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UAW May Prefer the 'Devil' It Already Knows

UAW
UAW

"The devil you know": Familiarity may breed more trust than contempt in Detroit, as the United Auto Workers union decides which Chrysler suitor to cozy up with -- or whether to spurn them all in favor of sticking with current ownership. Two industry analysts told "Morning Call" viewers that for all the griping, the UAW may prefer to keep things as they are.

Last week, Tracinda -- the holding company led by billionaire Kirk Kerkorian -- said it would bid on DaimlerChrysler's U.S. arm. The announcement caused a stir when the investment group offered a role to the UAW that would include an equity stake in the company. Now, the other reported bidders -- Magna International, Blackstone Group and Cerberus Capital -- are also said to be weighing a role for the UAW, in return for its support.

CNBC's Phil LeBeau said that the UAW is now "on the spot" to choose wisely, as its potential voice in Chrysler's future is also a weighty responsibility -- and the Behind The Wheel blogger reminded viewers that employee ownership in UAL's United Airlines didn't help navigate the carrier out of financial doldrums.

Jim Hall, automotive analyst at AutoPacific, predicted the UAW will begrudgingly side with "the devil you know" -- Daimler and its CEO, Dieter Zetsche. The analyst believes that the union will recognize the CEO's "major advantage": familiarity with "the strengths and weaknesses" of the business. And Hall said that when the CEO declared "all options are on the table," Zetsche was implying that the transatlantic automaker may just hold onto Chrysler.

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KeyBanc Capital Markets' auto analyst Brett Hoselton agrees: He said "the equity folks make [the UAW] nervous" -- and union members are "staring into a black hole." Hoselton says that in the end -- sale or no sale -- the UAW will have to make "pretty significant" concessions to survive. And he believes that Cerberus actually has the best shot at convincing investors to approve its bid, as the private-equity fund "will pay the most money" for Chrysler -- and is already investing in financers and parts-makers like GMAC, Tower Automotive and Delphi.

Full disclosure: Hoselton's employer, KeyBanc Capital Markets, provides investment banking services to Magna International.