"There's Going To Be a Bloodbath" at Chrysler, Says Michigan Auto Executive

15 de may de 2007

<body><div id="article"><tr><td height="28" valign="middle" width="184"></td><td valign="middle" width="185"></td></tr><h1>"There's Going To Be a Bloodbath" at Chrysler, Says Michigan Auto Executive</h1><p>May 15, 2007 (EIRNS)--The question, after Cerberus' buyout of Chrysler, is whether the big private-equity fund will dismantle the company, or try to dismantle the United Auto Workers' (UAW) contracts, first.</p><p>UAW President Ron Gettelfinger, whose sudden endorsement of the Cerberus takeover he was publicly fighting a month earlier has dismayed many unionists, said in a May 14 press conference that he had been assured by Daimler-Chrysler management that Cerberus would not dismantle the company. He had not, however, talked to Cerberus management itself, when he backed the takeover. And Cerberus, or the Chrysler Holdings entity it forms to take control of Chrysler in late Summer, will take the lead from GM and Ford in confronting the UAW in the 2007 national contract renewal negotiations, demanding wage cuts for the 55,000 current production employees of Chrysler, and health-benefit and pension cuts from its retirees. Cerberus management has already pushed hard for severe cuts from the UAW employees at Delphi Corporation since December 2006, when it appeared to begin a takeover of Delphi. This has been its <i>modus operandi</i> in many previous takeovers and "restructurings." Cerberus, like other big private equity funds, expects 20% return on investment--on a company which has been losing money.</p><p>Chrysler is known to have a huge $18 billion dollars in unfunded liabilities for retiree healthcare and pensions ($19 billion, says the <i>Kaiser Daily Health Policy Report</i> today); this is where Cerberus restructuring knife will demand to make the biggest cuts.</p><p>"There's going to be bloodbath there" in health benefits and pensions, Gerald Meyers, former CEO of American Motors and now a university professor, told the <i>Detroit Free Press</i> on May 14. "It's going to be wicked in Southeast Michigan and Indiana," he said, referring also to wage cut demands and possible plant closings. Daimler Chrysler had already announced 13,000 Chrysler job cuts, to make it "saleable" to a Cerberus or a Blackstone, when it put Chrysler on the block in February. And Cerburus hired Wolfgang Bernhard to make the buyout--the same Daimler-Chrysler executive who, between 1999 and 2002, eliminated 26,000 Chrysler jobs and closed down six of its U.S. plants.</p><p>Ironically, it was precisely Bernhard's drastic shrinkage plan, which made Chrysler "profitable" for three years, which has created the huge unfunded liabilities, since the ratio of retired Chrysler production workers to active ones, zoomed to four to one.</p></div></body>