Things look good to go for Chrysler, Rep. Donnelly says

It appears, according to Rep. Joe Donnelly, that Chrysler LLC has dodged a bullet and will remain viable in the foreseeable future.

Donnelly, D-2nd District, told the Tribune Tuesday that all key elements are in place to allow the automaker to avoid bankruptcy.

"There were three key ingredients," Donnelly said of Chrysler's push to meet an April 30 deadline set by the Obama administration to secure additional federal loans.

"There was Fiat, the union and the banks," he said. "All three are now in place."

Donnelly said the U.S. Treasury Department reached an agreement Monday with the debtholders, to whom the Treasury Department will provide a total of $2 billion.

"In normal times," said Dr. Jerry Conover, director of the Indiana Business Research Center at Indiana University's Kelley School of Business, "debts like this aren't forgiven this way, but we are not in normal times. It is a better sign for Chrysler what the size of the cut was. It will make it easier for them to keep going."

As for the alliance with the Italian automaker, Donnelly said, "Fiat is anxious to get this deal done."

Donnelly said Fiat officials have toured Chrysler's transmission plants in Kokomo and were impressed.

"The Kokomo transmission plants fit the Chrysler plans and hopefully we expand production lines," he said.

Donnelly called the agreements the best possible news for Kokomo and the 2nd District.

"This will make [the Chrysler business] model profitable," he said. "Even with the lowered production numbers, they will be profitable."

Donnelly said he was confident an agreement will be finalized by Thursday's deadline.

Congressman Dan Burton, R-5th District, spoke Tuesday with John Bozzella, Chrysler's senior vice president of external affairs and public policy.

That conversation left him with hope that an agreement can be finalized.

"He explained the framework that is being discussed with the union and the bondholders," Burton said.

An element still needed is the United Auto Workers' ratification of tentative concessions made with Chrysler on Sunday.

With a weekend approval from the Canadian Auto Workers' union, Chrysler's factory-level UAW leaders voted unanimously Monday night to recommend their members approve a deal that is expected to keep the automaker out of bankruptcy.

Today, the rank-and-file will vote.

According to reports, union members will vote on a settlement that includes wage freezes through 2011 for temporary and part-time workers; removing restrictions on the number of new workers that can be hired at less than $15 an hour; and agreeing Chrysler will pay less into the UAW's retiree health-care fund.

The concessions mirror those approved by the Canadian union. Other concessions include: Union members surrendering Christmas bonuses for the next two years, a shorter Easter vacation, eliminating tuition-assistance, reduced laid-off workers compensation, and limiting break time to 40 minutes a shift.

Richie Boruff, president of Local 685, said, "No doubt," when asked if he will ask his rank-and-file to vote for the concessions.

After all, "we don't have a lot of choices. I don't like it that we are in this position, but this will keep jobs in the community," said Boruff. "It's a shame we are where we are at, but I do like the solidity that has been shown. We don't have a lot of choices.

"I don't like where we are, and it is painful. No doubt about it."

David Cole, chairman of the Ann Arbor, Mich.-based Center for Automotive Research, says things look positive.

"This puts them in a positive direction, and it has to be a positive sign for [areas like Kokomo] that have Chrysler plants invested in their communities," said Cole.

"Getting the unions' agreement is a good move," he said. "There are still other conditions to be met. They are not home-free. But this shows there is some life after the proverbial death."