Obama: Chrysler's 'new lease on life'

By Mark Silva

A Big Three American automaker is going bankupt.

And another automaker's CEO will be out of a job: Chrysler CEO Robert Nardelli said today that he' leave the company after its emergence from bankruptcy.

And the president says this is as it should be. This time, he says, it's not the customer that's getting a new lease. It's the company.

"One month ago, I spoke about some of the problems that have led to the crisis in the auto industry, and about what would be required to ensure that General Motors and Chrysler emerged from their current troubles stronger and more competitive,'' President Barack Obama said today at the White House.

"And today, after consulting with my Auto Task Force, I can report that the necessary steps have been taken to give one of America's most storied automakers, Chrysler, a new lease on life,'' he said

"This is a company that has a particular claim on our American identity,'' said Obama. "It's a company founded in the early years of the American automobile industry. a company that helped make the 20th Century an American Century, and that came to embody, along with the two other members of the Big Three, the ingenuity, the industriousness, and the indomitable spirit of the American people.

"Chrysler has not only been an icon of America's auto industry and a source of pride for generations of American workers. It's been responsible for helping build our middle class, giving countless Americans the chance to provide for their families, sending their kids to college, saving for a secure retirement. It's what hundreds of thousands of autoworkers and suppliers and dealers and their families rely on to pay their bills in communities across our industrial Midwest and across our country.

"It's been a pillar of our industrial economy,'' he said, "but, frankly, a pillar that's been weakened by papering over tough problems and avoiding hard choices.''

Nardelli, appearing on CNBC's Power Lunch today, said: :Our goal... would be to get through things thing in the next couple of months, 35, 40, 60 days.'''

"For too long, Chrysler moved too slowly to adapt to the future, designing and building cars that were less popular, less reliable, and less fuel-efficient than foreign competitors,'' the president said. "That's part of what has brought us to a point where they sought taxpayer assistance.

"But as I've said from the start, we simply cannot keep this company, or any company, afloat on an endless supply of tax dollars,'' he said. "My job, as president, is to ensure that if tax dollars are being put on the line, they are being invested in a real fix that will make Chrysler more competitive.

"That's why I rejected the original restructuring plan that Chrysler offered last month. It was clear that if we put tax dollars in that plan, it would be a bad deal for American taxpayers and would not put the company on a viable path. But it's also clear that if Chrysler was able to form a partnership with the international car company Fiat, there was a chance Chrysler could have a bright future.''

Obama gave Chrysler and the Italian automaker, Fiat, 30 days to reach a merger agreement.

"The standard I set was high -- I challenged them to design a plan that would protect American jobs, American taxpayers, and the future of a great American car company,'' he said. "But over the past month, seemingly insurmountable obstacles have been overcome, and Chrysler's most important stakeholders -- from the United Auto Workers to Chrysler's largest lenders, from its own -- from its former owners to its suppliers -- have agreed to make major sacrifices.

"So, today, I am pleased to announce that Chrysler and Fiat have formed a partnership that has a strong chance of success. It's a partnership that will save more than 30,000 jobs at Chrysler, and tens of thousands of jobs at suppliers, dealers and other businesses that rely on this company.

"It's a partnership that the federal government will support by making additional loans that are consistent with what I outlined last month,'' he said.

"As part of their agreement, every dime of new taxpayer money will be repaid before Fiat can take a majority ownership stake in Chrysler. In addition, considering Chrysler's extensive operations in Canada, the government of Canada is also committing resources to ensure that Chrysler has a chance to succeed, and we're working closely with them.

"It's a partnership that will give Chrysler a chance not only to survive, but to thrive in a global auto industry. Fiat has demonstrated that it can build the clean, fuel-efficient cars that are the future of the industry, and as part of this agreement, Fiat has already agreed to transfer billions of dollars in cutting-edge technology to Chrysler to help them do the same. Fiat is also committed to working with Chrysler to build new fuel-efficient cars and engines right here in America.

"Now, this partnership was only possible because of unprecedented sacrifices on the part of Chrysler's stakeholders, who are willing to give something up so that this company -- and all of the men and women whose livelihoods depend on it -- might see a better day.

"Chrysler's management, and in particular, its CEO, Robert Nardelli, have played a positive and constructive role throughout this process. The United Auto Workers, who had already made painful concessions, agreed to further cuts in wages and benefits; cuts that will help Chrysler survive, making it possible for so many workers to keep their jobs and about 170,000 retirees and their families to keep their health care.

"Several major financial institutions, led by J.P. Morgan, agreed to reduce their debt to less than one-third of its face value to help free Chrysler from its crushing obligations. The German automaker, Daimler, agreed to give up its stake in Chrysler and contribute to the company's pension plan, further easing Chrysler's financial burden. And countless Americans across our country will be making major sacrifices, as well, as a result of plans to consolidate dealers, brands, and product lines.

"While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them.

"I stand with Chrysler's employees and their families and communities,'' he said. "I stand with Chrysler's management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices. And that's why I'm supporting Chrysler's plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success.

"No one should be confused about what a bankruptcy process means. This is not a sign of weakness, but rather one more step on a clearly charted path to Chrysler's revival. Because of the fact that the UAW and many of the banks, the biggest stakeholders in this whole process have already aligned, have already agreed, this process will be quick. It will be efficient. It's designed to deal with those last few holdouts, and it will be controlled. It will not disrupt the lives of the people who work at Chrysler or live in communities that depend on it.

"And it will not affect the ability of American consumers to buy a Chrysler, or to get it serviced and repaired,'' he said. "It's a process that has the full support of Chrysler's key stakeholders and the full backing of the United States government. And I have every confidence that Chrysler will emerge from this process stronger and more competitive.

"I know that there are some who will insist that bankruptcy, even for these limited purposes, is a step that should not have been taken. But it was unsustainable to let enormous liabilities remain on Chrysler's books, and it was unacceptable to let a small group of speculators endanger Chrysler's future by refusing to sacrifice like everyone else. So I recognize that the path we're taking is hard. But as is often the case, the hard path is the right one....

"If you are considering buying a car, I hope it will be an American car,'' the president said, addressing television cameras at the White House as if this were another public address. "I want to remind you that if you decide to buy a Chrysler, your warrantee will be safe -- because it is backed by the United States government. And to further boost demand for autos, we are working to accelerate the purchase of a federal fleet, and we're also working with Congress on fleet modernization legislation that can provide a credit to consumers who turn in old cars and purchase cleaner, more fuel-efficient cars.

"These are challenging times for America's auto industry and for the American people. But I am confident that if we as a nation can act with the same sense of shared sacrifice and shared purpose that's been shown by so many of Chrysler's stakeholders, if we can embrace the idea that we're all in it together -- from the union hall to the boardroom to the halls of Congress -- then we will succeed not only with Chrysler, we will not only see our American auto industry rise again, but we will rebuild our entire economy and make the 21st century another American Century....

"Chrysler and GM are going to come back,'' he said. "And I am very confident that we're going to be able to make once again the U.S. auto industry the best auto industry in the world.''

And here, courtesy of CNBC, is what Chrysler's Nardelli told Maria Bartiromo:

BARTIROMO: HI THERE THANKS VERY MUCH BILL JOINING US NOW BOB NARDELLI IN DETROIT BOB NICE TO HAVE YOU ON THE PROGRAM THANKS FOR SPENDING THE TIME

NARDELLI: THANK YOU VERY MUCH MARIA FOR THE OPPORTUNITY

BARTIROMO: WELL AMAZING DEVELOPMENTS HERE HOW DO YOU FEEL? HOW DID THIS ALL COME DOWN?

NARDELLI: WELL FIRST OF ALL I NEED TO REACH OUT TO EVERYBODY THAT'S HELP MAKE THIS THING HAPPEN TODAY AS YOU CAN IMAGINE AN INORDINATE CHALLENGE A HUGE AMOUNT OF WORK AND PEOPLE WERE WORKING 24/7 CERTAINLY THE LAST TWO WEEKS BUT SINCE OUR FILING ON FEBRUARY 17TH YOU KNOW IT'S A BITTER SWEET CONCLUSION I THINK THE PRESIDENT SUMMED IT UP EXTREMELY WELL VERY ACCURATELY MARIA I THINK BREATHING NEW LIFE INTO CHRYSLER IS WHAT IT IS ALL ABOUT GIVEN OUR EMPLOYEES OUR DEALERS OUR SUPPLIERS AND EVERYONE INVOLVED THE OPPORTUNITY TO CONTINUE YOU KNOW WHERE CHRYSLER WILL PROVIDE GREAT PAYING JOBS AND CONTINUITY IS WHAT THIS PROCESS WAS ALL ABOUT

BARTIROMO: BUT OF COURSE FOR THAT BANKRUPTCY FILING YOU LEAVING THE COMPANY AFTER THE TRANSITION WHAT DO YOU THINK THAT TELLS US ABOUT AMERICA WHAT DOES THIS SAY ABOUT AMERICA THE ECONOMY A GREAT AMERICAN ICON FILES CHAPTER 11

NARDELLI: WELL I THINK AGAIN THE PRESIDENT THE AUTO TASK FORCE ALL OF US OBVIOUSLY WOULD HAVE PREFERRED NOT HAVING TO DO THIS SURGICAL FILING THE PRESIDENT SO ACCURATELY IDENTIFIED IT MARIA IT IS SOMETHING THAT WILL ALLOW US TO EMERGE IN A MUCH LEANER FASHION WE WILL BE ABLE TO LEAVE SOME ASSETS BEHIND SOME LIABILITIES BEHIND SOME DEBTS BEHIND OBVIOUSLY THERE IS A HUGE AMOUNT OF WORK AND A SIGNIFICANT CHALLENGE ANYTIME YOU ENTER INTO A CHAPTER 11 FILING BUT I THINK GIVEN WHERE WE ARE AND THE TIMEFRAME WE WERE WORKING AGAINST IT ENDED UP BEING THE ONLY SOLUTION NOT ONE OBVIOUSLY I WOULD HAVE CHOSEN FIRST BUT A PATH A DECISION WE HAD TO MAKE ALONG THE WAY AND I THINK HE IS RIGHT OUR GOAL IS TO GET IN AND OUT AS QUICKLY AS WE CAN AND GET THE FIAT DEAL FROM SIGNING TO CLOSING AND MOVE ON

BARTIROMO: YOU KNOW SO MANY THINGS TO REALLY EXPLORE BOB LET ME HIT ON SOMETHING YOU JUST SAID AND THAT IS THE SO-CALLED SURGICAL BANKRUPTCY HAVE YOU EVER SEEN A BANKRUPTCY TAKE 60 DAYS

NARDELLI: NO I HAVEN'T AND TO BE HONEST

BARTIROMO: IS IT FAIR TO SAY THIS IS GOING TO TAKE ONE OR TWO YEARS

NARDELLI: NO I THINK AGAIN WHAT MAKES THIS DIFFERENT IS THAT WE HAVE A LOT OF THE PARTIES ALREADY ONBOARD I CAN'T SAY ENOUGH ABOUT THE CAW THE UAW CERTAINLY OUR OWN UNITED STATES TREASURY WHO HAVE BEEN FABULOUS AND THE AUTO TASK FORCE FABULOUS THE CANADIAN GOVERNMENT THE SUPPLIERS THE DEALERS EVERYONE WHO HAS COME TOGETHER AND PROVIDED AND MADE CONCESSION AS THE PRESIDENT HAS CHALLENGED US TO DO I THINK THIS WILL I AM NOT AN EXPERT IN BANKRUPTCY AND I DON'T WANT TO BECOME AN EXPERT IN BANKRUPTCY BUT I REALLY THINK WE CAN MOVE THROUGH THIS QUICKLY MARIA

BARTIROMO: WHAT'S QUICKLY

NARDELLI: OUR GOAL AS HE SAID WOULD BE TO GET THROUGH THIS THING IN THE NEXT COUPLE OF MONTHS 35, 40, 60 DAYS

BARTIROMO: MANY PEOPLE I HAVE SPOKEN WITH TODAY AND OVER THE LAST COUPLE OF DAYS SAID THAT IS AN EXTRAORDINARY STATEMENT AND IT'S NOT GOING TO HAPPEN TO GET THROUGH BANKRUPTCY IN 60 DAYS BUT YOU THINK IT'S DOABLE IS THAT WHAT YOU'RE SAYING BOB NARDELLI THINKS BANKRUPTCY IS DOABLE IN 60 DAYS

NARDELLI: ONE DIFFERENCE AND PROBABLY THE SINGLE BIGGEST DIFFERENCE THE PRESIDENT OF THE UNITED STATES HAS CERTAINLY SET THAT AS A CHALLENGE FOR ALL OF US INVOLVED AND TODAY HE HAS BEEN VERY SUCCESSFUL IN DELIVERING ON HIS COMMITMENTS

BARTIROMO: LET ME ASK YOU ABOUT THOSE COMMITMENTS BECAUSE THERE IS A LOT OF CHATTER ON WALL STREET TODAY AND AT A NUMBER OF INVESTMENT FIRMS WHO FEEL THAT THEY REALLY ARE NOT BEING TREATED FAIRLY LAST NIGHT THE NON-TARP BANKS THESE ARE THE SENIOR DEBT HOLDERS OFFERED TO TAKE A 40% HAIRCUT EVEN THOUGH GROUPS LOWER DOWN CERTAINLY ON THE LEGAL PRIORITY CHAIN SUCH AS THE UNIONS WILL BE GIVEN RECOVERIES UP TO 50% OR MORE WHY ARE THE UNIONS GETTING MORE THAN THE SENIOR DEBT HOLDERS WHEN THESE DEBT HOLDERS THESE INVESTORS RELY ON BANKRUPTCY LAW THAT HAS GOVERNED OUR COUNTRY FOR DECADES OR RELY ON THE OBLIGATIONS THEY AGREED UPON A LONG TIME AGO

NARDELLI: MARIA THAT'S A GREAT QUESTION I THINK AS WE GO THROUGH THIS PROCESS AND WE LOOK AT NOT ONLY THE VIVA CONVERSION BUT WE LOOK AT THE CONCESSIONS THAT BOTH THE CAW AND THE UAW SIGNED UP FOR AND ACHIEVED IN REMARKABLE TIME THROUGH RATIFICATION YOU'LL FIND I THINK THAT THE TABLE WAS FAIRLY WELL-BALANCED I THINK THAT AS IT RELATES TO THE LENDERS THE UNITED STATES TREASURY HANDLED ALL OF THOSE NEGOTIATIONS I THINK THEY DID A REMARKABLE JOB TRYING TO BALANCE THE SACRIFICE TRYING TO BALANCE AND RECOGNIZE THE EQUITY OF THE FIRST LEAN LENDERS AND THE FUNDS THEY HAD PUT INTO THIS AND AGAIN I THINK THAT AS THIS UNFOLDS WHAT YOU WILL FIND IS THE AUTO TASK FORCE UNTIED STATES TREASURY ADMINISTRATION TOOK ALL THOSE THINGS INTO CONSIDERATION TRIED TO BALANCE THEM AS FAIRLY AND AS EQUITABLY AS THEY COULD GIVEN THE TIMEFRAME WE HAD TO GET THROUGH THIS

BARTIROMO: AND TREASURY ASKED YOU TO STEP DOWN RIGHT

NARDELLI: NO THAT IS NOT THE CASE MARIA I TELL YOU I WAS TAKEN BACK BY THE PRESIDENTS COMMENTS I THOUGHT THAT I CAN'T TELL YOU HOW APPRECIATIVE I WAS OF HIS COMMENTS THANKING ME BUT IT'S NOT ABOUT ME IT'S ABOUT A HUGE GROUP OF MEN AND WOMEN THAT HAVE BEEN INVOLVED WITH MAKING THIS PROCESS A SUCCESS I THOUGHT IT WAS AN APPROPRIATE TIME MARIA TO ANNOUNCE IT THAT I WOULD SEE THIS THROUGH THE BANKRUPTCY AS YOU KNOW IN THE TERM SHEET THE NEW COMPANY THAT WILL EMERGE AS DIRECTED BY THE UNITED STATES TREASURY WILL HAVE A NINE PERSON BOARD SIX SELECTED BY THE GOVERNMENT THREE SELECTED BY FIAT ONE WILL BE A FIAT EMPLOYEE FROM THAT BOARD THEY WILL ELECT A CHAIRMAN THEN THAT BOARD WILL SELECT A CEO AND THAT CEO WILL BE WITH THE CONCURRENCE OF FIAT THIS IS THE APPROPRIATE TIME TO MAKE THE TRANSITION CERTAINLY TO HAVE A FIAT INDIVIDUAL WHO IS TOTALLY FAMILIAR WITH ALL OF THE SYNERGY OPPORTUNITIES THE PRODUCTS THE TECHNOLOGIES TO MAKE SURE WE MAXIMIZE THE OPPORTUNITY IN COMING TOGETHER

BARTIROMO: LET ME ASK YOU MORE ABOUT FIAT BOB WHAT IS PRIORITY NUMBER ONE ONCE FIAT AND CHRYSLER GET TOGETHER IS IT GETTING PRODUCT OUT ON THE MARKET IS IT REDUCING COSTS WHAT IS THE NUMBER ONE PRIORITY

NARDELLI: WELL WE ARE GOING TO BE ON A PARALLEL PATH WITH BOTH OF THOSE AND THE OTHER ONE OF COURSE IS TECHNOLOGY AS WE LOOKED AT FIAT ALMOST A YEAR AGO TOM LASORTA ARRANGED THE FIRST MEETING WITH FIAT AND THEN WE QUICKLY FOLLOWED SO WE HAVE BEEN WORKING THEM FOR OVER A YEAR ON A PRODUCT ALLIANCE THAT NOW HAS EMERGED INTO A STRATEGIC ALLIANCE AND WE WERE LOOKING AT THAT CERTAINLY FOR SMALL CARS LAST SUMMER WHEN GASOLINE WENT TO FOUR DOLLARS WE WERE LOOKING AT THEIR TECHNOLOGY AND POWER TRAIN TO HELP US MAKE SURE WE CAN MEET THE CAFE STANDARDS WE WERE LOOKING AT FIAT TO HELP US ON A GLOBAL BASIS AFTER WE SEPARATED FROM DAIMLER WE WANTED TO MAKE SURE WE HAD A BROADER EUROPEAN SOUTH AMERICAN FOOTPRINT TO MOVE OUR JEEPS OUR CHRYSLER AND DODGE THROUGH THAT SO ON A MULTI-PRONG OBJECTIVE WE'LL MOVING DOWN THAT CONCURRENTLY MARIA BECAUSE TIME IS OF THE ESSENCE TO REALLY RESTRUCTURE GET AS MUCH SYNERGY AS MUCH TECHNOLOGY AS MUCH GLOBAL REACH AS WE CAN THROUGH THIS PROCESS

BARTIROMO: SO IN THE PAST WHEN WE HAVE SPOKEN YOU TOLD ME IT TAKES 1-2 YEARS TO GET A CAR ON THE MARKET FROM START TO FINISH HOW LONG WILL IT TAKE TO GET NEW FUEL EFFICIENT CARS ON THE MARKET BETWEEN CHRYSLER AND FIAT AND IF IT IS TWO YEARS WHAT ARE YOU GOING TO DO IN THAT TWO YEAR PERIOD TO SURVIVE THIS INCREDIBLY SHRINKING MARKET CLEARLY WILL THERE BE A NEED FOR NEW GOVERNMENT HELP DOWN THE ROAD IF IT IS GOING TO TAKE YOU TWO YEARS TO GET NEW FUEL EFFICIENT CARS ON THE MARKET WHICH WE DON'T KNOW YET THAT THE US CONSUMER IS GOING TO WANT FROM FIAT

NARDELLI: WELL IT'S A GREAT QUESTION AND IF WE WERE STARTING FROM A BRAND NEW PLATFORM I THINK THE TIMEFRAME IS APPROPRIATE AS WE DISCUSSED BEFORE ONE OF THE ADVANTAGES IN THIS ALLIANCE IS THAT WE HAVE BEEN WORKING AS I SAID FOR OVER A YEAR NOW THE KEY WILL BE TO TAKE SOME OF THE SMALLER PLATFORMS LIKE THE FIAT 500 WHICH WE SHOWED IN NY AT THE AUTO SHOW AND GOT TREMENDOUS CONSUMER REACTION TO IT AND IT WAS AWARDED BEST IN CLASS FOR ITS SEGMENT THAT'S A CAR THAT WE CAN COMMOLOGATE VERY QUICKLY AND WE CAN INTRODUCE INTO THE US MARKET THERE ARE TECHNOLOGIES THAT WILL ALLOW US TO ADAPT THAT TECHNOLOGY INTO EXISTING PRODUCTS THAT WE TAKE MANY OF OUR VEHICLES AS WE SAID BEFORE OVER 70% OF OUR VEHICLES HAVE GAINED FUEL EFFICIENCY YEAR OVER YEAR TO FURTHER ENHANCE THAT TO IT OUT INTO THE MARKET PLACE SO THERE'S TECHNOLOGY THERE'S PLATFORMS AGAIN THE THIRD PART ABOUT THIS THAT WILL HELP IMMEDIATELY IS TAKING OUR JEEP BRAND ONE OF OUR MOST ICONIC BRANDS IN THE AUTO INDUSTRY ON A GLOBAL BASIS AND MOVE IT THROUGH THEIR DISTRIBUTION IN A MUCH MORE EFFICIENT WAY THROUGH A BROADER FOOTPRINT THAN WE HAD AFTER WE SEPARATED FROM DAIMLER BACK IN AUGUST OF 07

BARTIROMO: I WANT TO ASK YOU ABOUT DAIMLER BECAUSE A LOT OF PEOPLE SAY LOOK WE'VE TRIED THESE CROSS=PROMOTIONAL MERGERS BEFORE AND CROSS' GLOBAL MERGERS WITH DAIMLER DIDN'T WORK OTHERS DIDN'T WORK WHY DO YOU THINK FIAT WILL WORK BUT WE'LL COVER THAT ON THE "CLOSING BELL" LET ME END THIS LIVE INTERVIEW HERE BOB WITH ASKING YOU ABOUT THE REPERCUSSIONS IF IN FACT WE WERE TO SEE THE FEDERAL GOVERNMENT OWN 50% OF GENERAL MOTORS YOU KNOW HERE WE ARE WITH THE GOVERNMENT HAVING A BIG STAKE IN GM IF THE PLAN ON THE TABLE GOES FORWARD DO YOU FEEL THAT FORD AND CHRYSLER ARE AT A DISADVANTAGE IF THE GOVERNMENT OWNS SUCH A BIG STAKE IN YOUR MAIN COMPETITOR THERE DO YOU FEEL LIKE YOU ARE OPERATING WORKING AGAINST TAX PAYER DOLLARS IN SOME REGARD

NARDELLI: NOT AT ALL MARIA I HOPE THAT THE RESTRUCTURING PROCESS FOR GM IS TREMENDOUSLY SUCCESSFUL WITH THE UNITED STATES TREASURY THE AUTO TASK FORCE INVOLVEMENT AND AGAIN A LOT OF THE SAME CONSTITUENTS THAT WE WERE INVOLVED IN BECAUSE THE AUTO INDUSTRY PRIMARILY THROUGH THE SUPPLY NETWORK NEEDS TO BE HEALTHY AND GM IS SUCH A LARGE PLAYER WE NEED THEM TO BE SUCCESSFUL THE OTHER COMPETITORS CERTAINLY HERE IN THE US NEED THEM TO BE SUCCESSFUL SO WE CONTINUE WITH AN UNINTERRUPTED SUPPLY OF COMPONENTS SO THAT WE CAN CONTINUE TO MANUFACTURE AND SUPPLY AND PROVIDE THEM TO OUR CONSUMERS

BARTIROMO: ALL RIGHT BOB WE ARE GOING TO CONTINUE TALKING ABOUT IN PARTICULAR THE SENIOR DEBT HOLDERS AS THEY SEEM TO BE UPSET THAT THERE IS CONTINUING CLASS WARFARE IF YOU WILL BIG BUSINESS IS BAD WE WILL TALK ABOUT THAT AS WELL AS WHAT A DEAL WITH FIAT MEANS ON THE CLOSING BELL MEANWHILE BOB THANK YOU AND WE WILL SEND IT BACK TO THE STUDIO AND BILL AND SUE