United Auto Workers President Ron Gettelfinger says the union is not opposed to private-equity ownership in the auto industry, as long as the new owners don't adopt a “strip-and-flip” strategy.
“They come in the door and say, ‘We're here for the long term,’” Gettelfinger says at the Global Automotive Conference, held in April in Lexington, KY. “I found out real quick you better ask them what long term means, because for some, long term is one year. To others it's three to five, and to others it's seven.”
The union, however, is a lifetime stakeholder.
“We're representing workers who want to retire from that facility, and you can't retire in two, three or five years,” he says. “That's one of the things that we watch.”
Gettelfinger uses formerly bankrupt supplier Dana Corp. as an example of how private-equity groups can assist a troubled company.
“Dana was in bankruptcy, and in its case (private equity) worked perfectly,” he says of the deal that bailed out Dana.
Then there is Delphi Corp.
“I think the people involved in the Delphi bankruptcy were only fighting for pennies, and they let the credit crunch sneak up on them, and all of a sudden Appaloosa Management (LP) came in and bought all of this stock for a quarter a share and watched it jump up,” Gettelfinger says.
“When they went to the closing, they didn't close, so now they're debating whether or not they owe $250 million to Delphi,” he says. “So there's an example where it didn't work.”
Regarding Cerberus Capital LP's purchase of the former DaimlerChrysler AG's Chrysler Group, Gettelfinger says it has largely worked out, calling Cerberus Chairman Steven Feinberg a “great American.”
Although Gettelfinger doesn't necessarily oppose the entry of private equity groups into the automotive arena, he admits they create a sense of “apprehension” among both salaried and hourly workers.
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