Toledo Jeep employees fret over job security, benefits
New owner Cerberus is tight-lipped about plans
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After nine years of ownership by a German-based firm, the Toledo Jeep Assembly Plant and its parent company are entering a new era.
DaimlerChrysler AG said yesterday it will sell 80.1 percent of the sputtering Chrysler Group to Cerberus Capital Management LP for $7.4 billion, marking the first time that a private equity group has owned a Big Three auto manufacturer.
The acquisition of the Chrysler Group, which lost $1.5 billion last year, will end the 1998 merger of Daimler-Benz and Chrysler Corp.
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Tim Steele, an employee for 22 years, said the United Auto Workers likely will be asked to accept concessions when the union begins contract talks with the automaker this summer.
“I’m hoping that it is good for everybody,” Jeff Ferris, a 44-year-old production worker, said of the deal.
But employee Randi Downes expressed reservations about the buyer.
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The Jeep Liberty, Dodge Nitro, and redesigned Jeep Wrangler are made at the multifactory complex off Stickney Avenue.
The system of supplier factories at the assembly complex that is used to build the Wrangler is a new concept in the production of vehicles in the United States. The complex has more than 4,500 employees.
Chrysler also operates a machining plant in Perrysburg Township and has a joint-venture engine plant in Dundee, Mich.
Under the deal, DaimlerChrysler AG will retain 19.9 percent of Chrysler. After the sale is complete, the German firm will be known as Daimler AG.
The sale of Chrysler to the New York firm was announced yesterday in Stuttgart by DaimlerChrysler’s Chief Executive Dieter Zetsche, who put the company on the block three months ago at the urging of board members and investors.
Cerberus Chairman John Snow, a Toledo native, was at the news conference in Germany.
“We think at this particular point in Chrysler’s history, there may be opportunities in the private world, the world of private investment, that create more room for growth and expansion, that allow management to focus with greater intensity on the day-to-day business of producing better cars,” Mr. Snow said.
The new company, which will be called Chrysler Holding LLC, will take over about $18 billion in existing employee health and pension obligations. The sale is expected to be completed by Sept. 30.
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Ron Gettelfinger, UAW president, expressed support for the deal yesterday after earlier objecting to a possible sale to a private equity group.
“It’s going to happen,” Mr. Gettelfinger said, “and we’re going to make it happen in the best interests of our membership.
“There will be an infusion of cash put into this company, and a lot of things are going to happen that are in the best interests of moving forward,” the union president said.
Cerberus is buying Chrysler at a bargain price, said Ron Harbour, president of Harbour Consulting in Troy, Mich. And getting the Toledo-born Jeep brand in the deal was a coup for Cerberus, Mr. Harbour said.
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With two plants built in the last few years, including one where suppliers share the financial burden and work for the hot-selling Jeep Wrangler, the Toledo Jeep complex is one of the deal’s strongest assets, he said.
“For Toledo, this is a good thing,” Mr. Harbour said. Cerberus appears to be building up its auto industry interests, Mr. Harbour said. Having Chrysler provides an anchor and it is unlikely Cerberus will want to sell the automaker or the Jeep brand in the next few years, he said.
No more plant closures or other manufacturing changes are likely to be announced before negotiations with the United Auto Workers this summer, Mr. Harbour added.
The buyer intends to take the company private, and it will no longer have publicly traded stock. Private-equity firms, which are investment pools financed by large pension funds, wealthy investors, and others, typically buy struggling companies, improve profitability, and later re-sell them.
Jeep, Dodge, and Chrysler are likely to stay together for now, but negotiations with the UAW will play a major part in determining their futures, said Tina Jantzi, manager of North American forecasting for J.D. Power and Associates.
| HEADQUARTERS: • Auburn Hills, Mich. CHIEF EXECUTIVE: • Tom LaSorda (will remain) |
J.D. Power, meanwhile, is raising its sales expectations this year for the Wrangler. The other two Toledo-made products, the Jeep Liberty and Dodge Nitro, also are doing well, Ms. Jantzi said.
‘We’re pretty optimistic’
“We’re pretty optimistic for all three of them,” she said.
Representatives of Cerberus visited Toledo and toured the Jeep Assembly complex during the last month, according to employees.
The upcoming negotiations between the Big Three automakers and the UAW will be pivotal in shaping the future of Chrysler, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.
“It is not survivable without doing some major things,” he said. “If they don’t come with an agreement that allows them to be more competitive over the long term, it is going to be horrible over the next few years.”
| • New York CHIEF EXECUTIVE: • Stephen Feinberg AUTOMOTIVE HOLDINGS: • CTA Acoustics, Madison Heights, Mich., makes acoustical and thermal insulation products • GDX Automotive Inc., Farmington Hills, Mich., makes and supplies vehicle seating and parts • GMAC LLC, Detroit, financial services company that offers auto loans, other products • Guilford Mills, Wilmington, N.C., auto seat supplier • Peguform Group, Germany, makes interior/exterior plastic parts |
“We feel pretty comfortable they will see our northwest Ohio facility as one of — if not the — centerpiece of the acquisition,” Mr. Finkbeiner said.
Staff writers Julie M. McKinnon and Tom Troy contributed to this report. Information from the Associated Press also was used.
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