Fallout from the Sale of Chrysler

Jobs, Wages, Health Care Pensions: All in Jeopardy

Fallout from the Sale of Chrysler

By CHRIS KUTALIK

and TIFFANY TEN EYCK

Auto workers are bracing for a bumpy road ahead at Chrysler, following the May 14 announcement that Daimler-Chrysler (DCX) would sell off 80 percent ownership of the company to Cerberus Capital Management, a private equity firm. The surprise sale may tip the balance of power further against the United Auto Workers (UAW) as the union faces the expiration of its agreements with the Big Three auto manufacturers in September.

More ominously it may also herald the deepening of disturbing trends faced by U.S. workers as speculative financial interests play more and more of a role in the restructuring of their workplaces. Buyouts of ailing mostly-unionized companies by private equity firms, hedge funds, and private multi-billion dollar investors in the U.S. steel, coal, airlines, and carhaul industries in recent years have on occasion led to "strip-and-flip" style restructuring that downsizes and merges fragments of older companies before selling them off.

Worse for the workers involved in this turnaround restructuring, it has also frequently led to large-scale layoffs, wage/benefit givebacks, the dumping of pension and retiree health care benefits, and the weakening of union strength in affected industries. Though often aided by federal bankruptcy courts, this process is not dependent on bankruptcy alone--a decided advantage to bankruptcy-adverse companies like the Big Three.