Labor Unions to Address Possible Chrysler Sale

The labor unions for DaimlerChrysler met to discuss the possible sale of the company to a possible investor. According to Chon, “United Auto Workers union President Ron Gettelfinger, IG Metall leader Erich Klemm and Jerry Dias, assistant to Canadian Auto Workers union President Buzz Hargrove, are among the labor representatives who will attend.” These representatives are meeting with the Chief Executive Mr. Zetsche. Mr. Zetsche claims that “DaimlerChrysler is talking to potential partners about a possible sale of Chrysler and all options are on the table.”

Labor will play a huge process in the role of the sale of the company. Mr. Gettelfinger and nine other representatives hold half the seats on the 20-member supervisory board. The supervisory board is the American equivalent of the board of directors. The goal of Mr. Gettelfinger is to “lobby to keep Chrysler within the German company and he would argue his case at the next supervisory board meeting.” Germany is a strongly unionized country.

Labor plays a big role in this decision on the future of Chrysler. Mainly this is because the company is dealing with how to address enormous health-care costs and more than $15 billion in unfunded/unpaid pension and health care liabilities. Bidders have been trying to reach out and woo the unions for support. They know that they play such a big role in this decision that they are trying to persuade their hand. Potential buyers such as Cerberus Capital Management LP, Centerbridge Capital Partners LP, and Canadian auto-parts supplier Magna International Inc. have been reaching out to the labor union.

According to Chon, “Mr. Gettelfinger, along with other labor representatives, have expressed opposition to a private-equity takeover of Chrysler.”

As is evident in this case labor unions can play a big role in a companies future decision making processes. They often cause problems and can hinder the process. Do you think labor unions are a good thing? Do they help or hurt a company?