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Canada bailed out GM, Chrysler without really knowing what they were getting into

The Auditor General of Canada recently issued a report that makes at least one thing clear: it doesn't know how effective Canadian government loans given to General Motors and Chrysler in 2009 were in ensuring the viability of both companies. That year, the Canadian and Ontario governments dished out $10.8 billion CAD ($9.6B US) to GM and $2.9 billion CAD ($2.6B US) to Chrysler, but hadn't yet sorted out precisely how the funds were to be used before disbursing them. This happened in spite of the fact that, according to a piece in Bloomberg, the loans weren't meant to be handed out until authorities were clear on the manufacturers' plans for reorganization. In fact, federal officials hadn't finished establishing the concessions made by all the involved parties, the pension liabilities, nor the long-term soundness of the automakers' financial positions. On top of that, apparently it didn't keep close tabs on the money after loaning it: the report says that $1B CAD should have been applied to GM Canada pension plans but was instead given to GM to use. Chrysler repaid $1.7 billion, while GM handed back $3.8 billion and Bloomberg believes the feds in Ottawa still own 110 million shares of The General, which, at the stock price as of writing, would be good for another $3.9 billion. Those were mad, bad days, though, and we're not sure what point the report serves, other than to say, "Oh, by the way...." News Source: BloombergImage Credit: Bill Pugliano / Getty Images Government/Legal Chrysler GM bailout

FCA eliminates just under 2,000 supplemental contract workers due to coronavirus constraints

Car companies have jumped in quickly to help combat coronavirus. They’re even beginning to manufacture some of the badly needed medical supplies, like ventilators and masks. However, with stay-at-home orders sweeping across the nation and folks practicing social distancing, automotive sales and manufacturing have quickly dried up in North America. That leads us to todayÂ’s news coming out of FCA. A company spokesperson told us that approximately 2,000 supplemental workers (a subcategory of the companyÂ’s many contract workers) are being laid off. HereÂ’s the official statement from FCA: “In light of the challenges created by the COVID 19 situation, and the various ‘stay at homeÂ’ orders from multiple states, a number of development projects within FCA have been temporarily put on hold. "As a result of this, subcontract companies who were providing external support to a number of these projects have been asked to temporarily suspend their activities as we reprioritize certain initiatives and projects. We will continue to monitor the situation with the intent to return to normal activity as soon as the situation allows.” FCA made it clear in our communications with the company that it is not terminating all contract workers, nor is it terminating any employees of the company itself. The rationale here is that certain development work is on pause, so those who were contracted to be a part of that work are now out. We're told that those workers are in white-collar functions, not manufacturing jobs. We asked FCA if it had plans to reinstate all of the affected workers once the coronavirus crisis has passed, but received no commitment either way. “At this point weÂ’re going to continue to monitor the situation,” a company spokesperson told us. Questions still remain when it comes to the stimulus package moving through Congress right now as it pertains to the automotive industry. FCA says itÂ’s currently studying the bill, but hasnÂ’t offered up a comment on the situation yet. We havenÂ’t heard of any similar cuts happening at Ford or GM yet, but now that FCA has made a move, weÂ’ll be on the lookout for more. Hirings/Firings/Layoffs Chrysler Fiat coronavirus

For his last act, Marchionne will outline an EV/hybrid roadmap this week

MILAN/LONDON — Fiat Chrysler (FCA) boss Sergio Marchionne is expected to outline new plans for electric and hybrid cars in a strategy presentation on Friday, aiming to ensure the world's seventh-largest carmaker remains in the race in the absence of a merger. The 65-year-old will present FCA's strategy to 2022, his final contribution to the company he turned around and multiplied in value through 14 years of canny dealmaking. After failing to secure a tie-up he said was necessary to manage the costs of producing cleaner vehicles, Marchionne needs to show the group can keep churning out profits on its own, even as emissions rules tighten, SUV competition intensifies and worries around his succession abound. Marchionne had long refused to jump on the electrification bandwagon, saying he would only do so if selling battery-powered cars could be done at a profit. He even urged customers not to buy FCA's Fiat 500e, its only battery-powered model, because he was losing money on each sold. But Tesla's success and the need to comply with tougher emissions rules have forced Marchionne to commit to what he calls "most painful" spending. "FCA is way behind rivals in terms of hybrid and electric vehicles and they need to hit the accelerator to convince investors they can close that gap," said Andrea Pastorelli, a fund manager at 8a+ Investimenti. Germany's Volkswagen, Daimler, BMW and U.S. rivals GM and Ford have committed to spending billions of euros each in coming years to try produce profitable cars powered by cleaner fuels. FCA needs to present a clear roadmap, just like Volvo Cars, which ditched diesel from its best-selling XC60 SUV, launched a new electric brand and pledged to shift all brands to hybrid by 2019, a banking source close to FCA said, noting: "The tech divide determines winners and losers in the industry." Marchionne has already said half of the wider FCA fleet will incorporate some elements of electrification by 2022, while luxury marque Maserati will spearhead FCA's electrification drive by making all new models due after 2019 electric. But its plans remain vaguer and less advanced than most big rivals and some investors wonder about the capital required to make vehicles compliant, and what share of spending can go to electrification given FCA's numerous demands.