Cerberus' Unleashed on Chrysler. Can Congress Put This Three-Headed Dog from Hell to Sleep?

May 14, 2007 (EIRNS)--The Cerberus Capital Management buyout of Chrysler announced this morning, is likely to result in the carving up and resale of parts of Chrysler in the near future, accompanied by plant closings and accelerated layoffs above the 13,000 Chrysler has already announced, according to auto industry and union sources, and private equity analysts.

One local union official told EIR that although Chrysler is "likely to stay in the car business somewhat" under Wolfgang Bernhard (hired by Cerberus to call the shots at Chrysler), Bernhard is also the then-Daimler executive who cut the Hell out of Chrysler's employment and plant structure from 1999-2001. That shrinkage plan clearly has failed--Chrysler's market worth in this deal is much less than a third of what it was in 1998--yet, Bernhard was hired again by Cerberus, apparently, to repeat it.

And auto analyst David Cole told the Wall Street Journal that foreign buyers, including Chery of China, were anticipating buying up parts of Chrysler, "waiting for the private equity companies [i.e. Cerberus] to do some of the cleanup work to make Chrysler an attractive deal."

The looming destruction of what remains of Chrysler follows two years in which the U.S. Congress, although fully aware of the warnings and proposals of Lyndon LaRouche and his political movement, has declined to lift a finger to stop the collapse of the U.S. auto sector--350,000 jobs lost since 2000, and 150,000 in the past two years alone. Despite its shrinkage since 1998, Chrysler plants under Daimler had modern machine tools and some completely new plants in the upper Midwest, and Congress could have intervened with credit to save the plant structure and employ it in building new U.S. economic infrastructure -

Now, those plants will go the same way Delphi Corporation's have been going, as that large auto-supply company has been sliced up among hedge funds and private-equity funds Cerberus, Renco, Inc., Platinum Partners, etc. Cerberus' controlling investments in Delphi, Tower Automotive, and Collins & Aikman--all auto-supply companies being drastically shrunk by plant closings and sell-offs--show what's in store for Chrysler in the near term.

Union sources believe the Cerberus management of Chrysler may also attempt a major assault on the United Auto Workers' wage structure and benefits in 2007 contract negotiations.

The Cerberus announced takeover also appears to have headed off a different merger plan for Chrysler, with Canada-based Magna International, which many unionists backed, and might have had a different result (see separate report).