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. |