Hargrove: "Cerberus Misled Us"
CAW President Buzz Hargrove has been in a feisty mood lately. After telling all of Detroit where it can stick two-tier wages, Hargrove got personal with Cerberus Capital Management, owners of Chrysler LLC. Bloomberg reports that Hargrove is irate at the three-headed hedge fund over promises its president made while seeking support for its purchase of Chrysler. Cerberus President Steve Feinberg had "promised that they weren't going to slice and dice and sell,'' Hargrove said in an interview. But with Chrysler cutting tens of thousands of jobs and slashing its model line, the CAW leader smells betrayal. "We were misled," says Hargrove, "(Feinberg's) trying to cut his way to profitability, as opposed to grow(ing) the business… (he) has never met with us since then to explain the shift in thinking." Of course, most people don't expect private equity groups like Cerberus to operate accountably, and strip-and-flip rumors have been plentiful since the Cerberus takeover. So what finally made Hargrove think that Cerberus wouldn't make good on its promises? The axing of Chryslers Pacifica CUV. Thats right, Hargrove calls the cancellation is "very concerning" because the crossover segment is hot at the moment and "they discontinued it without having a replacement." Anyone think Buzz ever looks at the sales numbers?
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Hargrove’s Old Tyme Unionism is as passé as wrap-around windshields and penny loafers. The Detroit-3 maintained Canadian car plants because the dollar traded at a substantial discount to the greenback and socialized medicine generated billions in benefit savings. Tolerating a buffoon every few years to keep the gravy train rolling was a profitable, manageable inconvenience. Buzz deluded himself into thinking his superb tactical negotiating skills made it all possible. In reality Lady Luck smiled on him; he was in the right place at the right time. Expensive foreign military adventures and malfunctioning political, economic and regulatory systems devastated the U.S. dollar. A generation of buyers abandoned the domestic auto manufacturers. The Canadian petrodollar irrevocably changed domestic manufacturing economics and a strong federal government will not succumb to Hargrove’s extortion. My guess is Buzz will retire, leaving the CAW's inevitable decimation to a hapless successor, and jump into the political trough. Years of experience doing himself good with other people's money make him a natural!
Have you sat in a Journey? Its interior is about the same quality as I recall in our old '89 Caravan. Just awful. The only way this vehicle will sell is based on price -- certainly not on perceived value. The Pacifica -- another example of lousy execution. If Chrysler (and Gm, Ford) need to rely on the Auto Workers union to survive - they won't. I cannot see the business case for US unionized car factories, not ever again. The unions either need to back off, and be happy there are still jobs -- or see them all go offshore. Pete
The Pacifica was an expensive R type Mercedes, neither one could sell well, I was told in an auto show they tried to put 2 cars at opposite end. The R was even worse, who had any brain would part with 70 grand of hard earned money? Going back to Merc, R perhaps the Maybach shall be dropped too. Buzz for sure wanted to built as many cars at full steam. He's looking for good times but not long time. Not long ago Chrysler was over building cars, that almost rented all of Detroit's empty lots. That is probably the very same reason caused Chrysler's divorce. Few yrs back when Merc wasnt making $$ and Chrysler pulling in the dough, nobody at the DCX say anything. Soon as Merc in the black Chrysler painted too much Rouge, folks at DCX went banana.
"Chrysler took two successful chassi from Germany and made it their own. The 300 and the Crossfire. Its no surprise the 300 hit the mark." The 300 was already in process before the Germans took control of Chrysler and is not a German chassis.