DCX Announces Sale of Chrysler, While Crying Poverty

Jun 3, 2007

The DaimlerChrysler (DCX) decision to sell 80% of Chrysler Group to a private equity company called Cerberus Capital was the signal for a huge wave of talk from the news media. Supposed auto industry “experts” and financial magnates bemoaned how bad things are for Chrysler, how much money it is supposedly losing.

Nothing but a bunch of lies! In most of the years since Daimler bought Chrysler, it was Chrysler that kept DCX afloat. Up until last year, Chrysler had made profits in 12 straight quarters. And it only began to show losses after DCX Chairman Dieter Zetsche openly complained that Chrysler’s profits had kept the company from getting similar cuts in wages and benefits like the ones GM and Ford got from their workforces. Only then, “miraculously,” did losses suddenly appear at Chrysler.

Even when DCX did announce losses, most of that was clearly phony. Take DCX’s most recent statement that Chrysler lost two billion dollars in the first quarter of this year. Even the company’s own financial statements show that more than half that loss, 1.2 billion dollars, was for what they call “restructuring,” that is, the company’s estimate of the future cost for laying off thousands of workers, closing plants, etc. In other words, in the process of wreaking misery on untold numbers of workers’ families and communities, Chrysler dares complain about how much these attacks may one day cost... its rich stockholders!

Phony also are the claims that DCX is getting much less for Chrysler today (7.4 billion dollars) than what it paid nine years ago (36 billion dollars). As DCX’s Dieter Zetsche recently told Bloomberg News, “The 1998 merger of Daimler-Benz and Chrysler, valued at 36 billion dollars, did not destroy that much cash because Daimler only used shares to buy Chrysler.”

These transactions are incredibly complex and complicated, and what these companies tell the news media mainly depends on how they want the deal to look for public relations purposes. Or in the words of David Cole, speaking about this deal, “In business, lying is one of the things you do all the time.” Cole should know. The son of GM’s president from 1967 to 1974, he currently heads an auto industry research organization.

Lying? For sure. Just listen to all the talk about the cost of health care benefits, especially for retirees–so huge, it is supposed to be pulling the company down like an enormous anchor. This is complete garbage. These companies are supposed to put aside the money to pay for pensions and health care for retirees week by week during all the years worked by every single worker. It is a part of the wage and benefit package. In the past, workers often accepted lower wages in return for higher pension and health care benefits later. If suddenly they can’t find that money, an amount they say is in the range of 18 billion dollars, it is because the company intends to take that money away from the retirees in order to give it to its stockholders.

It is the workers’ money, and the company and its stockholders owe it to the workers and retirees, no matter what.

Yes, they want everyone to believe that the auto companies are doing so horribly! Yet, on the very day that the Chrysler sale was announced, not only did DCX stock go up–all the other auto stocks went up. In fact, auto stocks have been rising steadily for the last year. DCX shares are up by 56%, Ford by 23% and GM by 17%.

Obviously, the auto companies are today crying poverty in order to prepare an enormous attack on the auto workers in the coming months. Already, Wall Street financiers are licking their chops in anticipation of what they expect to take from the auto workers.

Of course, the auto workers could very easily spoil the bosses’ plans, by refusing to give up what is rightfully theirs, by organizing a very big fight.