ST. LOUIS POST-DISPATCH
The shock waves of Monday's announcement that Chrysler Group will be sold to a New York-based private equity firm won't be felt anytime soon in Fenton. So for Charles Lewey, Monday was business as usual, which meant preparing a charity yard sale at the union hall of United Auto Workers Local 110.
Like many of the employees at Chrysler's two assembly plants in Fenton, Lewey heard early Monday morning about the $7.4 billion sale of the auto maker. Not much was said by the buyer, Cerberus Capital Management, about any future plans for its newest acquisition, which currently employs about 5,500 people in Fenton.
DaimlerChrysler AG said Monday that it would sell 80.1 percent of the money-losing U.S. unit Chrysler to Cerberus, keeping 19.9 percent for the German automaker. It was a stunning reversal of the $36 billion takeover by Daimler-Benz AG in 1998 that was meant to be a blissful marriage between Mercedes-Benz and the maker of the Chrysler, Jeep and Dodge brands.
The firm is taking a huge risk by agreeing to take on billions of dollars in pension and retiree health care costs at Chrysler, which will be heated topics in this summer's labor negotiations with the UAW।
But Cerberus Chairman John Snow, a former U.S. Treasury secretary, said at a news conference in Germany that the New York firm believes in Chrysler and wants to see the company recover.
Cerberus already has steadily been building strength in the automobile business. It led a consortium that bought a majority stake last year in General Motors Acceptance Corp., the financial arm of GM, and plans to invest in bankrupt auto parts giant Delphi Corp.
The plan Chrysler announced in February to restructure the company will continue as scheduled, said Peter Duda, a spokesman for Cerberus.
"We work with the management teams," Duda told the Post-Dispatch. "We invest not in just a company but the management team and people at Chrysler. Typically the management team continues to run the company."
To that end, Tom LaSorda, chief executive of Chrysler Group, said Monday that there are no new plans to cut jobs other than those announced in February, which call for 1,935 cuts across the Fenton plants through 2009.
Fenton's Mayor Dennis Hancock and the Missouri Department of Economic Development talked Monday to Chrysler representatives who reconfirmed the company's prior investment plan.
"I was told it's business as usual as far as they're concerned," Hancock said.
As part of that plan, Lewey, who assembles minivan chassis for the Dodge Caravan, Grand Caravan and Chrysler Town & Country at the South Assembly plant, will be off work for the next six to 10 weeks while the plant is upgraded to a flexible manufacturing plant.
The investment is part of Chrysler's plan to help improve efficiency and allow the facility to produce multiple vehicles off the same production line. Construction for that project started Saturday. Minor retooling at the North Assembly plant, which assembles Dodge Ram pickups, will begin about Christmas.
For the time being, Lewey said, he will concentrate on working with a handful of other union members to produce the hall's yard sale every Wednesday and Saturday, the proceeds of which are used to purchase and send care packages to U.S. troops in Iraq.
"Right now all we hear is rumors," he said about the future of Fenton. "We're just taking care of our business as long as we can."
Local workers would be smart not to stop their lives in anticipation of Cerberus' next move, according to an executive who has dealt with the company.
The executive, who spoke on the condition of anonymity, described the private equity firm as a company that moves carefully and works closely with the current management.
"They're typical Wall Street," the executive said. "They're not jumping for headlines. They keep their sleeves rolled up. In working through the process ... they went about it in their own pragmatic way, as opposed to using the media hype or pressure (to influence the deal)."
However, the executive added that change of some sort is likely.
"I think they will challenge the status quo and ask the management team to put together some thought processes."
He added that Cerberus tends to be very thoughtful about the way it spends money, but said they rarely spent much on research and development for the future.
That focus on short-term profitability worries some who think Cerberus will attempt to make money fast and leave Chrysler with no future.
On Monday, Canadian Auto Workers President Buzz Hargrove said he had "enormous concerns," noting that many private equity groups have a long-standing history of "job cuts as opposed to job creation."
The UAW held similar views, but then reversed its opposition when the deal was announced.