Chrysler sale threatens more job losses in auto
By
Martha Grevatt
Published Mar 18, 2007 10:44 PM
This past Valentine’s Day, when Chrysler workers should have been
relaxing with their companions, some 80,000 pairs of eyes were glued to the TV
or the Internet. They were waiting for DaimlerChrysler (DCX) to announce how
many of their jobs would be cut, and where.
In what workers termed the St. Valentine’s Day Massacre, the bosses
announced cuts of a whopping 13,000 jobs in the United States and Canada. With
5,500 of these cuts in Michigan, this constituted a racist attack on Black auto
workers.
Last fall DCX insisted that the Chrysler Group was not for sale. Yet on
Valentine’s Day DCX management said it wasn’t ruling out any
options.
Now the bombshell has hit the papers: Chrysler is for sale.
Possible suitors include General Motors—whose management recently cut
35,000 jobs, insisting that GM was poor and impoverished. The GM bosses got
workers to take a pay cut by crying about the high price of health care, which
they claimed cost them $1,500 per vehicle. Yet the concessions were worth
$2,000 per vehicle by GM’s own figures. $2,000 minus $1,500 means that GM
management gains $500 for each vehicle sold.
That’s enough to allow them to go shopping for acquisitions.
Another ominous scenario for the workers is that Chrysler will be bought by one
or more private equity firms.
What is “private equity”? The term has not been explained to the
workers whose jobs are on the chopping block. An article in Business Week
defined it as “giant pools of capital just waiting to pounce on takeover
targets.”
In a discussion on public television, Andrew Ross Sorkin of the New York Times
elaborated: “Well, you know, a private equity firm actually is a polite
term for what we used to call LBO firms, or leveraged buyout firms, in the
1980s. ... [They] take money from pension funds, wealthy individuals. They put
it in a pot, and then they leverage it, so then they take out effectively a
mortgage on it. So they may take $100, and they may get a $900 mortgage from
the bank, and then they go and buy a company. They buy that company, they turn
it around, hopefully for them, in a couple of years, fix it up. They may strip
the company down. Sometimes they—a lot of people lose jobs. ... And then
they sell the company. And that’s pretty much what private equity is
today.”
Adding to the discussion, private-equity expert Colin Blaydon said: “They
are now coming together, in what they’re calling clubs, and groups of
them are now bidding for these companies. So they’ve got more money that
they’ve been able to raise, that the pension funds have largely given
them, more debt to put on the deal. And these clubs have gone elephant hunting,
because the big companies out there are the ones that are probably today among
the most attractive targets for them to take over and take private.”
Chrysler salespeople have wined and dined several potential New-York-based
members of a buyout “club,” including the Wall Street firm
Blackstone Group. Blackstone has stakes in over 100 companies ranging from real
estate to pickles. With annual revenues of over $85 billion, these investors
are the majority shareholders in TRW automotive holdings. Blackstone CEO
Stephen Schwartzman, dubbed by Fortune magazine “the King of Wall
Street,” is notoriously extravagant. The day before the Valentine’s
Day Massacre he spent millions of dollars on his 60th birthday party, which
featured a private concert by Rod Stewart.
Another firm shopping for a car company is Cerberus. According to the Detroit
News, Cerberus Capital “has been an increasingly aggressive player in the
auto sector, with former Ford Motor Co. executive David Thursfield spearheading
its auto investment activities. Last year, the firm agreed to buy a 51-percent
stake in GM’s highly profitable finance business. Cerberus is also
leading a group of investors attempting to buy bankrupt parts supplier Delphi
Corp.”
Top Cerberus executives include former Treasury Secretary John Snow and former
Vice President Dan Quayle. In Greek mythology, Cerberus was the guard-dog of
the underworld, usually depicted with three but sometimes 50 heads, with snakes
for its tail and mane. Cerberus CEO Steve Feinberg has brushed aside
suggestions that the firm change its name to something gentler.
The third contender to emerge is Centerbridge, founded less than two years ago
by former Blackstone Director Mark Gallogly and Jeffrey Aronson. Joining them
in a meeting with Chrysler CEO Tom LaSorda was Stephen Girsky, formerly an auto
analyst with Morgan Stanley and a special adviser to GM Chair and CEO Rick
Wagoner.
Whether these firms lock horns in a bidding war or form a buyers
“club”—or if GM walks away with the loot—workers will
most likely read or hear about it after it’s a done deal. Meanwhile those
who ran the company into the ground are set for life: 2006 salaries for DCX CEO
Dieter Zetsche and Chrysler Group CEO Tom LaSorda were $6.7 million and $3.16
million respectively.
What all these multi-headed beasts have in common is that they are part of the
capitalist system, with its built-in tendency to cut jobs and concentrate
wealth in fewer and fewer hands. This goes for GM, DCX, Blackstone,
Centerbridge and Cerberus.
In mythology, the 12th and final task for Hercules was to capture Cerberus with
his bare hands in order to secure his release from bondage. But Hercules’
brute strength was nothing compared to the muscle of the modern working class.
In 1937 the 44-day occupation of GM was followed by a powerful 31-day sit-down
at Chrysler. Next, by seizing hold of this corporate beast, the working class
can accomplish its own Herculean task—to free all who toil from the
bondage of wage slavery and restructure society to put people before profits
and guarantee every worker the right to a job.
Martha Grevatt is an auto worker and an elected trustee of UAW Local
122.
Articles copyright 1995-2012 Workers World.
Verbatim copying and distribution of this entire article is permitted in any medium without royalty provided this notice is preserved.
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