Private equity group to ‘cut and slash’ Chrysler

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DAIMLERCHRYSLER is selling a 80.1 per cent share in its crisis-hit American Chrysler division to the private equity group Cerberus for $7.4bn. President George Bush’s former Treasury Secretary John Snow is the Chairman of the group that manages the $23.5bn fund.

Cerberus Capital Management will get Chrysler debt free, with the German group paying about $650m to off-load its giant carmaker in the United States.

The private equity group is not a newcomer to the vehicle manufacturing sector, having already taken a controlling share in General Motors’ financial arm for $14bn last year.

DaimlerChrysler will retain a 19.9 per cent share in Chrysler, but will have no responsibility for the $17.5bn unfunded healthcare liabilities.

DaimlerChrysler indicated that it was looking to off-load Chrysler in February when operating losses of more than $1.1bn were announced.

At that time the company announced a £1.3bn ‘restructuring’ programme to slash 13,000 jobs, 16 per cent of the workforce at Chrysler, on top of the 40,000 jobs lost since 1998.

After Monday’s deal, Cerberus said that it will forge ahead with these latest redundancies.

In addition, Snow’s private equity group made it clear that it will use the secrecy surrounding its financial affairs to force the United Auto Workers Union (UAW) to accept job cuts and, above all, give ground on cutbacks in healthcare provisions and pensions.

The unions will not have the published figures of a stock-market listed company to use in negotiations with Cerberus.

Speculators responded to this prospect with enthusiasm across all the ‘Big Three” US car giants (Chrysler, GM and Ford), with DaimlerChrysler shares shooting up seven per cent, GM 3.9 per cent and Ford four per cent. They want a ruthless private-equity owner to go for the carworkers, cut the huge losses of the US car giants and make profits.

Canadian Auto Workers Union (CAW) President Buzz Hargrove said on Monday: ‘I have enormous concern today about what this means. . .

‘The union’s experience with private equity firms in the past hasn’t been positive as they tend to borrow money, invest, take over an existing company cut and slash and then sell the operation for a quick profit within a few years.’

However, after talks in Germany with DaimlerChrysler chiefs, UAW President Ron Gettelfinger said that the union leaders felt comfortable enough to support the Cerberus takeover.

Gettelfinger said: ‘There will be an infusion of cash put into this company, and a lot of things are going to happen that are in the best interests of moving forward. We have to believe they are very concerned about the future of the US auto industry.’

Carworkers in both the US and Canada should be forewarned by the actions of the stock market speculators who expect the private equity group, and GM and Ford, to launch an onslaught on carworkers this September.

Union leaders who ‘believe’ the bosses are concerned about the future of the industry, and not their profits, are carrying out public relations work for the bosses.

It is clear that carworkers need to build a new leadership in the UAW that will organise a fight to defend jobs, pay, conditions, healthcare and pensions.

Such a leadership must end the financial secrecy and force the opening of the books of these monopolies for scrutiny by carworkers and the whole of the working class.

It is the bosses who are responsible for the car giants’ losses.

Carworkers cannot sacrifice their jobs, living standards, health and security in old age in order to satisfy profit-hungry, predatory, private equity groups and huge monopolies.

Workers must fight to ensure that loss-making companies are taken over and controlled by the workers and nationalised without compensation, in order to continue vehicle building, secure jobs and ensure a future for carworkers and their families.

The most vital task facing the working class in this struggle is the building of a new revolutionary leadership in the unions, an American section of the Trotskyist International Committee of the Fourth International, to organise this fight for socialist policies to solve the crisis in the car industry.