Chrysler Corp.'s appeal for federal financial assistance took on a more urgent tone yesterday, as the Carter administration prepared to make public its own recommendations -- probably early next week.
At the Treausry Department, the troubled automobile manufacturer submitted an analysis from the management counsulting firm of Booz, Allen & Hamilton Inc. warning that Chrysler probably will need more outside money than has been projected previously.
Separately, Mayor Coleman Young of Detroit said that a Chrysler failure would bring about unemployment in several cities "near or past depression levels" as well as a "serious threat" to the entire American economy.
United Auto Workers Union President Douglas Fraser also disclosed that he will meet today with Vice President Mondale and Treasury Secretary G. William Miller -- at their request -- to discuss the company's crisis. Fraser has promised no nationwide strike against Chrysler as the UAW continue talks with Chrysler on a new contract.
Chrysler made an economic counter-proposal to the UAW yesterday, and Fraser said agreement could be reached by a Thursday deadline. Sources said the firm is now seeking an 18-month wage freeze compared with a two-year freeze proposed in August. The same sources said the UAW wants a freeze limited to six months -- if one is approved at all.
Booz, Allen, in a report prepared for Chrysler directors, offered a gloomy assessment of the impact on the company of recent economic developments.
As a consequence, the consultants said Chrysler should prepare to seek $700 million of additional contingency financing over the next five years with a peak level approaching $2.8 billion in 1983-1984.
Only last week, to meet demands of the Carter administration, Chrysler scaled down to $750 million from $1.2 billion the amount of government loan guarantees it would need as part of a package of outside financing -- projected then to peak at $2.1 billion in 1982.
With no hope of independent financing of such a magnitude, the Booz, Allen sutdy would appear to indicate that Chrysler now must either reduce spending plans or secure promises of backing for the $750 million now on the table and an extra $700 million.
The toatl of $1.45 billion would exceed even the $1.2 billion of loan guarantees earlier proposed by Chrysler but rejected by the administration. Chrysler has planned to spend $13.6 billion overall from now through 1985 to retool its aged facilities and develop a more competitive firm engaged in all principal segments of the auto market.
But Booz, Allen said Chrysler faces a number of near-term risks in a recessionary economy that probably will make its financial condition continue to worsen -- a downturn in the overall auto industry, a faster than forecast shift to smaller cars and lower than planned increases in Chrysler's share of the domestic market.
"Moreover, the magnitude and complexity of the internal task facing Chrysler management is substantial -- ambitious profit improvement programs, plant closings, major new model launchings, a new style of management, upgrading quality -- all at the time that major personnel reductions are occuring," Booz, Allen stated.
"We believe that these adverse events are more likely to occur than not, and that Chrysler should proceed prompltly with its program to reduce capital requirements," the consultants added.
In addition, Booz, Allen warned that peak potential funding requirements could increase if there are any "major" delays in obtaining government support. "Keeping the banks in line without an indication of government support is becoming increasing difficult . . . It can be concluded that the financial support required six months ago was less than today, and the support that would be required six months from now would be greater than today," the report stated. Chrysler's current loans have been classfied as "doubtful" by federal bank regulators and the banks have said they can lend the firm no more money.
Detroit's mayor, however, was not reticent. Young, speaking on behalf of the U.S. Conference of Mayors as well as himself, said the government must act rapidly to approve the concept of loan guarantees for Chrysler -- with whatever amount of money is "reasonably" necessary to "ward off collapse" of the nation's tenth largest industrialcorporation.
In interviews with reporters here and in testimony before a House subcommittee yesterday, Young said:
Chrysler's financial plight is "a national problem and not a Detroit problem" that threatens a crisis "at least as serious" as the potential collapse of New York City several years ago -- before a fovernment rescue operation.
The "national interest dictates action" by Congress before the end of the year but the final amount of loan guarantees is (not important . . one billion (dollars) one way or the other." The "most important" requirement is an indication from Washington that aid is coming, to stem an erosion of confidence in Chrysler's survival.
"It would be ironic if a giant inner-city corporation such as Chrysler were allowed to fail," only to have cities involved spend vast sums to attract new industry to replace the auto maker.
The Conference of Mayors has adopted a Chrysler "resolution of support," which calls for "loans, loan guarantees, tax credits or other measures which would restore Chrysler to profitability."
Young castigated critics of Chrysler and free enterprise purists who have said the company should be allowed to fail and file for bankruptcy. He said the U.S. never has faced the potential failure of a single enterprise employing more than 140,000 persons and said "it is not possible to detail all of the economic effects of a Chrysler Corp. on the nation's cities."
Perhaps hardest hit would be cities such as Kokomo, Ind., and New Castle, Ind., where one-third to 40 percent of all jobs are related to Chrysler's business, Young stated. In Detroit, where the firm employs 75,000 persons throughout the metropolitan area, unemployment could more than double from the current 10 percent level and the city would lose $31 milllion of revenues if Chrysler fails, he added.
"Although economic theorists have and will continue to adebate the philosophical question of whether the government should ever assist private enterprise the mayors and citizens of the affected cities cannot approach the matter with such a sense of detachment," Young emphasized.