Chrysler: The Unions Watch For The Squeeze Play

The head of DaimlerChrysler told the Financial Times that he did not like the treatment his company is getting from the UAW. Dieter Zetsche, Daimler’s chief executive, branded the unions’ attitude “totally unacceptable”. The German executive wants the same deal that GM (GM) and Ford (F) are getting. Because the two US car makers were close to the brink last year, the UAW was willing to cooperate on healthcare costs and buyouts.

But, Chrysler has a rich parent. Daimler had over $2.7 billion in operating profits last year. Not so GM and Ford.

The UAW has enough problems trying to convince its members that it can get them anything more than pink slips when negotiations for new contracts begin this Fall.

What Dieter does not want to admit is that the UAW may not want to treat all car companies the same. There is nothing wrong with soaking the rich so that the poor can get a break.

At this point, GM is doing better than it was a year ago. All the union has to do is look at the share price, which is up 55% over the period. Ford may need some real relief, but, unlike negotiations in the past, one size may not fit all.

Daimler would like the GM and Ford management to be good guys. They can all negotiate together and put the strong arm on the UAW. Strike one of us, strike all of us. See how long you can pay your guys while they are out on the picket lines.

Daimler’s problem is compounded by the fact that private equity firms appear to be interested in buying Chrysler. The only operations richer than big international corporations are funds with billions of dollars sitting around collecting fees for their managers.

The UAW would like to get their hands on some of that cake. And, why not?

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.