberus". Dang typos...
Rich 2:11PM (12/12/2008)
Interesting write-up here: http://www.forbes.com/home/2008/12/09/chrysler-cerberus-bailout-oped-cx_dg_1210gerstein.html
Patrick 2:15PM (12/12/2008)
Rich, I agree. Cerberus should use its money from other operations to help Chrysler if in trouble. On the other hand, I would like to see Chrysler kick the bucket because most of their products are junk and really, the US cannot support all 3 automakers.
Jim in Tampa 4:00PM (12/12/2008)
Great link, Rich. Thanks!
tekd 4:14PM (12/12/2008)
Well, thing is, Cerberus is under no obligation to put more money into any particular investment it has. It's like if your stock portfolio's been taking a hit-you're not obligated to keep dumping money into it.
They do however, have an obligation to not lose all their clients' money, and if you bought a mutual fund that owned a whole bunch of businesses I don't think you'd want them to sell all their shares of everything else just to put everything into Chrysler.
Could Cerberus pump more money into Chrysler? Of course, but they could very well just lose more money.
And quite frankly, if both Ford and GM get bailouts it'd be quite obvious why Cerberus would hold out for a bailout for Chrysler as well-why be the only private company taking the hit?
2007RC46SP2 2:09PM (12/12/2008)
RIP Chrysler
1925-2008
NOPAR
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big L 10:44AM (12/16/2008)
Cerberus has lots of money and a lot of clever wealthy backers/investors. The CEO is former Secy of Treas. All this mewling and whining is unseemly. Their cost was really low. If they wanted to the Cerberi could borrow a few bucks. But I think they could move a few bucks around.
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Steve 2:39PM (12/12/2008)
They are kidding?
They need to work with Chrysler LLC and get them back the company
back on its feet again.
What the hell are they thinking?
Where is Cyberus and all of there money. I agree with everyone on this one.
Private is private. They must help Chrysler LLC get of this mess.
He we go again. No one wants to help each other out.
Steve
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moyoi 4:16PM (12/12/2008)
It's not that nobody wants to help out, but the thought is the since they are privately owned, the father company should take care of them 1st. It's like Donald Trumps daughter asking you for a loan. It's a silly idea.
CARGOD 2:22PM (12/12/2008)
YEP I AGREE RIP CHRYSLER...BIG 2 WILL CARRY THE BALL NOW
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Richard S. 2:25PM (12/12/2008)
Cerberus will probably not put more "good money" after "bad money". It will just delay the inevitable rather than avoid it. Unlike GM, Chrysler does not have a decent pipeline coming in the future (such as Chevy Volt, Cruze, etc...).
Also, parts-makers demanding COD is payback for all the cost-cutting demands that Chrysler and the other Big 2 demanded for them. Rather than cultivate strong ties and bonds that could have helped now, the then Big 3 only knew how to squeeze and squeeze the suppliers.
Nevertheless, if I were the chief of Chrysler's UAW workers, I would propose some radical wage costs in lieu of equity, until the company may some how tide over. Better to get 65% of your current wages than 100% of unemployment benefit. Hopefully the UAW workers will be smart enoug to see this.
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Patrick 2:24PM (12/12/2008)
So really, this 'bailout' should only really be a loan to GM. Ford doesn't want any money (yet), and privately owned Chrysler shouldn't qualify for it without it's 3-headed Daddy Moneybags ponying up first.
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Lar 2:26PM (12/12/2008)
As frequently as every passing day now, it seems a clearer certainty that Chrysler will soon be a memory. It already sounds weird to say aloud "I'm looking at a new Chrysler." And there lies the problem.
Go, Chrysler, go gently into that good night, safe in the company of Plymouth and Oldsmobile. And preparest the way for Mercury and Pontiac. And Saturn.
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