Autoworkers wary of Chrysler sale

DETROIT — The restructuring taking place in the auto industry took a dramatic turn May 15 when Cerberus, the New York private equity investment firm, acquired an 80.1 percent controlling share of Chrysler and renamed it Chrysler Holdings. Daimler, formerly DaimlerChrysler, will retain a 19.1 percent share.

Chrysler has about 80,000 employees and the United Auto Workers union represents 50,000 of them. While Cerberus has said it will honor the union contact, that contract expires in September. UAW negotiations with Chrysler Holdings, GM and Ford are set to begin this summer.

Whatever Cerberus’s pronouncements, private equity firms do not buy companies for the long haul. They have a history of “stripping and flipping,” as UAW President Ron Gettelfinger has said. They come in with aggressive plans to reduce costs and make things look good for the sell, always at the expense of the workers.

In February, Chrysler said it would shed about 13,000 workers as part of a plan to cut production capacity by 400,000 vehicles a year. Cerberus is going forward with those cuts.

Workers worry as they take a look at some of the management personnel at Cerberus. CEO Steve Feinberg, along with his wife, gave $50,000 to the National Republican Congressional Committee in 2004 and followed that with $25,000 in 2005. Cerberus Chairman John Snow was the Bush anointed U.S. treasury secretary in 2003. Prior to that appointment, he had been the chairman of CSX, the railway company that had not paid taxes on over $1 billion in profits, but which had collected $164 million in tax rebate checks from the federal government.

The company also employs former Vice President Dan Quayle as a consultant.

One major concern for workers is the funding of pension plans and health care for both active and retired employees. Notwithstanding a Cerberus pledge to contribute to pension funds, workers feel there remains a danger that the company will target their benefits and that GM and Ford will jump on the bandwagon.

The Detroit Free Press quoted an unnamed source saying that discussions among Big Three auto executives on this matter are under way at “the highest levels.”

There is also speculation that Chrysler, GM and Ford may pressure the UAW to agree to a retiree health care plan similar to one reached at Goodyear Tire and Rubber Co., where the United Steelworkers union agreed to let Goodyear shift $1.2 billion in future health care liabilities to a fund managed by the union. This would represent a move away from defined benefits to defined contributions, and the ever-rising costs of health care would be absorbed by the workers, not the companies.

Prior to the sale of Chrysler, both Gettelfinger and Canadian Auto Worker President Buzz Hargrove had said they were against a private equity company buying Chrysler. But both changed their opinions after receiving the assurances from Cerberus. In an online discussion last week, Gettelfinger and General Holiefield, a UAW vice president, told union members, “We were not a part of the bidding process nor did we have input in the selection process.”

Gettelfinger and Hargrove may have felt they were between a “rock and a hard place” after having seen Daimler’s determination to sell Chrysler. Observers point out that now, more than ever, autoworkers need labor unity and support from all sections of the community.

jrummel @pww.org