United Auto Workers president Ron Gettelfinger (pictured at left) shocked auto industry pundits and many of his own union members on Monday with his endorsement of the sale of Chrysler to Cerberus Capital Management LP. Gettelfinger, who just weeks ago called private equity firms “strip and flip” shops that would seek a quick profit at the expense of the business and its workers, was quoted in the press release announcing the deal as saying the $7.4 billion divestiture by DaimlerChrysler AG is “in the best interest” of the union and Chrysler.
So have the UAW and Gettelfinger, who had yet to meet with Cerberus representatives when he endorsed the deal, decided new ownership, and the wage and benefit concessions those new owners are expected to demand, is really what is best for the automaker? More likely, as one restructuring source said, Gettelfinger’s endorsement “should scare the hell out of the buyers.”
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The reason for such skepticism? Many believe Gettelfinger couldn't sell his membership on drastic concessions even if he were willing to allow workers to be used to erase the $2,500-per-car manufacturing cost advantage Toyota Motor Corp. has over U.S. carmakers. Rather, many believe that the union head was drawn to Cerberus hoping that the private equity firm’s deep pockets would lessen the need for cuts, just as the UAW has previously argued that Daimler’s profitable Mercedes unit meant Chrysler employees didn't need to offer the same givebacks granted by workers at General Motors Corp. and Ford Motor Co.
Gettelfinger is in a no-win situation. While there is plenty of blame to be spread beyond the unions for Detroit’s current woes, it seems inevitable that workers will have to shoulder much of the burden of returning these companies to profitability. However, a growing chorus of UAW workers, frustrated by the seemingly endless series of cuts, are accusing their leaders of capitulating to management. And a number of Web sites have sprouted up run by UAW members calling for new leadership.
Making matters worse is that Gettelfinger is endorsing the bid over a rival offer planned by UAW members who had hoped to lead an employee buyout of Chrysler, which according to Autoblog.com has angered many of those workers.
All of this suggests that Chrysler’s new owners, despite the canned bonhomie contained in the press release, face a battle when talks on a new labor contract start this summer. —Lou Whiteman
See Daimler's press release announcing the sale
See msnbc.com story with Gettelfinger's earlier comments
See May 15 story from TheDeal.com
Go to a Web site critical of UAW leadership
See World Socialist story calling the deal "a historic betrayal of auto workers"
See Toledo Blade story on the employee buyout plan
See Autoblog.com post
