Thursday, 30 June 2016
Last updated 8 hours ago
Oct 11 2007 | 11:32am ET
Alternative investments giant Cerberus Capital Management has weathered its auto-industry trial-by-fire, and emerged with a landmark deal that seeks to make American carmakers more competitive.
Chrysler, which Cerberus bought in August for $7.4 billion, was hit by a six-and-a-half-hour strike yesterday, affecting 34,000 workers at 18 of the company’s 25 U.S. manufacturing plants. But by the end of the workday, Chrysler had struck a deal with the United Auto Workers union representing the striking employees.
The deal is in line with the one struck by General Motors and the UAW three weeks ago after a two-day work stoppage. Under the agreement, which still must be ratified by rank-and-file members, the union will assume retiree health care costs, while Chrysler agreed not to close two U.S. divisions and to pay concessions.
The strike began at 11 a.m., after Chrysler reportedly made an unacceptable offer—reflecting the tough stance of Cerberus and its handpicked CEO, Robert Nardelli—causing the union to walk out of negotiations. A new offer five hours later included the promise to save Mopar and Chrysler Transport, and the agreement was announced at 5:30 p.m. Chrysler workers went back to work today.
“This agreement was made possible because UAW workers made it clear to Chrysler that we needed an agreement that rewards contributions they have made to the success of this company,” UAW President Ron Gettelfinger said in a statement. For his part, Chrysler President Tom LaSorda said the deal “balances the needs of our employees and company by providing a framework to improve our long-term manufacturing competitiveness.”