Cerberus buys Chrysler

Frank Stronach`s bold but unsuccessful bid to buy Chrysler with the help of Gerry Schwartz and   Russian billionaire Oleg Deripaska has been bested by an American capital management group with a reputation for restructuring firms after acquiring them. The deal is a complex one and is carefully reported in today`s New York Times.Since 1000s of Canadian manufacturing jobs depend upon the on going operations of Chrysler in Canada both the CAW and the Canadian government had better place close attention to Cerberus`s plans for the auto company.Cerberus will probably try to spin off its 18 bilion dollar pension and health care obligations to a separate company and downsize Chrysler holdings for which it paid 5 billion. Another 1.35 billion was paid to Daimler and 1 billion to the financing company operated by Chrysler.Daimler will loan Chrysler holdings $400 million and Daimler will absorb 1.65 billion in costs associated with previous restructuring.
The union will undoubtedly face calls for concessions and possible plant closures. It is going to be hard pressed to defend its members` interests.

Mr. Stronach`s. gambit was a very interesting one that would have been more popular with Canadians . But it probably would have faced hostility from the US because of his inclusion of his Russian partner. From the American point of view having one of its classic car companies taken over by a Canadian would have been bad enough but a Canadian allied with a Russian billionaire surely worse.

Nevertheless, Stronach has shown that he has the entrepreneurial nerve and brilliance to be a major player   in the very difficult automobile business. It would be nice to see him find another vehicle for his vision.Perhaps the French might be interested in a Canadian, French, Russian, Korean car venture. Whatever happens ever since the takeover of the McLaughlin Buick by General Motors almost a century ago in 1918 Canada has lacked its own car. Automobile manufacturing is key to central Canadian manufacturing and cities like Windsor,Oshawa and Ste. Catherine`s are partly dependent upon it. I wish Stronach luck in pursuing his dream and best wishes to the CAW in defending their workers.