Accounting 12 - Chapter 16

Link: http://www.cbc.ca/money/story/2009/03/22/chrysler-union.html

Summary:
The economy is now in recession and companies and workers are suffering. Here is another case. As you might have heard, Chrysler's minivan assembly plant in Windsor, Ontario, has laid off many employees and has plans to close down the plant as well. Closing down the plant would include the layoff of more than 5000 workers! This is why Chrysler and the Canadian Auto Workers (CAW) will begin talk aiming at reaching an agreement on worker concessions in advance of a looming deadline for the troubled automaker to receive billions in emergency loans from the Canadian and U.S government. The two sides both have different ideas on what the plan should be in order to get them out of the trouble they are in. The CAW believe that the union should stick to pattern bargaining, meaning it will ask Chrysler to accept a deal similar to the one that General Motors accepted upon earlier in this month. Chrysler described the plan as "unacceptable" to Chrysler, and threatened a complete pullout from Canada if the company did not get what it needs from workers and the government. The CAW hope an agreement can be made by the end of the week.

Connection:
Wages and Unemployment Insurance Deductions were the connections i made between the article and chapter 16. The CAW believes that Chrysler should stick with pattern bargaining, which includes the freezing of wages until 2012 and adjustments made to both wages and pensions for workers. Under the agreement, CAW members would also contribute $30 a month to their health benefits. Decreasing wages to employees would not only decrease the gross amount of money employees are making, but would also help Chrysler increase their profit because of less wage expenses. So what happens to the thousands of employees if Chrysler's minivan assembly plant closes down? More than half will not be able to have a source of income for at least a month. So what should they do? They should just continue looking for a job because they still have "unemployment insurance". The unemployment insurance fund was created from deductions made from previous portions of their cheques for if they were to ever become unemployed. When the become unemployed while willing and able to accept employment, the worker is entitled to receive payments out of the fund.

Reflection:
I think Chrysler should just stick with the Canadian Auto Worker's ideas of following the plan of pattern bargaining, like the one that General Motors accepted earlier in this month. It seems like a great idea that will benefit the thousands of workers, Chrysler customers, and the corporation of Chrysler itself. If Chrysler so happens to not come to an agreement and decides to pull out from Canada, i see a deepened recession that will be eventually lead towards a depression that will be even harder for the world's economy to get out of. So, cross your fingers, and if you have not started saving money, i suggest that you start now. When will our economy recover?

Accounting 12 - Chapter 15

Link :
http://money.cnn.com/2009/03/03/news/companies/chrysler_viper.reut/index.htm?postversion=2009030317

Summary:
The Dodge Viper. It is a V10-powered sports car manufactured by the Dodge division of Chrysler LLC. Chrysler LLC is recently in discussions with two to three companies for the possible sale of the Dodge Viper sports car line, but the economic recession has slowed the process. But why sell this unique car to another company? The answer is simple, “Chrysler is exploring the sale of the Viper business in efforts to generate cash and ride out the deepening U.S. auto industry downturn.” Chrysler has had a 169% increase of sales of the Viper from the previous years, but recently, they have been struggling along with other automakers through the downturn in U.S. auto sales. Chrysler tries to seem calm by saying that they “are not in a big hurry to [sell the] Viper.” U.S. auto sales have declined 44% in February.

Connections:

The insiders and the outsiders of a company, and trend analyses were the connections I made between the article and chapter 15. The insiders, Chrysler, had to study their financial statements thoroughly and look at how the economy was doing in order to make key decisions about their company. In this article's case, Chrysler came to the decision that they wanted and probably needed to sell the Viper in order to survive the U.S. automobile industry downturn. The two to three companies interested in buying the Viper, the outsiders, had to analyze Chrysler's financial statements, and look at how the sales industry was doing in order to see if the Viper was worth purchasing or not. The outsiders are always looking for something that will grow in the future and something that will become very profitable. The last connection I made was the use of trend analyses. Chrysler uses presents their financial data as very well (ie. 169% sales increase from previous years), but it does not also show that U.S. auto sales have also declined 44% in February alone.

Reflection:

SELL SELL SELL! If Chrysler sells their Viper to another company, they will most likely ride out the deepening U.S. auto industry downturn. In general terms, Chrysler will actually benefit from the sale of their Viper for now. As for the company that purchases the Viper, I believe they will be in even harder times as the sales of automobiles have declined 44% in February alone. I think Chrysler is selling the Viper only because of the following reasons:

1) Auto sales are declining and will continue to decline.

2) Gas prices are rising, and the demand for V10-powered, fuel-eating sports cars are declining.

As for now, if Chrysler sells their Viper, they will benefit for the next couple of years. But if the economy turns around in a couple of years, the company that purchased the Viper, assuming they do not go bankrupt, will benefit.