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How deep a cut will Chrysler unions accept?
Cerberus, in a $7.4 billion deal to buy control of the automaker, will try to turn it around.
from the May 15, 2007 edition
Page 2 of 3
Now, the Chrysler Group, which includes the Dodge and Jeep nameplates, is No. 4 behind Toyota in US sales.
Toyota is fast gaining on No. 2 Ford in the US market. While General Motors remains No. 1 in American sales, it is poised to cede top billing in global sales to Toyota for 2007.
All this puts pressure on Detroit's threesome to push for major concessions from the UAW in talks this summer. In the talks, which occur every three years, the union bargains first with one of the Big Three, and then typically cuts a similar deal with the other two.
This year, the union has chosen to bargain first with DaimlerChrysler. Now, in effect, that means it is across the table from Cerberus. And the bargaining will start soon.
The buyout firm "will want to wring concessions right from the start," says Mr. D'Cruz. "Their ability to act is strongest right at the beginning."
If the concessions aren't big enough, the Cerberus deal for Chrysler could fall through. But all sides appear to have a strong stake in trying to make it work.
Daimler's management wants to unload a division that is losing money. Cerberus, with former auto executives in its managerial talent pool, sees the chance to manage one of America's best-known companies – and perhaps engineer a moneymaking turnaround.
And the UAW, knowing that Daimler is eager to sell Chrysler, has concluded that Cerberus represents its best hope going forward.
"The transaction with Cerberus is in the best interest of our membership, the Chrysler Group, and Daimler," UAW president Ron Gettelfinger said in a statement Monday.
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