UAW chief is on board with deal
This summer’s contract talks between organized labor and the Detroit Three were expected to be tough, with Ford, Chrysler and General Motors all looking for significant concessions from blue-collar workers.
Enter Cerberus Capital Management.
The private equity firm’s purchase of Chrysler seemed bound to raise the hackles of United Auto Workers leaders -- until union chief Ron Gettelfinger on Monday pronounced himself on board with the deal.
That led to speculation that Gettelfinger may have done a bit of “pre-bargaining” with the new bosses at Chrysler.
“Cerberus has probably already talked to the UAW and sorted out some of these issues,” said Bruce Belzowski of the University of Michigan Transportation Research Institute. “That may be why Gettelfinger said ‘We’ll work it out.’ ”
Workers at DaimlerChrysler’s Jefferson North assembly plant in Detroit weren’t as upbeat as the union boss. They said they felt mostly powerless.
“No one really knows what’s going on,” said assembly line worker Mark Slavko, 52. “All I know is some big shot bought up the company.... We’re all wondering what this means.”
Slavko, who has worked for Chrysler for 14 years, said that although he and most of his co-workers knew little about Cerberus, they were worried about a private equity firm taking over. As it is, Chrysler is already poised to cut 13,000 jobs after losing $1.46 billion last year.
“It’s kind of a shock,” said Robert Harris, 40, a technician who planned to research the firm on the Internet after finishing his day shift. “This Cerberus company came out of nowhere.”
For his part, Buzz Hargrove, head of the Canadian Auto Workers, said he would take a hard line with Cerberus on the issue of job cuts and predicted “a lot of turmoil ahead.”
Until this weekend, Gettelfinger had expressed deep concerns about a sale to Cerberus, which had drawn the UAW’s ire by proposing cuts at Delphi Corp. Cerberus was co-leader of a group planning an investment in the auto parts maker, which is in bankruptcy protection.
Over the weekend, Gettelfinger said he had a “last ditch” meeting with DaimlerChrysler Chairman Dieter Zetsche and urged that Chrysler remain part of the German automaker.
“He made it unequivocally clear that it is no longer an option,” Gettelfinger said in a radio interview Monday.
But Gettelfinger said he was assured that the Chrysler pension fund -- currently over-funded by $2 billion -- would get an “additional commitment” from Cerberus, backed up by DaimlerChrysler, which under the plan would retain a 19% stake in the U.S. auto company.
UAW leaders are scheduled to meet with Cerberus founder Stephen Feinberg early today to verify those commitments, Gettelfinger said.
A spokesman for Cerberus said the firm was “committed to a constructive dialogue with the unions” but wouldn’t provide any specifics.
The UAW’s experience with private equity firms “has been poor,” said Harley Shaiken, a UC Berkeley professor who specializes in labor issues. “But the statement of support reflects a desire by the union to start on a constructive note.”
That stance isn’t sitting well with everyone in the rank and file.
“I don’t trust the union,” Slavko said. “I don’t think it’s doing much. I just feel right now that the union ain’t got no leverage, no backbone. I just got to represent myself on this one.”
Among the unanswered questions for Cerberus and the UAW is how Chrysler’s unfunded retiree healthcare liabilities -- estimated at more than $18 billion -- will affect this summer’s contract talks.
The Big Three U.S. carmakers are expected to look for ways to pare these costs, which add hundreds of dollars to the cost of each car they produce and make it tougher for them to compete with Asian automakers.
Chrysler said its 46,276 unionized hourly workers in the U.S. make $26.86 an hour on average. That jumps to $76 an hour when health insurance, pension and other benefits are added in.
Average pay for Toyota’s 22,000 North American production workers is $20 to $25 an hour. Toyota said it couldn’t provide a pay figure that included benefits but experts said it was significantly lower than what Chrysler was paying.
By publicly applauding the Cerberus deal, Gettelfinger virtually assured that the union “will give Chrysler the same retiree healthcare deal given to GM and Ford” last year, said Ken Elias, a partner at independent consulting firm Maryann Keller & Associates.
That deal, which requires retirees to pay a larger share of their healthcare costs and insurance premiums, would lower Chrysler’s healthcare obligations “by $3- to $4-billion and reduce healthcare cash expenditures by $350 million,” Bank of America securities analyst Ronald Tadross wrote in a note to investors Monday.
jenny.jarvie@latimes.com
Zimmerman reported from Los Angeles, Jarvie from Detroit. Times staff writer John O’Dell contributed to this report.
