The Finch Formerly Known As Gold

21 April 2007

In lieu of getting out of Dodge

So what are the chances that the Chrysler Group might wind up owned by its employees?

Not great, but not zero either:

About 25 hourly workers calling themselves the "Employee Buyout Committee" are proposing that workers take a 70 percent stake in Chrysler with DaimlerChrysler retaining the remaining stake. Michele Mauder, who works at Chrysler's Toledo Supplier Park, where the Jeep Wrangler is built, and is a member of the committee, said the workers believe employee ownership is the best option for Chrysler's 50,000 UAW workers. "The bottom line is the corporation won't take the hit, it's the employees, the shareholders and the consumers," she said in an interview. "So we need to work as a team."

The employee buyout committee was notified by the UAW last month that its proposal is being evaluated by the union's legal department, Mauder said.

The proposal was mentioned by a shareholder at DaimlerChrysler's annual meeting April 4, and on Tuesday, Mauder received written notification from DaimlerChrysler that the proposal is being reviewed by the German automaker.

The UAW itself hasn't made any statement one way or another, though UAW President Ron Gettelfinger has said he would prefer that DaimlerChrysler hold on to the Chrysler Group.

Separate proposals by Kirk Kerkorian, who in 1995 mounted an unsuccessful bid for Chrysler and who wound up suing DCX, and by Palm Beach investor Daniel Imperato, call for dividing up at least some of Chrysler's equity among employees.

Autoblog notes:

While the employee buyout plan is a long shot, and if successful, an incredible risk for the employees, it's also inspiring that a group of workers would be the masters of their own fate. Unfortunately, it's not yet known how much the employees could offer for a 70% stake in their employer, which, in the end, is likely DaimlerChrysler's number one consideration in this sale

I think this could work, though obviously it won't be a straight cash deal: more likely, there will be a period of years during which at least part of a worker's compensation will be paid in Chrysler stock rather than in wages or in benefits. Fifty thousand Chrysler workers times $100,000 would come to $5 billion, which is a hefty proportion of the $5-7 billion rumored to be sought by DCX. (Kerkorian's bid was for $4.5 billion.)

And whether this works or not, I'd prefer it to having the company taken private and then ritually dismembered for the sake of the bottom line.

Posted at 9:38 AM to Common Cents , Driver's Seat

Some of the leftists I encountered in college would expect someone like me to be against the idea of the employees owning a controlling share in the company, since us right-wingers were so against the dictatorship of the proletariat over in that Soviet place (you know, where Russia is now).

The fact Daimler has the option of rejecting this offer, if one is actually put together, would be a nuance too subtle for those long-ago lefties (who probably converted to corporate capitalism during the dotcom boom anyway).

Posted by: McGehee at 3:04 PM on 21 April 2007

The head of the Canadian Auto Workers (representing 11,000 Chrysler workers) is also apparently dead-set against it. The Kerkorian proposal includes a piece of the company going to the workers; "We see absolutely no advantage to that whatsoever," said Buzz Hargrove. (Source.) Which tells me that the left, at least some of it, likes things just fine the way they are, and better the company should fail than that the traditional "power" relationship be changed. Chalk up a point for whoever it was who said that liberals are the new reactionaries.

Posted by: CGHill at 3:34 PM on 21 April 2007