3 Min Read
WASHINGTON (Reuters) - The U.S. government is encouraged by the turnaround plan for Chrysler presented by Fiat SpA FIA.MI but will not push for a quick offering of the automaker's shares, a senior official said.
"We see management with a huge sense of urgency. We see a huge dedication and commitment, working extremely hard," Ron Bloom, who heads the Obama administration's autos task force told Reuters on Tuesday. "It's an ambitious plan."
The U.S. Treasury directed and funded a restructuring of the No. 3 U.S. automaker in bankruptcy that gave operational control of Chrysler and an initial 20-percent stake to Fiat.
Earlier this month, Fiat Chief Executive Sergio Marchionne said Chrysler would break even on a net basis by 2011 in presenting a long-awaited restructuring plan.
Fiat's five-year turnaround plan projects that Chrysler can more than double sales as it rolls out a dozen new models built on Fiat platforms.
The Marchionne plan hinges on the view that Chrysler can recover market share lost as the automaker slid toward bankruptcy and that the U.S. market will gradually recover.
Bloom said it was likely that the an initial public offering of Chrysler shares would come after GM's IPO and probably not earlier than 2011.
"Sergio Marchionne has said he thought it was a 2011 event but I think in fairness Sergio would tell you there's a fair amount of uncertainty in that," Bloom said.
"We're not going to push them into the market when the market isn't ready for them. I think Sergio was clear...that they've got a lot of work to do."
The U.S. government holds an 8-percent stake in Chrysler. A health care trust affiliated with the United Auto Workers union holds 55 percent of Chrysler.
Union officials remain in talks with Chrysler about where a number of vehicles in the Fiat plan will be produced, including new mid-sized sedans.
Bloom, who had been an adviser to the United Steelworkers union until joining the Obama administration in February, said the U.S. government would not intervene in those talks.
"We're not going to involve ourselves in plant location decisions. At the end of the day, the board of directors will decide where to locate plants and where to put product," he said.
"GM and Chrysler have a very competitive cost structure in North America, so I think there's a lot of business logic for making cars in North America. We trust they'll follow business logic but we're not going to follow it with a dictate," Bloom said.
Additional reporting by David Lawder; Editing by Andrea Ricci