Call Sale Off, Says UAW to DaimlerChrysler
By Brendan Moore
Ron Gettelfinger, President of the UAW, told Reuters reporters earlier today that DaimlerChrysler should abandon its efforts to sell its American subsidiary and just keep Chrysler.
Gettelfinger said he believed the sales process that began in February, is currently being conducted with four potential buyers, and has pushed up DaimlerChrysler’s share price in the last two months could still be halted. Gettelfinger stated that there was a lot of support on DaimlerChrysler’s supervisory board for abandoning sale efforts, but did not elaborate. He told reporters that the UAW, Chrysler’s biggest union, would prefer that there were no changes in Chrysler ownership.
There is much speculation that a sale to one of the four potential buyers, all of whom are private-equity groups or backed by private-equity groups would be a nightmare scenario for UAW. Private-equity groups are known for their strong emphasis on financial indicators like IRR and ROE during their usually-short stewardship of companies they acquire, and the UAW is not seen as a strong contributor to those types of calculations. Chrysler sustained a loss of nearly $1.5 billion in 2006, is trending towards large losses this year, and any new owner will be under intense pressure to reverse those numbers.
Of course, the UAW is very capable themselves of producing nightmares for any new owner through protracted labor negotiations, work stoppages or strikes if there is anything happening that the union members are opposed to, either short-term or long-term. Any new owner will need a cooperative UAW for the first couple of years at the very least.
It seems ridiculous that DaimlerChrysler is even considering abandoning their efforts to make Chrysler go away, but maybe Gettelfinger knows something the industry analysts do not. Then again, maybe his statement today was simply a negotiating tactic; Gettelfinger has met privately with every potential buyer and should know better than anyone just how serious DaimlerChrysler is about selling their American problem child.
Chrysler’s only response to Gettelfinger’s statements today was basically a non-response: they said only that “all options were on the table regarding a sale of Chrysler”, which I guess also includes not selling.
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