Well, moustachioed Dr. Z sold off Chrysler-for $7.4 billion-to an investment group (which carries the name of the 3-headed dog which guards the gates of hell). Not bad-considering they paid $36 billion for it. Now what? Will Chrysler become a lean and mean company? or will cerberus sell off the profitable lines (JEEP and the truck div.), and shut down the car lines? Will they give the UAW an ultimatum? Will Chrysler live and prosper, or is it the next corpse of the automotive world?
I think it’s very much still up in the air. I’m hoping they’ll do an overhaul. I’ve always owned Dodge vehicles and have been very unhappy with the selection they’ve been producing recently. I’d love to see them start making really energy efficient cars with the same Chrysler level of power we’ve come to expect, but it looks like there’s a chance they’re going to simply buy it then sell it off for profit. This article has lots of conjecture.
http://news.yahoo.com/s/ap/20070515/ap_on_bi_ge/chrysler_cerberus_59
I’ll be following this one more closely than most.
This is Wolfgang Bernhard’s ploy. You know, the guy who rebuilt VW? He’s Gunter Walz’s buddy, and if you look them up, you’ll get a clue or two.
They have to cut expenses. That’s pensions, healtcare. But Wolfgang’s been working at Chrysler for a while. And he’s been working with the Unions for a while, too. They understand him. He can get them to make the cuts.
More later, probably. This is, in my opinion, the best possible outcome for Chrysler.
… yeah, I’ve met the principle actors here. As I said, more later.
On of the best reasons to take a company private (especially when they got it at a fraction of the last sale price) is to get it off the financial pages for a while. A steady stream of worrying analysts does nothing to inspire confidence in the buying public. Unlike the Hollywood cliche, not all publicity is good.
While it may indeed be a benign, “let’s all sit down and talk about this” discussion between Cerberus and the union, there’s no way the UAW isn’t going to get its buttocks hauled over the coals on this one. The investers will kill the company before they lose billions on the deal. They’re not gonna care about the “worker” when the worker is pullng so little weight his company is going down the tubes, and that applies to engineers and marketers as much as assembly line men.
If the survival of the company was a matter of workers “pulling their weight,” or failing to do so, whose fault is it for hiring such incompetent employees in the first place? If you think the UAW just has to bend over and take it or else, go study the history of how the steelworkers’ union treated Bethlehem Steel. In that case, it really was “or else,” and the company is now no more. The UAW has as much power to kill the company as anyone, and they will have to be negotiated with equitably as a result. That’s why unions exist.
And that’s what Bernhard can do. He knows how to talk with them, and has.
But the UAW has to bend over and take it. Or else, well, g’bye Chrysler. They have to take it long and hard, and it’s going to be ugly. The problem is communicating this, and trying to find ways to give them some lube. The question isn’t how hard they’re going to get fucked. The question is, is there going to be a happy ending or just santorum leaking out at the end.
Man, you can stretch that metaphor a looong way.
Oh. And again, it’s not about the individual worker. It’s about the workers of the 50s, 60s, 70s, and 80s. About pensions designed on the philosophy that the company was always going to grow. That’s the chains around the ankle, there. That’s why when you buy a $20k American car, you get about 17k of car for it. It’s noticable.
I agree.
However, new management, not the old management which screwed things up, twice. Secondarily, the new management can destroy the company, sell off each compenent for a profit, and wipe out the union’s power in a heartbeat.
The union must blink or it dies. Cerberus does not.
:dubious: I don’t know about that. There are not many private companies that can afford to throw away that kind of cash just to how the union how mighty it is. As a matter of practicality, it must be a cooperative resolution or everyone involved loses.
If you had read what I posted, you woul dhave noted that I metioned breaking up the company and selling off the parts. That can often be profitable, as individual parts have less baggage and are more easily integrated into other businesses.
No offense, but I did read what you posted.
I could have commented that selling a division does not necessarily negate the union’s power; doing so could simply shift it to a new owner. However, your comment about blinking or dying was the source of my reply. I simply have the opinion that there is no good outcome by attempting to create a situation that forces one side to “blink”. In all likelihood, if one “dies”, the other will not come out so well.
Guys, Bernhard isn’t going to make the union blink. He’s going to work with them. He’s good at that.
… I should try to remember the story about… Sod. Well, there’s a funny story about how the Beetle got made (not the lines in the sand one.)
One thing, is that Chrysler Finance or whatever it’s called is toast. Cerebus bought GMAC a little while back, and they certainly don’t need 2 finance companies to make auto loans.
Wait… I just got all excited when a thought swept through my mind…
In theory, if Cerberus broke Chrysler into its individual components and sold it, could GMAC (Hummer) buy Jeep???
I thought the same thing. Hello “Consolidated Auto Finance”.
That’s an important distinction. As long as the debate is framed as “the UAW is going to have to grin and bear it” there is a real possibility the union might just vote to scuttle their own ship. What would they have to lose, if their benefits and pension are going to be stripped anyway? Smart managers (or leaders in any form of human endeavor) never wound a powerful opponent’s pride needlessly. The union might be persuaded to make sacrifices, if they see it as part of an overall strategy for the common good. They’ll never do that if given an ultimatum.
“What Will Cerberus DO With Chrysler?”
Probably chew three of the tires off.
“What Will Cerberus DO With Chrysler?”
I’unno. Drive around looking for mutants?
Actually, CERBERUS could make itself into a highly efficient auto mfg. But this requires the UAW to accept deep concessions-how about benefit/wage cuts in exchange for profit-sharing? The problem is the union membership-these guys still think it is 1957-and they can bring the company to its knees with a strike. hate to say it, but unless the UAW has a deathwish, a strike will just end Chrysler.
I wonder what the German shareholders think of “Dr. Z”? losing them $29 billion? great management!
You can take this one to the bank. GMAC and Chrysler Financial are going to be merged into “American Financial Services,” or something along those lines.
As others have said, if you tell the union, “You’re fucked. Deal with it,” they’ll respond with, “Well then, so are you!” The very worst thing a negotiator can do is to put his opponents into a position where they feel they have nothing left to lose by fighting.
That said, I get the sense that the union leadership realizes that they’re not going to win, and that the best they can do is to negotiate a deal that isn’t too awfully bad. The rank-and-file union members are a different story, however. Those guys are completely oblivious to how outragiously overpayed they are. The union leaders need to to give these guys a reality check, and tell them to take what they can get.