Share this story
Close X
Switch to Desktop Site

Chrysler hiring: a bailout that worked

CHRYSLER is hiring again -- and that's a success story that, for now at least, warrants public attention. In announcing recently that the No. 3 US automaker would expand its work force by 1,700 employees -- some 700 of them new workers -- Chrysler was acknowledging the heavy demands now found on its assembly lines. Chrysler cars and vans have become hot sellers -- sought out by a car-buying market that is probably more sophisticated than ever when it comes to considerations of price and quality. Moreover, auto analysts say that the management team put together by Chrysler chairman Lee Iacocca has to be reckoned one of the best in the auto industry: The team is considered bold and imaginative. Indeed, the firm is planning to put out five new products over the next 31/2 years. And Chrysler is expected to post record profits for 1984, the second year in a row.

New products and new profits, however, do not really tell the Chrysler story. What must be remembered is that Chrysler was facing bankruptcy back in the late 1970s. It was saved as an independent corporation precisely because of an extraordinary joint effort involving the federal government, which provided a multibillion-dollar loan-guarantee package; its workers, who took pay and benefit reductions, and in many cases experienced layoffs; its management, which was drastically trimmed in size; and its dealers and suppliers, who took price and profit cuts.

About these ads

There is much that is dubious about the whole notion of a ``federal bailout.'' As a general rule, the marketplace rewards firms that perform well and penalizes firms that don't. Had Chrysler ``gone under,'' it quite likely would have been merged with some larger, or more aggressive, firm.

Still, the ``Chrylser case'' does suggest that in a unique situation a federal package to save a key firm in the American industrial sector can work, provided there is a mutual sense of shared sacrifice and renewed effort from all parties involved. The ``bailout'' must be perceived as a short-term rather than permanent effort.

Chrysler still faces many challenges. Its workers continue to be paid less for comparable work than auto workers at General Motors and Ford, an issue that will come up in negotiations on a new contract later this year. And Chrysler still faces vigorous competition from other producers.

But surely, who could gainsay the good news that Chrysler -- which was teetering on the edge of corporate collapse back in 1979 -- is now planning its first off-the-street hirings in over half a decade. ------30------ {et

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.