Supply Chain News Bites - Only from SCDigest
 

-May 14, 2007

 
 

Manufacturing News: What's next for Chrysler, Unions?

 
 

New Owner Cerberus Has a History as Tough Guys, But They Backed Out of Delphi Deal After Failure to Win Further Concessions

 
 

SCDigest Editorial Staff

 
 

News that private equity company Cerberus Capital Management was buying the majority of Chrysler from Germany’s Daimler furthered Supply Chain Digest’s view that the script playing out in the auto industry is a microcosm of the fate of union labor generally in the U.S. (See UAW Preparing to Provide Revised Wage Proposal to Parts Maker Delphi to Stave off Showdown; Delphi, the UAW and the Impact on Supply Chain Management for Everyone).

Cerberus has a track record of buying bloated businesses and then slashing costs and payrolls, closing factories and moving production to low-cost labor markets overseas.

In a sign of how times have changed, Ron Gettelfinger, president of the UAW, said in a written statement that he "concluded that the transaction with Cerberus is in the best interest of the union's members, the Chrysler Group and Daimler.”

Meanwhile, Canadian Auto Workers President Buzz Hargrove told the New York Times that he was not comfortable with Cerberus as the winner of the Chrysler bidding due to its history and the tactics of private equity generally.

Apparently, the only other company really in the running for Chrysler was Magna International, a Canadian auto parts company that has primarily non-union operations.

Perhaps foretelling future turmoil, late last year Cerberus was part of a consortium of investors that agreed to invest $3.4 billion in Delphi, the largest auto parts supplier and former GM subsidiary currently locked in bankruptcy negotiations with the UAW over cost reductions. Cerberus eventually backed out of the deal after the UAW refused to make concessions in labor costs for the company.

 
     
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