As if we needed any more proof that the UAW Executive Board is in the tank for its corporate 'rivals' at GM, Ford, and Chrysler. Reuters now reports:
Private Equity Exec to help UAW on potential GM/Chrysler Deal: source
And just who is this private equity executive now 'helping' the once-great labor union renowned for routinely beating executives' attempts to deny paid vacations, medical benefits, and cost of living adjustments? His name is Stephen Girsky. And who is Stephen Girsky? Anybody he needs to be:
- In 2005, Girsky is named 'special advisor' to none other than General Motors CEO Rick Wagoner. According to <span style="font-style: italic">The Detroit News</span> account, Girsky had been "calling for the automaker to slash jobs, close plants, drop some brands and thin its U.S. dealer network."
- In 1988, Girsky worked briefly in GM's treasurer's office.
<div>- In between, Mr. Girsky was a managing director and senior analyst at
Morgan Stanley. </div> <div> </div> <div>- In 2006, Girsky became president of Centerbridge Industrial Partners, LLC., the industrial unit of private equity firm
Centerbridge Partners. </div> <div> </div> <div> <span style="white-space: pre"> </span>- According to <span style="font-style: italic">The Wall Street Journal's</span>
July 6, 2007 Deal Journal: </div>
"The Wall Street Journal reports that the New York private equity firm — formed last year by veterans of Blackstone Group and Angelo Gordon — has plunked down $500 million for a 25% stake in Dana, the troubled auto parts maker that filed for bankruptcy in March 2006.
It’s about time. Centerbridge has had its eye on auto assets ever since raising ".2 billion for a debut fund last year. Looking for its edge in the sector, the firm recruited former General Motors advisor Stephen Girsky about seven months ago. Girsky had been serving as a special adviser to GM chief Rick Wagoner following a stint as head of Morgan Stanley’s global auto research team.
One would think Girsky’s well-placed connections at GM would have given Centerbridge the inside track when it made a go for GM’s Allison Transmission division. But GM announced last week that it was selling the unit to Carlyle Group and Onex for $5.6 billion.
Centerbridge got bested at least one other time when it teamed up with Blackstone to buy Chrysler, which eventually went to Cerberus Capital Management.
After spinning its wheels on earlier bids, Centerbridge was bound to land an auto deal sometime. Turns out the third time was the charm."
(High five!)
- In addition to his current roles at Centerbridge and the UAW, Girsky also presently sits on the Board of Directors at the recently 'bankrupt' Dana Corporation.
Why all this high-powered investment interest in bankrupt and/or 'doomed' auto companies? Well, they aren't really doomed. They're just unionized. And in the world of corporate entitlement and deregulation, that simply won't be tolerated. Luckily, vulture capitalists have a trick up their sleeve, and a Terminator Toadie at the ready.
Mark Reutter's exceptional investigative project "MakingSteel.com" chronicles the story many business journalists hush up and most mainstream reporters fail to comprehend, consider, or both. Mr. Reutter summed up the racket this way:
"Delphi (a GM spin-off, UAW-organized auto parts supplier like Dana) is a company that has decided to take a U-turn in its relations with organized labor. Last July [2005], Delphi hired Robert Steve Miller. Miller’s previous job was putting Bethlehem Steel Corp. into bankruptcy.The same thing happened to United Airlines, where Miller sits on the board of directors. He was CEO of Federal-Mogul when it went through bankruptcy court, and CEO of Morrison Knudsen Corp. when it went belly-up following the rampant misrule of CEO William Agee. Miller is a serial CEO. He stays a year or 18 months at a company, enough to pretty up its financials and renegotiate or terminate its union contracts, then he moves on.
Days before Bethlehem went into Chapter 11, however, Miller arranged for a $450-million DIP loan from General Electric Capital Group. That gave him breathing room to bully employees with threats of liquidating Beth Steel as well as to keep up his patter about how he was making U.S. industry competitive again.
Miller seems to be following the same playbook at Delphi: Propose draconian wage cuts (to as little as $9.50 an hour), threaten to close factories, and bad-mouth employee benefits as unaffordable in today’s ultracompetitive environment. Then tell the media how he sympathizes with Delphi workers “for the stress they’re going through right now.” (4) Then turn around and goad them some more by saying they couldn’t possibly be so childish as to call a strike.
(Note: On March 31, 2006, Miller petitioned Bankruptcy Judge Robert Drain under Section 1113 to terminate Delphi’s agreements with 33,000 unionized employees. Hearings have been scheduled for May 9-10. Then Drain will decide whether to let Miller pull the plug.)
The Terminator is not alone in the unfolding story. Also circling around Delphi these days is “vulture capitalist” Wilbur Ross. A “vulture capitalist” is an investor who picks up “value” by finding and reorganizing properties tossed off by others, especially properties in bankruptcy courts. Ross made his reputation as a senior partner at Rothschild, Inc., reorganizing Eastern Airlines, Texaco, and Donald Trump’s Taj Mahal casino. In 2000, Ross struck out on his own and started buying bankrupt steel companies. And what was the biggest property he picked up? Bethlehem Steel, purchased from Steve Miller in May 2003.
Ross has now organized a $4-billion private equity fund to buy distressed auto parts companies. One of the properties Ross is reviewing is Delphi – if, says Ross, Delphi reduces its “uncompetitive” labor costs. And who did Steve Miller appoint as Delphi’s financial advisor? Rothschild, Inc. Rothschild is receiving a $250,000-a-month “cash advisory fee” for advising Delphi in financial matters. And that’s just the hors d’oeuvre – Rothschild will be back for a $15 million “completion fee” when Delphi and Miller finish a plan for Chapter 11 reorganization. If Ross can pick up all or part of Delphi on the cheap from Miller, he’ll have the same potential for profit as he did in steel, where he pocketed $267 million by selling ISG to Netherlands-based Mittal Steel Co."
Despite the popularly held belief that industries like steel, auto, airlines, and manufacturing are 'yesterday's news,' and that Web 3.0, The Knowledge Economy, manufacturing-free Green Technology, and Holograms are the only future for prosperity and wealth, the vultures know better. And UAW President Ron Gettlefinger ought to by now . . . depending on who he actually represents.
With the Big Three begging for even more money they didn't earn, this time from taxpayers – who include the workers they've already fleeced – it is do or die time for both Democrats whose promises to working Americans got them elected and Labor leaders who devoted their time and attention to these politicians while ignoring the crisis they exist to check and balance.
On October 29th, Bloomberg.com reported:
Merger talks between General Motors Corp., the largest U.S. automaker, and Chrysler LLC face a possible hurdle in the union-run trusts created to manage retiree health benefits (VEBA), people familiar with the matter said.
A tie-up may require GM and Chrysler owner Cerberus Capital Management LP to reach an accord with the United Auto Workers over the funds, which were negotiated with the union in 2007, said the people, who asked not to be identified because the discussions are private. GM and Cerberus also are working on financing for a deal, people have said.
New talks on the so-called Voluntary Employee Beneficiary Associations <span style="font-weight: bold">would give the union an opening to resist a merger</span>, the people said.
And with projected job losses from such a merger estimated to be as much as 35,000, the UAW had better find a way to resist it. On Monday, <span style="font-style: italic">The Detroit News'</span> Alisa Priddle wrote:
Every direct job at an automaker in the United States creates five more jobs, said Sean McAlinden, chief economist and vice president for research for the Center for Automotive Research in Ann Arbor. Two of the five are related to suppliers or dealers; the other three are spinoff jobs at businesses where auto industry workers spend their paychecks. The next closest industry to autos is high-tech, where each job creates a total of four, including spinoffs, he said. By contrast, one Wall Street position creates a total of about 2.5 jobs, yet Congress expedited aid to the financial services sector this year.
Let's see, 35,000 x 5 = 175,000 in total job losses resulting from a GM/Chrysler merger.
Rest assured, Ron Gettlefinger, Stephen Girsky, and Barack Obama will not be among those 175,000.
Here's hoping they will be among those who prevent that level of job loss. That is, after all, their job.