Special Report

UAW logo2007 UAW
Labor Talks

DETROIT – The United Auto Workers union refuses to name which one of Chrysler Group’s potential suitors it favors as a buyer, preferring instead a strategy to scuttle any such deal.

“That’s what our objective is – to try to make sure that they don’t unload Chrysler,” UAW President Ron Gettelfinger says of corporate parent DaimlerChrysler AG.

DC acknowledged last month it is exploring the sale of Chrysler, which recorded losses of $160 million in fourth-quarter 2006 and $1.4 billion for the full year.

Since then, speculation has surrounded a phalanx of potential buyers, ranging from General Motors Corp. to mega-supplier Magna International Inc. to Cerberus Capital Management LP – a private equity firm that reportedly has contracted former Chrysler executive Wolfgang Bernhard as a consultant.

“Our position is that we want them to keep Chrysler as the Chrysler Group under the DaimlerChrysler banner,” Gettelfinger tells Ward’s. “There’s no reason for them not to.”

He says the ink is barely dry on the deal that spawned DaimlerChrysler – the absorption in 1998 of Detroit-based Chrysler Corp. by Daimler-Benz AG of Stuttgart.

“We were supportive of that move at the time,” Gettelfinger says. “We’ve been amazing contributors to (Chrysler). So they’ve run into a little rough water. That’s no reason to throw the Chrysler Group overboard.”

Industry observers, including former Chrysler Corp. Chief Financial Officer Jerry York, have said no acquisition can go smoothly without the UAW’s blessing.

Says Gettelfinger: “We’ve got some influence, but can we kill (the sale of Chrysler)? We couldn’t stop them from bringing the B-car in (from China). And we were 100% unified (against) that.”

DC’s board last month gave formal approval to a deal that would see China’s Chery Automobile Co. Ltd. build subcompact cars for sale by Chrysler in North America. The auto maker argues low-margin vehicles cannot be built profitably in the U.S.

China’s government is expected to approve the agreement later this month, and domestic-market production reportedly is slated for April or May. Chrysler has not announced timing for the car’s arrival in North America.

While conjecture over Chrysler’s future has been missing from the formal agenda here, it has been top-of-mind for many of the convention’s 1,500-member delegate body. A popular rumor has GM, Magna and at least one private equity firm acquiring equal shares of Chrysler.

One influential UAW official tells Ward’s he would prefer to see an automotive entity leading Chrysler, admitting he is “less comfortable” with the prospect of a private equity firm at the top of a new organizational flow chart. This echoes the sentiment of an IG Metall union executive in Germany.

“We don’t have any interest in seeing Chrysler sold to a locust,” Joerg Hofmann, IG Metall chief in the German state of Baden-Wuerttemberg, tells the German newspaper, Berliner Zeitung.

The pragmatic Gettelfinger warns that speculation is foolhardy and refrains from commenting about potential scenarios making the rounds of the industry. Similarly, he speaks guardedly about specifics of the UAW’s strategy to discourage a potential sale.

One recent media report suggests the UAW plans to discuss the Chrysler situation next week, before DC’s annual shareholders meeting, with IG Metall and the Canadian Auto Workers union, both of which also would be affected by a sale.

The three unions, all of which have seats on a labor subcommittee of DC’s supervisory board, reportedly would review any purchase offers.

Says Gettelfinger: “We’re on the labor committee. And you know the CAW’s on the labor committee. And you know IG Metall is the majority of the labor committee. We have regular meetings.”

Tuesday’s opening day of the 2-day UAW convention here saw Gettelfinger and delegates focus their attention on ways to change a legislative climate they consider hostile to unions. Bankruptcy laws, in particular, drew their ire.

Delegates, many of whom represent workers outside the auto industry who also face contract talks this year, fear bankruptcies have become poorly disguised exercises in union-busting.

“The laws are stacked against us,” says George Albro, secretary-treasurer of UAW Local 2325 in New York, which represents legal aid attorneys. “Bankruptcy is not just another weapon. Bankruptcy is the nuclear option.”

Referring in his opening address to GM’s former captive supplier, Gettelfinger adds: “There is no better example of this abuse than Delphi (Corp.)”

Still struggling to recover from a 2005 Chapter 11 filing, Delphi, which is seeking concessions from its workers, successfully convinced a bankruptcy judge this month to allow the payment of $37.4 million in bonuses to company executives. The judge declared the payouts a necessary expenditure to retain talent.

Gettelfinger calls the bonus recipients “bottom-feeders” and “undeserving, under-performing, so-called executives who are making out like bandits.

“It is time to reform U.S. bankruptcy laws to ensure that workers are not discarded while executives are rewarded,” he says.

Meanwhile, noted Berkeley labor professor Harley Shaiken, in his keynote address, echoes the UAW’s call for a national health-care system.

This not only would improve living standards for millions of Americans, it would ease the cost burden that is crippling employers, Detroit auto makers in particular, he says.

Shaiken also calls for foreign trade agreements that level the playing field by ensuring workers in every global region are treated fairly. “We need rules to ensure competition is based on innovation, not exploitation,” he says.

What of the U.S. and Canada’s labor movement’s future? “You’re going to see a labor movement that is more engaged,” Shaiken tells Ward’s. “The problems won’t go away. The situation isn’t going to change overnight.”

But history suggests organized labor has a lasting place in American society, despite the current challenges presented by globalization.

“We realistically have to go back to the 1930s for a parallel,” Shaiken says. “Labor was very weak at the beginning of the ‘30s. And there were endless scholarly articles that said the union movement was dead and gone.”

emayne@wardsauto.com