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How Chryslers sale affects African Americans

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How Chrysler's sale affects African Americans

The "merger of equals" created in 1998 by the $36 billion union of Daimler-Benz and Chrysler has failed. Chrysler's sale involves 80.1% of stock going to the control of Cerberus Capital Management, a private-equity group, for $7.4 billion.




The "merger of equals" created in 1998 by the $36 billion union of Daimler-Benz and Chrysler has failed. Chrysler's sale involves 80.1% of stock going to the control of Cerberus Capital Management, a private-equity group, for $7.4 billion.

Cerberus holds controlling or significant minority interests in companies around the world that generate over $60 billion a year. The New York-based buyout firm is investing in Chrysler on the bet that it can revive the struggling carmaker.

Cerberus Capital is led by former U.S. Treasury Secretary John Snow, who says, "We encourage our companies to focus on the future through prudent capital investment, R&D, new product marketing, talent development, improved operations and appropriate strategic acquisitions."

Cerberus' portfolio includes a variety of high profile companies, some within the auto industry, including National and Alamo Car Rentals; and controlling shares of GMAC financial services. Speculation is that the most logical step of the purchase would be to merge Chrysler Financial and GMAC. Headquartered in Farmington Hills, Mich., Chrysler Financial has 4,200 employees and management of $75 billion in dealer and consumer financing. The Chrysler Group is headquartered in Auburn Hills, Mich. It produces Chrysler, Jeep, Dodge and Mopar brand vehicles and products. Chrysler's 2006 worldwide sales totaled 2.7 million vehicles.

Former Secretary Snow says, "We are excited about realizing this monumental opportunity to help bring an American automotive icon back to a path for profitability and long-term success."

To improve Chrysler's operations, Cerberus will surely implement an array of cost-cutting measures to restore profitability. So, while Cerberus makes deals on Wall Street what will be the sale's effect along Martin Luther King Boulevard?

Chrysler has been a source of employment and entrepreneurial enterprise for African Americans. The company employs over 80,000 people, and through due diligence on the part of African American executives, it has annually increased job, contractor and grant opportunities for Blacks.

As consumers, African Americans buy one of every eight vehicles sold in the U.S., and spend more than $35 billion each year on automobile purchases. In recent years, Chrysler's 300 M has been the second-best seller among Blacks. African Americans on Wheels magazine named DaimlerChrysler its 2006 "Company of the Year" for its annual spending among minority vendors -- $2.7 billion -- and diverse workforce. Currently, people of color comprise twenty-seven percent of the company's workforce.

Hopefully, Cerberus' takeover won't result in the "retirement" of Chrysler's Black-oriented policies or people. Already retired Roy Levy Williams helped Chrysler and its social impact among African Americans in the 1980s. Hired as Manager for Community Relations, Williams became the company's liaison to many civic/human service organizations. These linkages helped funnel many millions of dollars to these groups. Williams remains on the NAACP's Board of Directors.

Chrysler made an even higher level of corporate commitment in 1996 making W. Frank Fountain Senior Vice President overseeing Chrysler's external affairs. Named among Fortune magazine's list of "50 Most Powerful Black Executives," Frank Fountain was president of the DaimlerChrysler Corporation Fund which distributes more than $20 million in grants annually.

A hopeful sign is that since the sale, Chrysler Financial named William F. Jones as its Chief Operations Officer. Under DaimlerChrysler, Jones was pivotal for a plethora of financial and literacy programs targeting African Americans. He endorsed Chrysler Financial's sponsorship of the Hip-Hop Summit Action National
 

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