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Chrysler sale begins new automotive era

2417 Views 3 Replies 2 Participants Last post by  scalewoodman
Chrysler sale begins new automotive era

Honoring labor pacts is critical, as is fundamental UAW change

The Detroit News

Daimler's fire sale price of $7.4 billion for Chrysler -- it bought the company for $36 billion in 1998 -- speaks volumes about the challenges facing the North American automotive industry, as well as its direction for the future. In reality, after a series of payments and loans between the two companies, Daimler will pay Cerberus, a private equity firm, about $650 million to get rid of Chrysler.

Daimler can't afford to keep Chrysler because of its $18 billion in health care and pension liabilities. And, like its Detroit rivals, Chrysler has too many dealers and is drowning under labor contracts that make it unprofitable to build cars and trucks in the United States.

While we'd all like to know what will become of Chrysler, the transactions in this sale have so many moving parts that it will take time for an informed assessment.

DaimlerChrysler AG is walking away from a majority share in Chrysler nine years after the "merger of equals" was to form an international automotive juggernaut. Cerberus, a New York firm, has some automotive holdings, but none as significant as a major auto producer.

Cerberus, like the two other officially recognized bidders for the Auburn Hills automaker, sees some value in Chrysler. Whether it is as a unified American car company or in pieces, however, will be realized later.

Of primary importance to the company's retirees and workers is the maintenance of the contracts and promises that have been made. They should be honored. At the same time, United Auto Workers members heading into this fall's critical contract negotiations must realize that many of the benefits and work rules they've stubbornly held on to helped put the company on such uncertain footing.

The contract negotiations will be contentious unless UAW members recognize that the market no longer warrants the same deals they have enjoyed for decades. If Chrysler Holdings LLC is to survive as a long-term entity, which Cerberus management says is its goal, the UAW must change significantly too.

The concern that Cerberus will divide Chrysler in pieces and keep -- or sell -- only those units or brands (Jeep, for example, or the financing division of the company, which it can combine with its majority stake in GMAC), is real, but not inevitable.

UAW President Ron Gettelfinger has given his initial approval to the deal, but his counterpart in Canada, Buzz Hargrove, is already insisting on no layoff guarantees or the company "will have a problem" with the Canadian Auto Workers union.

Gettelfinger may follow suit to appease UAW members who are worried about their jobs, but his initial response is more encouraging and will go further toward seeing that this sale benefits Chrysler, Cerberus and its workers more than saber-rattling tactics.

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There are several Koren manufacturers competing in the US market-- Kia and Hyundai come to mind-- and soon the Chinese will be here subverting American labor. Granted we have our problems in the US-- and the UAW created some of them (bloated pensions, free health care, restrictive work rules)... however many of the 'Asian' competitors have NO responsibility for the environment, FEW worker rights, NO workman's comp, NO labor protection, NO cost for the defense of the world, 3rd WORLD human rights, and NONE of the burden for quality of life issues which USA workers pay for in tax dollars. Whether you agree w/the Iraq situation or not WHO IN THE FREE WORLD steps up to the plate again and again in defense of the world?

Rickaren, maybe you would be more comfortable posting on the Hyndai site or Prius SUV site...

The imbalance of trade is due to CLOSED borders back to the Asian countries and WIDE OPEN borders dumping products in the USA... the Chinese are licking their chops over the potential improvements to their lifestyle at the expense of the American lifestyle... and we continue to give it all away like there's no limit to our future! DUMB!

Time for consumers to get real and for a little US Nationalism. The legacy we leave future generations is bleak indeed if we don't take care of our own quality of life/economy first.

Why is this so out of fashion?
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Rickaren, maybe you would be more comfortable posting on the Hyndai site or Prius SUV site...

No way! These Articles are for this Form and members only. Not posting any where else. Do I always agree. Hell NO! But we should all be informed as to what is being written and said about the new Chrysler Group or the great Nitro. Would I buy anything but an America car. No, and never have or never will. Thanks for your posts and replies. That is what we need here, more involement!
Hey... nothing personal, I took the 'bait'...

I'm sure Consumer Reports feels they do a great service-- and they do to a point-- but I honestly question the impartiality of their reports (hey Suzuki certainly did).

Help me understand why it is so popular these days to bash anything 'American'... is this hangover from the Vietnam era? We have our issues, sure, but it is hard for me to understand the bias against American labor, merchandise, or any 'Yankee' sentiment. There is a counterculture attitude which is absolutely sabotaging any success we have competing on an an even playing field in the world market. What's wrong with a little 'nationalism'?
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