Unionists Still Oppose Financial Locust Takeover of Chrysler

May 14 (EIRNS)–The European trade union leaders on the DaimlerChrysler board of directors all oppose selling Chrysler to the Cerberus Capital Management hedge fund, two UAW local union leaders told {EIR} today. These German and other trade union representatives have opposed Daimler’s selling Chrysler at all; but above all, to Cerberus or another private equity or hedge fund “financial locust.” Both they, and many UAW unionists, were more in favor of another takeover–by Ontario-based Magna International Corp. one of the largest auto-parts suppliers in the world. Two months ago, on March 19, the United Auto Workers’ (UAW) Ron Gettelfinger, the Canadian Auto Workers’ (CAW) Buzz Hargrove, and German auto workers’ union representative Gerd Rheude–all on the board of DaimlerChrysler–had issued a statement declaring their unions’ intent to fight Cerberus, Blackstone, Centerbridge Capital LLC, or other locust funds taking over Chrysler. They were joined by Damon Silver of the AFL-CIO in Washington; and Brendan Barber, head of the British Trades Union Congress (TUC). Only on May 10, Magna–whose initial bid for Chrysler was simply not large enough, the UAW unionists said–had received a $1.54 billion investment from Russian industrial billionaire Oleg Deripaska’s Russian Machines Corporation.

The investment was clearly intended to help Magna raise its bid to compete with that of Cerberus’ hedge fund group. This raised echoes of the Russian steel company Severstal’s ten-year-old takeover of Ford Rouge Steel, which has led to the rarity among takeovers: increased production, investment, {and employment} at Rouge Steel since then. It also recalls the intense mobilization of hedge funds in Europe in 2006 to {prevent} Severstal or Deripaska from making a partnership with Arcelor Steel Corp., since the hedge funds wanted Arcelor to be taken over by Mittal Steel. On May 10 and 11, Michigan’s Democratic Gov. Jennifer Granholm, with local elected officials in Michigan, had publicly and strongly supported Magna’s bid for Chrysler, saying that she was convinced it would increase auto-sector employment in the state. Magna employs 7,000 workers in Michigan.

A UAW official in Missouri told {EIR} that Magna’s CEO Frank Stronach had long planned to build complete vehicles, not just auto parts, and had been looking at “greenfield” sites for new plants in the United States. He said Magna had introduced a number of innovative auto systems in partnership with Chrysler. Other sources say that Magna, which has always been overwhelmingly non-union, is negotiating with the CAW for unionization of most of its 18,000 employees in Canada. In a terse statement today, the UAW’s Gettelfinger supported the Cerberus takeover, saying that he has been convinced that it is in the best interests of the UAW and Chrysler, but does not give any reasons for this. Cerberus’ leveraged buyout comes down to just about $7 billion for 80% of Chrysler, somewhat more than Magna might have bid with Deripaska’s investment. But Cerberus clearly will target auto workers’ wages, UAW health benefits, and Chrysler’s unionized and salaried workforce, for quick cuts. [pbg]

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