The perfect solution for Chrysler would be that it be bought by the UAW. For the union, it is an each way bet and a no-brainer. The new shareholders could pay themselves great benefits and run the car business as a tax loss.


Or they could drop the handsome benefits package, run car manufacturing as a business, and pay themselves dividends from the profit.


In effect, that is what the equity groups who are dancing around the edges of Chrysler are trying to tap into – the certainty that with proper education and motivation, current employees will sign up for lots of jam tomorrow rather than a dollop of jam today.


The snag though, is when it comes to looking at the rights of the Chrysler pensioners. They don’t all have time to wait for jam tomorrow and are probably beyond the reach of the reformers’ message.


And rather dispiritingly for the potential purchase groups – the retired Chrysler pensioners outnumber the workers in the factories by more than three to two. There are 68,000 people working for the company at the moment – 54,000 of them UAW or Canadian Auto Workers Union members. Ex-union members on the retired list number 83,000 and that number is rising fast.


You could make a pretty safe bet on whether pensioners are likely to forego part of current earnings to invest in a business run by their young successors. Well would you?


Interestingly, current Chrysler employees do not take home a huge wage relative to other car-builders. The Chrysler employee/revenue ratio is higher than any other global car maker at $700,000 revenue per employee. The lowest, Volkswagen, is down below $400,000 according to research published by the merchant bank, UBS.


Chrysler has been driven into this successful position by Mercedes which has provided manpower, engineering know-how and efficient technique. And Chrysler makes a lot of large vehicles in a big market with inherently high margins.


The devil is in the detail of the remuneration package. Chrysler pays $26 an hour which is only marginally more than Toyota in the US, but the sum more than doubles after the addition of healthcare benefit, pension top-ups and generous holidays and overtime.


Take all that out, and Chrysler has a business which is structurally competitive and capable of generating a profit-sharing scheme that could be the envy of the industry. There is not much more that the Mercedes boys can do for Chrysler. They forced down purchasing costs five years ago so successfully that they contributed to the bankruptcy of a large part of the US supply base, according to UBS analyst, Max Warburton.


The current Daimler-Chrysler share price of $60 assumes that DaimlerChrysler will have to give away Chrysler for nothing and keep hold of the pension liability.


If by some miracle, the board was to find a buyer who would take pension liability on the books of ChryslerNewCo, there is 25% of upside in today’s DaimlerChrysler shares. Any cash payment for the business would be on top, and read straight through to the share price.


The value of Chrysler is therefore exactly the value of the concessions that a buyer can wring from the unions, says UBS. But why would the unions concede anything to an avaricious capitalist when it has declined over many years to assist a generous employer?


Anyone who can write the answer to that one on the back of a postcard could become an extremely wealthy man.


Rob Golding


See also: Chrysler still up in the air