GM-Chrysler Merger Rumor Roundup: Deal To Be Done By Halloween, Mandatory Two Month Furlough For Chrysler Engineers?SThe WSJ reports today (via Automotive News) Cerberus and GM are moving full-steam-ahead in their efforts to get a GM-Chrysler deal done by the end of October. Today also brings news Renault may have their hand in the cookie jar too, negotiating for one or more parts of Chrysler and leading to speculation the Auburn Hills, MI-based automaker could be divvied up among several companies: Basically the worst-case scenario envisioned when Cerberus Capital Management took over in 2007. Finally, we've got an unsubstantiated rumor engineering employees at Chrysler may be getting two months off sans pay beginning...drumroll please...November 1st. Coincidence? Maybe. Also, David Faber of CNBC had a chance to sit down with ChryslerCo CEO, Bob "The Builder" Nardelli; while we haven't had a chance to run through it in its entirety, hit the jump for the a full transcript of the CNBC interview with Nardelli. UPDATE: We now hear from a Chrysler source that rumors of an engineering furlough are not true; that's why we call them "rumors." So what's Nardelli got to say about life, liberty and the pursuit of less losses for Cerberus? Here's the full transcript of his exclusive interview with CNBC's David Faber:
CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S DAVID FABER SITS DOWN WITH ROBERT NARDELLI, CHRYSLER CHAIRMAN & CEO, TODAY ON CNBC'S "WALL STREET CRISIS: IS YOUR MONEY SAFE?" WHEN: Today, Thursday, October 16th at 8:40PM ET WHERE: CNBC's "Wall Street Crisis: Is Your Money Safe?" Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Robert Nardelli, Chrysler Chairman & CEO. All references must be sourced to CNBC ———————————————————————————————- FABER: THANK YOU MARK. YEAH WE ARE HERE ROBERT NARDELLI. MR. NARDELLI THANKS FOR JOINING US. NARDELLI: THANK YOU. IT IS GREAT TO BE HERE. FABER: ON THIS LOVELY EVENING WITH THE CRICKETS WITH THE BACKGROUND. LET ME START OFF WITH THE HEADLINES THAT WE'VE BEEN TALKING ABOUT, PEOPLE HAVE BEEN SEEING, AND WE'VE BEEN TALKING ABOUT FOR MORE THAN A WEEK NOW. ARE YOU IN TALKS WITH GENERAL MOTORS? IS IT POSSIBLE CHRYSLER WILL GET PURCHASED BY GM? NARDELLI: AS YOU KNOW, OBVIOUSLY, WE DON'T COMMENT ON THOSE RUMORS OR SPECULATION, DAVID, BUT I THINK IF YOU LOOK AROUND THE GLOBE, TODAY THEY ANNOUNCED IN CHINA A CONSOLIDATION. OBVIOUSLY, THERE'S GOING TO BE SPECULATIONS.WE'VE BEEN VERY OPEN ABOUT LOOKING FOR PARTNERS AND CREATING ALLIANCES, VERY IMPORTANT FOR US. WE ANNOUNCED THE ONE WITH NISSAN THAT WOULD GET US INTO A "B" PLATFORM, A SMALLER-SIZED VEHICLE. IS IT SOMETHING WE CAN'T DO? SURELY NOT. WE HAVE GREAT ENGINEERS, WE'VE GOT GREAT TECHNOLOGY TO BE ABLE TO DO IT, BUT RIGHT NOW IT'S A RACE. IT'S A RACE TO MAKE SURE WE CAN RESPOND TO AN UNPRECEDENTED CHANGE IN THE INDUSTRY AND CONSUMER DEMAND BY DOWNSIZING. SO BY BEING ABLE TO FORM THESE ALLIANCES OR CREATE THESE PARTNERSHIPS, WE'RE TRYING TO FILL OUR PORTFOLIO TO SUPPORT OUR DEALERS TO BE MORE RESPONSIVE TO OUR CUSTOMERS. FABER: THERE ARE SOME WHO SAY THAT THERE ARE A LOT OF BENEFITS FROM CONSOLIDATION, FROM A GM AND CHRYSLER, THE SYNERGIES WOULD BE CONSIDERABLY VERY LARGE. DO YOU AGREE? NARDELLI: WELL, I THINK IF YOU LOOK AT THE U.S. INDUSTRY, WE STARTED THE YEAR AT ABOUT 16.6 MILLION UNITS. WE FINISHED LAST MONTH AT 12.8. THE PIN NUMBERS TODAY ARE AROUND 12 MILLION UNITS. I THINK IT JUST, CERTAINLY, CREATES AN ENVIRONMENT FOR CONSOLIDATION, WHERE YOU CAN GET SYNERGIES OF PRODUCTIVITY THAT WILL ALLOW YOU TO BE MORE COMPETITIVE, NOT ONLY HERE IN THE U.S. MARKET, BUT ON A GLOBAL BASIS. FABER: TO THE EXTENT — AND I REALIZE YOU'RE NOT GOING TO COMMENT ON THE TALKS, PER SE, TO THE EXTENT THERE ARE ANY, BUT WHEN THOSE KINDS OF TALKS OCCUR,THEY CAN ALSO BE DISTRACTING. FOR MANAGEMENT, AND POTENTIALLY FOR EMPLOYEES. ASSUMING THERE ARE TALKS GOING ON, IS IT SOMETHING THAT YOU WOULD APPROACH AND THEN WANT TO TRY TO GET AN ANSWER TO IN A FAIRLY RAPID FASHION? NARDELLI: LET ME JUST SAY, I COULDN'T BE PROUDER OF OUR ORGANIZATION. THEY HAVE GONE THROUGH A TREMENDOUS LEVEL OF ANXIETY. REMEMBER, THEY FORMED A MERGER OF EQUALS, IF YOU WILL, A WHILE BACK. AND THEN ALL OPTIONS WERE PUT ON THE TABLE IN SOME TIME, FEBRUARY, MARCH OF LAST YEAR, AND THEN WE CONSUMMATED THE DEAL, IF YOU WILL, WITH CERBERUS. AGAIN, I COULDN'T BE HAPPIER WITH CERBERUS AS OUR OWNERS AND STEVE FEINBERG HAS BEEN ABSOLUTELY WONDERFUL TO WORK WITH, THE ENTIRE ORGANIZATION. SO OUR PEOPLE HAVE GONE THROUGH TREMENDOUS ANXIETY. THEY'VE SEEN THE PEAKS, THEY'VE SEEN THE VALLEYS. NOT ONLY RECENTLY, BUT THE HISTORY OF CHRYSLER, DAVID, AS YOU KNOW, HAS BEEN ONE OF A LITTLE BIT OF A ROLLER COASTER RIDE, WHERE WE'VE ALWAYS MANAGED TO COME OUT WITH SOME BOLD, INTIMIDATING, COMMANDING DESIGNS. NEW TECHNOLOGIES, INNOVATIVE SOLUTIONS TO WHAT CUSTOMERS ARE LOOKING FOR. SO I THINK OUR PEOPLE ARE VERY RESILIENT. AND WE JUST KEEP REASSURING THEM THAT OUR RESPONSIBILITY IS TO RETURN CHRYSLER TO PROFITABILITY. WE FOCUS ON THAT EVERY DAY. WE DO THAT BY MAKING SURE THAT WE'VE GOT GREAT PRODUCT CADENCE. WE MAKE SURE THAT WE'RE INVESTING HEAVILY IN QUALITY. THAT OUR QUALITY TODAY IS BETTER THAN YESTERDAY. NOT AS GOOD AS IT'S GOING TO BE TOMORROW, SO THAT WE CAN REALLY CHANGE THE IMAGE, THE REPUTATION, THE RELIABILITY, THE DURABILITY OF OUR VEHICLE, THAT THEN SUPPORTS OUR DEALER NETWORK. A STRONG DEALER NETWORK, A LOYAL DEALER NETWORK, AND THEN TRY TO RESPOND TO CONSUMER DEMAND. FABER: LET'S TALK ABOUT SOME OF THE OTHER THINGS GOING ON RIGHT NOW. THE PRICE OF OIL HAS DROPPED PRECIPITOUSLY. ONE WOULD IMAGINE THAT MIGHT BE GOOD NEWS FOR YOUR INDUSTRY. ONE MIGHT IMAGINE THAT, BUT I CAN ALSO IMAGINE IN THIS ENVIRONMENT, IT MIGHT NOT BE THE CASE. NARDELLI: I THINK IN A NORMAL ENVIRONMENT, WE'D BE DOING A DANCE RIGHT NOW AT UNDER $70, YOU KNOW, AROUND $3 PER GALLON. OBVIOUSLY, WHEN OIL SPIKED, GASOLINE PRICES WENT UP TO $4. WE THOUGHT THAT WAS GOING TO BE OUR BIGGEST CHALLENGE IN 2008.IF YOU THINK ABOUT AN ECONOMY THAT'S IN TURMOIL, IF YOU THINK ABOUT AN INDUSTRY THAT'S SPIRALING DOWNWARD, $4 A GALLON GAS HAS REALLY BEEN DWARFED BY THIS WHOLE ISSUE NOW OF CREDIT AVAILABILITY FOR OUR CONSUMERS, CONSUMER CONFIDENCE, CONSUMERS' ABILITY TO ACTUALLY GET INTO A VEHICLE. YOU'VE SEEN SOME FINANCING ARMs TODAY ANNOUNCE, UNLESS YOU HAVE A FICA SCORE OF ABOUT 700, YOU WON'T QUALIFY. A LOT OF NORMAL CUSTOMERS OUT THERE TODAY, DAVID, ARE 650, 670. AND SO THOSE THAT HAVE ENOUGH INITIATIVE, ENOUGH CONFIDENCE TO BUY A VEHICLE MAY FIND THEMSELVES NOT QUALIFYING FOR A VEHICLE. FABER: SO YOU'RE SAYING THAT DESPITE THIS INCREDIBLE DROP IN OIL, WHICH ONE WOULD IMAGINE WOULD BE GOOD NEWS FOR YOUR POTENTIAL BUYER, THE CREDIT PROBLEM IS DWARFING THAT? NARDELLI: I THINK, NUMBER ONE, IT'S PARAMOUNT IN THE CONSUMER MIND RIGHT NOW. I THINK IT'S THE BIGGEST CHALLENGE THAT WE'RE FACING RELATIVE TO OUR DEALER NETWORK, TO MAKE SURE THAT WE CAN CONTINUE TO FINANCE THEM ON THE WHOLESALE BASIS, THAT THEY STILL HAVE GOOD ACCESS TO RETAIL FINANCING, AND SO WE'RE WORKING VERY HARD RELATIVE TO INCENTIVES TO MAKE SURE THAT OUR CONSUMERS CAN GET INTO OUR VEHICLES. WE TRIED THAT EARLIER THIS YEAR WITH REFUELING AMERICA.SO WE HAVE A LASER FOCUS ON OUR DEALERS AND OUR CONSUMERS, OUR CUSTOMERS TO TRY TO COME UP WITH SOLUTIONS, CREATIVE SOLUTIONS, KIND OF OUT-OF-THE-BOX SOLUTIONS. BECAUSE AS A PRIVATE EQUITY COMPANY, WE HAVE THE ABILITY TO DO THINGS IN SOMEWHAT OF AN UNTRADITIONAL MANNER. FABER: HOLD IT THERE. WE'RE GOING TO BE RIGHT THERE. I WANT TO TAKE A BREAK AND WE'LL CONTINUE TO TALK WITH BOB NARDELLI, CHAIRMAN AND CEO OF CHRYSLER FABER: WELCOME BACK TO CNBC, I'M DAVID FABER HERE IN KIAWAH ISLAND, SOUTH CAROLINA, WHERE THE BUSINESS COUNCIL IS TAKING PLACE. I'VE BEEN SPEAKING TO BOB NARDELLI, THE CHAIRMAN AND CEO OF CHRYSLER. WE'VE BEEN TALKING ABOUT THE IMPACT THE CREDIT CRISIS HAS BEEN HAVING ON YOUR BUYERS, WHO ARE UNABLE TO GET CREDIT TO BUY AUTOMOBILES. YOU MENTIONED 16.6 MILLION AUTO SALES. WHERE ARE WE HEADED? SOME SEE US HEADED AS LOW AS 13 MILLION. IS THAT REALLY A POSSIBILITY? NARDELLI: I THINK THAT'S A VERY REAL POSSIBILITY. DAVID, WE STARTED THE YEAR AT ABOUT 16.6. LAST NOVEMBER, TRYING TO PUT TOGETHER A VERY AGGRESSIVE, CONSERVATIVE PLAN FOR CHRYSLER, WE KIND OF PEGGED IT AT 15.5. SO WE THOUGHT WE WERE IN PRETTY GOOD SHAPE THROUGH THE FIRST QUARTER. THEN WE SAW THIS UNPRECEDENTED AND PRECIPITOUS SPIRALING DOWNWARD. LAST MONTH WE ENDED WITH SEASONALLY ADJUSTED RATE OF ABOUT 12.8. AGAIN, THERE ARE FORECASTS OUT THERE THAT THE YEAR COULD END AT 13 MILLION. RIGHT NOW THE PIN NUMBERS HAVE US JUST SLIGHTLY ABOVE 12 MILLION. SO JUST IMAGINE THE VOLUME CONTRACTION, JUST IN THE U.S. MARKET. FABER: THAT'S SHOCKING. THAT'S OVER 4.5 MILLION CARS. NARDELLI: IT IS. SO JUST TO PUT THAT INTO CONTEXT, THAT'S AS BIG AS ONE OF THREE MANUFACTURERS IN DETROIT IS TODAY. SO WE'VE HAD TO, UNFORTUNATELY, TAKE OUT ABOUT 1.1 MILLION EQUIVALENT UNITS OF CAPACITY. WE'VE HAD TO AFFECT WELL OVER 25,000 FAMILIES AS A RESULT OF HAVING TO RESIZE TO MAKE SURE THAT WE CAN BE COMPETITIVE THROUGH THIS TROUGH AND COME OUT THE OTHER BIGGER, STRONGER, AND MORE FORMIDABLE. ONE OF THE MOST GUT WRENCHING PARTS OF THIS JOB RIGHT NOW IS TO AFFECT PEOPLES LIVES. YOU KNOW, PEOPLE WHO ASPIRE TO HOMES AND COLLEGE EDUCATIONS AND SO FORTH. SO IT'S REALLY ONE OF THE MOST CHALLENGES PARTS THAT I'VE HAD TO GET MY ARMS AROUND IN THE LAST YEAR SINCE I'VE BEEN WITH — FABER: MANY CONSUMERS HAVE WATCHED THE STOCK MARKET DIVE OVER THESE LAST THREE WEEKS, OCTOBER HAS BEEN WORSE THAN SEPTEMBER. I'VE BEEN SPEAKING TO PEOPLE VERY CLOSE TO CONSUMER-RUN COMPANIES AND THEY SAY THEY'VE SEEN A PRECIPITOUS DECLINE SINCE THE END OF SEPTEMBER. ARE YOU SEEING SIMILAR KINDS OF THINGS? NARDELLI: I THINK CERTAINLY IN THE FIRST COUPLE OF WEEKS OF OCTOBER. WHAT I PROVED, DAVID, NO ONE IS IMMUNE FROM THIS ECONOMIC CRISIS THAT WE'RE IN RIGHT NOW. I SAW YOU AND JOHN THIS MORNING, YOU KNOW, ON YOUR SEGMENT, AND I THINK HE FRAMED IT VERY APPROPRIATELY. I THINK YOU ASKED HIM IF WE WERE HEADED FOR A RECESSION. HE SAID, I THINK WE'RE IN ONE. AND SO I THINK WE'RE SEEING, AGAIN, AN UNBELIEVABLE CONTRACTION. AND OBVIOUSLY THE SPECULATION AND THE RUMORS AROUND THAT IS KIND OF DUE COURSE. IT'S NORMAL ANY TIME YOU HAVE THIS KIND OF ECONOMIC PRESSURE, YOU'RE GOING TO SEE CONSOLIDATIONS, YOU'RE GOING TO SEE PARTNERSHIPS, ALLIANCES TO TRY AND OPTIMIZE AND GET PRODUCTIVITY AND SYNERGIES OF TECHNOLOGY. FABER: BUT YOU DON'T KNOW WHERE YOU'VE GOT TO OPTIMIZE YOUR COSTS ARE WHEN YOUR IN DEMAND IS VARYING SO MUCH. IT MUST BE VERY DIFFICULT. NARDELLI: IT'S VERY CHALLENGING, PARTICULARLY IN THIS INDUSTRY BECAUSE, YOU KNOW, OBVIOUSLY IT'S NOT A MATTER OF JUST CANCELING AN ORDER. YOU KNOW, TO STOCK A SHELF AS IN RETAIL. WE'VE MADE HUGE CAPITAL INVESTMENTS IN EXCESS OF BILLIONS OF DOLLARS FOR A LOT OF THESE PLATFORMS. AND SO WHEN YOU HAVE TO DOWNSIZE, OBVIOUSLY YOUR AMORTIZATION ON THE PHYSICAL CAPITAL IN OUR FACILITIES, WORKING WITH THE SUPPLIER NETWORK IS EXTREMELY CHALLENGING, DAVID.YOU KNOW, WHEN WE DID THE DUE DILIGENCE ON CHRYSLER, WHAT WE SAW THERE'S ABOUT 1 MILLION PEOPLE DEPENDING ON OUR SUCCESS. FABER: IN TERMS OF ALL OF THE SUPPLIERS. NARDELLI: YOU LOOK AT NOT ONLY OUR DIRECT EMPLOYEES. YOU LOOK AT THE DEALER NETWORK, 3,600 DEALERS AND THEIR FAMILIES, THE SUPPLIERS, THE LOGISTICS, THE TRANSPORTATION, IT'S A HUGE RESPONSIBILITY. AND I HOPE THAT THE GENERAL PUBLIC, I HOPE THAT OUR LEADERS IN WASHINGTON UNDERSTAND THE IMPLICATIONS OF THE PRESSURE THAT THE INDUSTRY IS UNDER RIGHT NOW. AND CERTAINLY IT'S GONE FROM HOUSING TO BANKING AND I THINK, UNFORTUNATELY, TRANSPORTATION IS FEELING THE BLUNT OF BOTH OF THOSE SECTORS. FABER: I WANT TO END ON THAT. AND LET ME QUICKLY ASK YOU, IN 1979, CHRYSLER GOT BAILED OUT BY THE FEDERAL GOVERNMENT. $1.5 BILLION, A VERY SMALL SUM IN CURRENT TERMS. IS IT POSSIBLE YOU'RE GOING TO NEED THE HELP OF THE FEDERAL GOVERNMENT AGAIN? NARDELLI: WELL, I THINK THAT REMAINS TO BE SEEN. WE'RE DOING EVERYTHING WE KNOW HOW TO DO. WE'RE LOOKING AT EVERY LINE ITEM WHILE AT THE SAME TIME TRYING TO MAKE SURE THAT WE CONTINUE A VERY STRONG PRODUCT CADENCE. WE'RE WORKING VERY HARD TO MAKE SURE WE'RE COMPLIANT WITH THE CAFE STANDARDS THAT HAVE PUT A TREMENDOUS FINANCIAL BURDEN ON THE AUTO INDUSTRY. WE FULLY SUPPORT, DAVID, ENERGY INDEPENDENCE. WE SUPPORT THE NEED FOR ENVIRONMENTAL IMPROVEMENTS, WE'RE DRIVING HARD ON INNOVATION AND TECHNOLOGY TO MEET BOTH OF THOSE THINGS. WE HAVE TO BE VERY CAREFUL, THOUGH, HOWEVER, AS WE TRY TO GAIN INDEPENDENCE ON OIL. WE'VE GOT TO MAKE SURE THAT WE DON'T BECOME DEPENDENT ON BATTERIES. OUR ENVY PROGRAM WITH ELECTRIC VEHICLES, WE HAVE TO MAKE SURE WE'RE SUPPORTING FINANCIALLY, WORKING WITH THE ENTREPRENEURS TO CREATE THE BATTERY TECHNOLOGIES HERE IN THE U.S. THAT ALLOWS US TO BE SELF-SUSTAINING. FABER: WE HAVE TO END IT THERE. OKAY. BOB, THANK YOU VERY MUCH. NARDELLI: THANK YOU.