Cars and Drivers
Chrysler And Delphi: The UAW Prepares For Private Equity Siege
Published:
This may be the UAW’s last stand. Private equity interest like Cerberus Capital Management are moving into the automotive industry hoping to pick up assets on the cheap. The hedge fund has already bought a controlling interest in the financial arm of GM (GM). It is now trying to buy large bankrupt auto parts company Delphi for as much as $3.4 billion.
And Cerberus is a bidder for DaimlerChrysler‘s (DCX) Chrysler unit.
But, the UAW is digging in on the Delphi deal. Cerberus may rightly feel it has to cut headcount and benefits to make Dephi profitable. But, the UAW would lose more jobs and leverage in its upcoming negotiations with The Big Three.
In addition, the labor representatives on the DaimlerChrysler supervisory board are opposed to private equity buying Chysler. They assume that a financial buyer would carve the car company into pieces and jettison as many jobs as possible. And, that is probably right.
If the UAW can kill a deal at Delphi, they show that the union still has muscle.
That may keep private equity out of Detroit.
Douglas A. McIntyre
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