The news that several Chinese automakers want to buy Fiat Chrysler Automobiles, and that one has even made an offer, elicits some mixed feelings. On one hand, as some have pointed out, it could be a win-win both for China and for FCA's American workers, ensuring the company's survival and opening new markets. On the other hand, this is China, whose trade relationship with the U.S. is the source of considerable scrutiny from the Trump administration — and whose not-a-friend, not-an-enemy status is particularly difficult to gauge right now during heightened tensions with its client state North Korea. So would such a deal pass regulatory muster?
One reason that springs to mind for blocking any sale has to do with national security. Chrysler's role as a military supplier dates back to Dodge trucks used by Gen. Blackjack Pershing to chase Pancho Villa in Mexico, and shortly thereafter by American forces in World War I. The Detroit Three automakers were, of course, mainstays of the Arsenal of Democracy of World War II. Even before U.S. entry into the war in December 1941, America's industrial machinery went into overdrive, and Chrysler was one of the biggest cogs. It engineered and built the M3, Sherman and Pershing tanks and trucks for Gen. George Patton's Redball Express. It helped develop a radar-guided antiaircraft gun that knocked German bombers and V1 rockets out of the sky — on one day, shooting down 97 of 101 V1s headed for London. On D-Day, the radar system helped thwart Luftwaffe counterattacks on the beaches of Normandy, and it later helped Allied forces break out at the Battle of the Bulge.
Chrysler redesigned the Wright Cyclone engines used by the Boeing B-29 Superfortress, the plane that firebombed Tokyo and dropped the atomic bombs that ended the war. Chrysler even played a secret role refining uranium in Oak Ridge, Tenn., that was used in the Hiroshima bomb and in the ensuing Cold War arms race. It worked on military missiles and was NASA's prime contractor for the Saturn V rocket that put men on the moon. More recently, Chrysler produced the M1 Abrams tank.
And of course Chrysler is the keeper of the flame for Jeep, a 75-plus-years military legacy handed down from Bantam and Willys to Kaiser to AMC to Chrysler.
The point of this history lesson is to note that in times of war or national emergency, America's industrial might has been called to serve, and may well be called on again. For that reason, among others, there exists a governmental entity known as the Committee on Foreign Investment in the United States, or CFIUS. Born in the Cold War, CFIUS brings together the departments of Defense, Treasury, Commerce and Homeland Security to review the national-security implications of any corporation's proposed sale to a foreign interest. Would there be a crucial loss of technology, intellectual property or industrial capacity? Would the deal present a risk to the public or a conflict of interest? CFIUS is secretive, or at least little-known, and it is the entity in play when you see news stories about, say, the feds blocking the sale of a computer system to an overseas buyer, such as the time it stopped a software firm's sale to an Israeli company. Israel, of course, being an ally.
Clearly, CFIUS didn't stand in the way of the Daimler-Chrysler merger in 1998 or Fiat Chrysler Automobiles in 2014. That said, Germany and Italy are our NATO allies. Meanwhile, China is right up there with Iran in the level of governmental scrutiny it receives.
And talk of a China FCA buy comes at the very moment the feds are ratcheting up their rhetoric and reviews of Chinese investment. President Trump just yesterday signed a memorandum to crack down on China's trade practices and intellectual property theft — including from the automotive industry.
Meanwhile, Chinese investment in U.S. companies tripled between 2015 and 2016, and by all accounts, that's a trend Congress and the Trump administration are determined to stop. In fact, CFIUS has blocked at least nine deals so far this year.
A lot of those squelched deals involve tech — China has been especially keen on semiconductor companies — while Chrysler may be further from the technological cutting edge as it cranks out minivans, SUVs and old-school muscle cars, its glory days of world wars and moon rockets long gone.
Still, we never know when we might need to call upon that Chrysler again.
Related Video:
One reason that springs to mind for blocking any sale has to do with national security. Chrysler's role as a military supplier dates back to Dodge trucks used by Gen. Blackjack Pershing to chase Pancho Villa in Mexico, and shortly thereafter by American forces in World War I. The Detroit Three automakers were, of course, mainstays of the Arsenal of Democracy of World War II. Even before U.S. entry into the war in December 1941, America's industrial machinery went into overdrive, and Chrysler was one of the biggest cogs. It engineered and built the M3, Sherman and Pershing tanks and trucks for Gen. George Patton's Redball Express. It helped develop a radar-guided antiaircraft gun that knocked German bombers and V1 rockets out of the sky — on one day, shooting down 97 of 101 V1s headed for London. On D-Day, the radar system helped thwart Luftwaffe counterattacks on the beaches of Normandy, and it later helped Allied forces break out at the Battle of the Bulge.
Chrysler redesigned the Wright Cyclone engines used by the Boeing B-29 Superfortress, the plane that firebombed Tokyo and dropped the atomic bombs that ended the war. Chrysler even played a secret role refining uranium in Oak Ridge, Tenn., that was used in the Hiroshima bomb and in the ensuing Cold War arms race. It worked on military missiles and was NASA's prime contractor for the Saturn V rocket that put men on the moon. More recently, Chrysler produced the M1 Abrams tank.
And of course Chrysler is the keeper of the flame for Jeep, a 75-plus-years military legacy handed down from Bantam and Willys to Kaiser to AMC to Chrysler.
The point of this history lesson is to note that in times of war or national emergency, America's industrial might has been called to serve, and may well be called on again. For that reason, among others, there exists a governmental entity known as the Committee on Foreign Investment in the United States, or CFIUS. Born in the Cold War, CFIUS brings together the departments of Defense, Treasury, Commerce and Homeland Security to review the national-security implications of any corporation's proposed sale to a foreign interest. Would there be a crucial loss of technology, intellectual property or industrial capacity? Would the deal present a risk to the public or a conflict of interest? CFIUS is secretive, or at least little-known, and it is the entity in play when you see news stories about, say, the feds blocking the sale of a computer system to an overseas buyer, such as the time it stopped a software firm's sale to an Israeli company. Israel, of course, being an ally.
Clearly, CFIUS didn't stand in the way of the Daimler-Chrysler merger in 1998 or Fiat Chrysler Automobiles in 2014. That said, Germany and Italy are our NATO allies. Meanwhile, China is right up there with Iran in the level of governmental scrutiny it receives.
And talk of a China FCA buy comes at the very moment the feds are ratcheting up their rhetoric and reviews of Chinese investment. President Trump just yesterday signed a memorandum to crack down on China's trade practices and intellectual property theft — including from the automotive industry.
Meanwhile, Chinese investment in U.S. companies tripled between 2015 and 2016, and by all accounts, that's a trend Congress and the Trump administration are determined to stop. In fact, CFIUS has blocked at least nine deals so far this year.
A lot of those squelched deals involve tech — China has been especially keen on semiconductor companies — while Chrysler may be further from the technological cutting edge as it cranks out minivans, SUVs and old-school muscle cars, its glory days of world wars and moon rockets long gone.
Still, we never know when we might need to call upon that Chrysler again.
Related Video:
Sign in to post
Please sign in to leave a comment.
Continue