Wednesday, October 15, 2008

Unions oppose GM-Chrysler merger

Unions worldwide fear jobs will be lost if 2 automakers become 1


UAW chief Ron Gettelfinger


The possibility of a General Motors Corp. and Chrysler LLC merger encountered stiff opposition Tuesday from organized labor around the world, concerned about the possibility of job losses from a combined auto company.

One leader even called the potential merger "an absolute catastrophe."

Revelations that GM and Chrysler's majority owner Cerberus Capital Management have talked about the possibility of a GM-Chrysler merger came to light late Friday night and has since sent Detroit into a tizzy with speculation about Detroit's automotive future.

One benefit seen from a tie-up is the elimination of redundancies between the two companies, and several analysts predict severe job cuts, though it's unclear exactly how a merger would affect union factory jobs.

UAW President Ron Gettelfinger said he would oppose any deal that would reduce the workforce. "I personally would not want to see anything that would result in a consolidation that would mean the elimination of additional jobs," Gettelfinger said on WWJ-AM (950). "But we've not had any official discussions at all with any of the companies."

Union expert Harley Shaiken, a professor at University of California at Berkeley, called the unions' response Tuesday "an important cautionary note."

"The UAW couldn't block the deal, but General Motors and Cerberus need the UAW to achieve competitive success in these tough times -- both in terms of what's negotiated at the bargaining table, but also the UAW's presence in Washington is critical," Shaiken said.

Gettelfinger's thoughts were echoed by union leaders in Canada and Europe.

"You'd have to be worried, if a merger did take place, about the consolidation of product lines," Canadian Auto Workers President Ken Lewenza said. "We would be very much concerned about the job security of our members. On the surface, it's not something we would support."

Like his fellow labor leaders, however, Lewenza said he has no official knowledge of merger talks between GM and Chrysler. "I've reached out to both Chrysler and GM this morning," Lewenza said Tuesday. "The normal response we get is: 'We are in constant discussions with companies about possible opportunities.' ... Obviously, I'm nervous enough to ask for top-level confirmation."

The German newspaper Handelsblatt reported that the top labor leader for GM Europe, Klaus Franz, called the potential merger "an absolute catastrophe."

Franz was quoted as saying that such a merger would only increase GM's problems and that Chrysler, whose majority owner is the private equity firm Cerberus, has nothing that GM needs.

"Combining two people with bad feet does not create a marathon runner," Franz said. "And with Cerberus, there would be a third sick person on board."

Industry observers aren't surprised to hear opposition from union leaders. "Despite the rhetoric, I don't think they would stand in the way of making these companies more competitive," said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

A GM-Chrysler company could see real savings in reducing the two companies' white-collar, nonunion jobs, he said. "Ultimately, if the combination can potentially sell more cars and trucks, there's more jobs," Cole said.

The unions' concerns sounded similar to those from when then-DaimlerChrysler AG announced it might sell its U.S.-based Chrysler division in early 2007.

CAW and UAW leaders spoke at the time about their objections to a sale. "We'll never accept some private equity group coming in here and destroying the company," a CAW leader said before it was announced that Cerberus was acquiring the firm.

DaimlerChrysler CEO Dieter Zetsche took special efforts to tell Gettelfinger about the deal, having him meet in Germany about the details prior to the announcement in May 2007. Gettelfinger then issued a statement calling the deal in "the best interests of our UAW members, the Chrysler Group and Daimler."

Shaiken, the union expert, said the failed DaimlerChrysler merger remains fresh on many union leaders' minds. "I think the UAW and CAW remember only too well the euphoria over the 'merger of equals' ," he said of the 1998 combination of Chrysler Corp. with Daimler-Benz AG. "That turned out to be something that virtually destroyed Chrysler, rather than positioned it for the 21st Century. It's unclear what the advantage of this merger is, other than cutting jobs and closing facilities."

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