Business Blog: Hoover’s Business Insight Zone

Yes, on the surface the UAW is negotiating its contract renewal with Chrysler, but Chrysler is now owned by Cerberus — and these private equity and hedge fund folks tend to play a different brand of hardball than old-line unionized manufacturers. (You can find more analysis of Cerberus’s buyout of Chrysler here.) The union has set a strike deadline for tomorrow, although according to this MarketWatch story, its coincidence with ordinary plant idling this week means that the strike could be more symbolic than punitive, which is the same way that the UAW played things with General Motors last month.

Chrysler’s new ownership seems determined to make the company successful in old-fashioned terms — i.e. by selling more cars, not by fancy financial engineering or the like. So it would seem that an amicable union deal, reached quickly, would be in the best interests of both the union and the auto maker. But here’s what will be interesting: since it has taken Chrysler private, Cerberus need not answer to public shareholders, and it need not disclose Chrysler’s performance to the public going forward. Cerberus has lots and lots and lots of money that could help it withstand a strike. And hedge fund types are not apt to pony up “extra” money anywhere they can avoid it. In other words, while Chrysler and Cerberus would benefit from labor harmony like any other unionized shop, they may employ a substantially different calculus than their publicly traded rivals GM and Ford as they negotiate with the UAW.

On the other side of the coin, the UAW is not accustomed to dealing with a privately held Big Three auto maker. If Chrysler — and it’s non-automotive-veteran chief, Bob Nardelli — really are using a different calculus, the negotiations could proceed very differently for the UAW.

Who knows where this is headed — maybe Chrysler and the union will sign an amicable deal by tonight — but it could get interesting in a hurry.