Blog: Chrysler conundrum
Dave Leggett | 2 May 2007
Rob Golding - with a little help from UBS analyst Max Warburton - has cut through to the core issue at Chrysler. Yes, it's legacy stuff. But one bit of information uncovered almost made me fall of my chair. Apparently, Chrysler has one of the best revenue/employee ratios around as a result of Mercedes' cost-cutting influence and the fact that it sells a high proportion of high-margin products.
The firm is a strong proposition on a number of measures. Competitive, even. Right up there with Toyota. But it all falls apart once legacy stuff is rolled in.
So, any prospective buyer needs to sort out a deal with the UAW. And that was something I seem to remember Jerry York saying a few weeks ago. And Kerkorian has been keeping in touch with the UAW buy-out plan people.
But here's the massive rub. Why would the UAW - with many of its members heading into retirement - make concessions to an avaricious capitalist (or Magna for that matter) when it has declined to do so for a generous employer over many years (and I suspect that was what finally swayed Zetsche to put the for-sale sign up)?
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