UAW weighs Chrysler bid

UAW weighs Chrysler bid
http://www.detnews.com/apps/pbcs.dll/article?AID=/20070420/AUTO01/704200423/1148

Add one more to the list of potential bidders for DaimlerChrysler AG's
Chrysler Group.

The United Auto Workers is reviewing a long shot proposal from a group of
Chrysler workers in Toledo who are pushing for employee ownership of the
struggling automaker.

About 25 hourly workers calling themselves the "Employee Buyout Committee"
are proposing that workers take a 70 percent stake in Chrysler with
DaimlerChrysler retaining the remaining stake.

Michele Mauder, who works at Chrysler's Toledo Supplier Park, where the Jeep
Wrangler is built, and is a member of the committee, said the workers
believe employee ownership is the best option for Chrysler's 50,000 UAW
workers.

"The bottom line is the corporation won't take the hit, it's the employees,
the shareholders and the consumers," she said in an interview. "So we need
to work as a team."

The employee buyout committee was notified by the UAW last month that its
proposal is being evaluated by the union's legal department, Mauder said.

The proposal was mentioned by a shareholder at DaimlerChrysler's annual
meeting April 4, and on Tuesday, Mauder received written notification from
DaimlerChrysler that the proposal is being reviewed by the German automaker.

UAW spokesman Roger Kerson could not be reached for comment late Thursday.

Chrysler spokesman Mike Aberlich said the proposal from the employee group
was sent to Chrysler CEO Tom LaSorda and is "expected to be reviewed by the
company's legal department."

Mauder anticipates the proposal will be discussed at a DaimlerChrysler
supervisory board meeting next week. While she realizes the proposal may be
a long shot, she feels it's worth a try.

"Unless they come up with a better plan, this is it," said Mauder, who noted
that Chrysler workers owned shares in the company in the 1980s after
Chrysler turned to the federal government for loans to bail it out of a
financial crisis. "It's really in Daimler's ball court now."

Employee ownership has been tried in other struggling industries, including
steel and airlines, but not widely in the auto industry.

"The issue here is employee ownership is both a long shot and a slippery
slope," said Harley Shaiken, a labor expert at the University of California,
Berkeley. "So much depends on the details and the structure of the
reorganized company."

Mauder pleads the employees' case in an April 9 letter to DaimlerChrysler
CEO Dieter Zetsche that was attached to their proposal.

"It appears the sale of Chrysler may not only affect our employees and
retirees, but essentially could affect the entire automobile industry
depending on who acquires our company," she wrote. "One never knows until
one asks. By no means do we want to interfere with any potential sale of
Chrysler. Mr. Zetsche, you have made the statement that all options are on
the table. Our committee would hope that this option would be held in
comparison to the other possible offers"

Although the workers would prefer Chrysler remain with its parent company,
the letter says, "If DaimlerChrysler is adamant to sell and (Canadian auto
supplier) Magna (International Inc.) would be the leading contender, our
committee would prefer the option of partnership with them versus a private
equity firm.

"Magna, the Canadian operations, had an established employee equity and
profit participation program."

DaimlerChrysler is in negotiations with several potential Chrysler buyers,
including two of the country's largest private equity firms, Cerberus
Capital Management LP and Blackstone Group, which is working with
Centerbridge Capital Partners. Also in the running is Magna, which has
partnered with Onex Corp., a Canadian buyout firm.

In addition, billionaire investor Kirk Kerkorian, through his Tracinda
Corp., earlier this month submitted a $4.5 billion bid for Chrysler that
included an ownership stake in the company for the union.

Earlier this week, LaSorda declined to reveal details of the ongoing
negotiations. "I'll just say this," he said. "Discussions continue."

The offer from Kerkorian, who tried to take over Chrysler in 1995, includes
an equity stake for the UAW as well as for Chrysler management.

UAW President Ron Gettelfinger has said the private equity bidders for
Chrysler also have talked to the union about giving workers a stake in the
automaker.

But Gettelfinger has repeatedly said he would like DaimlerChrysler to keep
Chrysler and pledged to use his seat on the 20-member DaimlerChrysler
supervisory board to oppose any deal that takes Chrysler private. The
supervisory board meets next week in Germany. Other labor representatives on
DaimlerChrysler's board have said they wouldn't support a bidder that would
break up the company.

Mauder said she has researched employee stock ownership and is working with
a team of experts on the subject from Kent State University. The group hopes
local unions will support their cause and has reached out to local UAW
leaders in Detroit.

Members of the employee committee will attend the 21st Annual Ohio Employee
Ownership Conference today to learn more about such a business venture.

They also plan to launch a Web site where workers can correspond with each
other about the idea of perhaps one day becoming owners of Chrysler.

Workers' concern over a private equity buying the company is "quite
justified," labor expert Shaiken said.

"Essentially what they seem to be saying is they want to see a successful
manufacturing company. The feeling of wanting Chrysler as a successful
ongoing concern runs through the minds of almost all Chrysler workers and
the paradox is you've got a lot of talent and experience in these
factories."

 

IMO an employee stake is a very wise approach.
Profit sharing works as an employee incentive.

Another wise look at the buy out.
A company such as Magna has a very successful history in manufacturing,
has a vested interest in Chryslers long term success and has good
employee relations.

The private equity firms are the latest vulture money makers, not in it
for the long term.