GM-Chrysler Merger Deal Would Likely Result In 35,000 Job Cuts

Taxpayers are already being asked to bail out Detroit. Do they also have to play investment banker for a GM-Chrysler merger -- as well as help out a private equity giant?

General Motors (GM) since September has been talking to Chrysler's majority owner, Cerberus Capital Management, about acquiring Chrysler [BusinessWeek.com, 10/17/08]. GM management is convinced that acquiring Chrysler's $11 billion in cash, and then gutting the company of redundant jobs, will provide it with the revenue, cash flow, and cash reserves it needs to make it through 2009 and into 2010. Moody's Investor Service (MCO) this week downgraded GM's debt, and reiterated what other rating agencies have said: that GM will run out of operating cash next year without new sources of capital.

...

Congress is looking to help all three [big U.S.] auto companies, but, as one Capitol Hill staffer puts it: "The package is going to have to look right and smell right, and it is going to have to have the support of the UAW [United Auto Workers]."

The biggest sticking point is the almost guaranteed loss of some 35,000 jobs as a result of a GM-Chrysler merger. GM, says the same Hill staffer, is working out some promises on protecting a certain number of blue-collar jobs, though most of Chrysler's white-collar jobs would be lost.

Read the full story here

-OR-

Read Steve Parker's blog, which argues that the GM-Chrysler job cuts could be up to 70,000 in number.

Comments

[Deus Angelus]

I think a Ford Chrysler merger would be much stronger. Think about it. Ford and Dodge combined to create a much better truck lineup. Jeep can become the force it needs to be in the rugged SUV category. They can eliminate terrible brands such as mercury, which truly serves no purpose. Ford can now truly develop Chrysler's Mini Van division which is the strongest in the industry, and the two together can now start with a clean slate and truly develop a mid-entry sedan. Lincoln can be built into a true luxury unit and compete with Cadillac and the closure of mercury can allow those resources to developing Lincoln.

I think the truck and suv division will see the best of the two companies because both make great trucks. Can you imagine an F-150 Hemi edition? Just like GM has two divisions with GMC and Chevy, ford truck division can now have Ford F-Series & Dodge Ram Series, or they can create a hybrid of the two. The "Ram F-150"? who knows?

Then we have the Dodge Viper, the Ford Mustang, and how can we forget Mazda, Land Rover, Volvo?

If you have any family members who are executives in both of these companies I would suggest you convince them that the Ford Chrysler merger would better serve the US economy than a GM Chrysler merger.

[iambusto]

F is not in that dire need of cash that GM is. Chrysler has the cash on teh balance sheet that will help GM survive till 2010 without any additional need for capital.

[rpr]

GMs strategy:
Acquire another brand, suck it dry and run it into the ground.
Is Saab dry yet? Need some new blood?

[harriettubman]

More bad news. Some days I just don't want to read anything or watch the news, hoping this is just a nightmare and not reality for so many families.

[pjburns11]

Round them up, take back their stolen money, balance Bush's bull**** budget,
Spit upon all of them and throw them in jail! OIL Goons, Bank Leaches, and the Executive Admin that paved their way. Pitooooey!

http://thetruthburns.wordpress.com/2008/10/24/put-these-wall-street-criminals-where-they-belong/

[DFL]

MORE GOP HARD TIMES, LAST DECADE WHEN WE HAD A DEMOCRAT IN THE WHITE HOUSE, WE DID NOT HAVE COMPANIES LIKE THESE HAVING TO MERGE!

[rpr]

Didn't you get the memo? Here's the program:
1. Elect Democrat to fix the economy.
2. When it's humming, elect Republicans to distribute the wealth.
3. When the economy is sucked dry, goto 1.

[TrooAmerican]

9 Billion jobs lost last week alone.

37 Trillion jobs lost this year.
Its an epidemic!

Lets keep doing the same dang thing thats sinking the ship!!!! yayyyyy vote for McCain! we need another recession!!.

Reagan had 2 recessions during his presidency. Bush Sr. had 1 right after Reagan. Clinton's tenure had no such thing and pulled out of Bush Sr's.
Bush Jr. has had 2 now, thats why growth has stagnated, salaries for the middle class and poor have gone down in 8 yrs, and the rich have gotten so much richer its as if satan was tempting them daily. And the 2nd recession we've been in for a year now, is the worst in 80 yrs.

GOP economics, all bad, all the time.

Vote for Dems, for responsible spending, good stewardship of the treasury, better economic times for everyone, and stability, safety, common sense and decency.

[EinChicago]

"9 Billion jobs lost last week alone.

37 Trillion jobs lost this year.
Its an epidemic!"

Ummm. There are only 6 billion people (including kids too young to work) on the entire planet. Which other planets are you including in your count?

[TrooAmerican]

pssst ( the economy is so bad, even micro-organisms and parasites are losing jobs!)

[string-em-up]

Corporations are Bad for America and the World.

[TallGrrl]

35,000 people who will watch GM get a Bush/McCain tax break. I'm sure some upper management will maybe lose their jobs, but I wonder what colour THEIR parachutes will be?
I'm thinking they'll be various shades of....you got it....GOLD­.
Sheesh.

[k6007]

Here's a thought. Buy cars manufactured in the good ole us of a. toyota, saturn, kia...whil­e they're building plants here, gm is moving more and more of it's manufacturing overseas. Great, just don't expect to share in us market share.

[neoconumb]

GM, Ford, Chrysler, do not import any of their vehicles to the U.S. from outside of the North American continent, while the other non-domestic makers import heavily into the U.S. The manufacturing they are involved in overseas is for products they sell overseas.

Yes, many of the non-domestic makers have plants in the U.S., but the percentage of plants to the market share they enjoy here in the U.S. pails in comparison to that of the domestic automakers.

The domestic automakers also have unionized plants, and source the highest percentage of parts from domestic suppliers.

The bottom line is that if Toyota were to go bankrupt, it would have little effect on the U.S. economy. If GM or Ford go bankrupt, then watch out.

[javaman]

35 thousand people. my heart just sinks at the thought. It's been long known that Michigan is basically in a depression right now. This will point the fine point on that. Those poor folks.

we have so lost our way in this nation. we have lived in a house of cards supported by toothpicks.

[Erdgeist]

The American CEO has always been unfit to manage. The failure of GM and Ford, not to mention Wall Street, have their cause in the general incompetency of CEOs. This opinion goes back to Ernest D. Lieberman's book, How mismanagement Endangers America and What Working People Can Do about It. Published in 1988 the book specifically addresses the mismanagement of Detroit automakers. They are more concerned with union busting than taking care of building good cars and spend extravagant sums of money to bust unions. It is a kind of Nietzschean will-to-power that possesses CEOs in general. To be blunt, they hate workers and especially unionized workers. Yet, it is these very workers who insure quality. In Lieberman's book he discusses also the efficiency of American atuo workers which is second to none. Things have not changed since 1988. We still have huge amounts of mismanagement in both Main Street and Wall Street.

[neoconumb]

The problem is the greedy, shortsighted, and unaccountable members of American Corporate Boards that pick the CEO's. It's the Corporate Board's job to make sure a company's executives are implementing appropriate policies and strategies. Here Corporate Board's are like country clubs for the privileged and they're not concerned about their team winning - re high paid professional athletes.

The relationship between management and unions isn't nearly as bad as it was 20 years ago. I don't agree that unions insure quality. They can be part of the answer, but without top notch management quality takes a hit. High quality Toyota and Honda products are proof.

The quality front has really improved for GM and particularly Ford. This just shows that when threatened with survival, our Corporate Boards can affect positive change. But they haven't been held accountable for being asleep at the wheel for so many years.

Our government and citizens haven't done a good job of supporting U.S. automakers. Our horrid health care system has been a competitive disadvantage for our automakers. This, somewhat, has forced them to compensate by throwing all their eggs into the gas hoarding SUV and trucks basket that were more profitable. Given the extremely low price of gas that we enjoyed a while ago in this country, there was a huge demand for these large vehicles, so the domestic automakers couldn't have possibly competed with each other unless they got heavily involved, and eventually overcommitted, with these large vehicle segments.

[Chavez08]

Who do these MENSA members think are going to buy their cars if the 25% are unemployed and the rest make $25,000 a YEAR?

"Trickle-Down" economics = "Tricke-up" poverty and even those with advanced degrees are in the path of this train....o­r haven't you Groupthink Darwinists figured that out yet?

[Bluebayou101]

One problem (out of many problems) that could be dealt with in the US auto industry is the cost disadvantage of cars related to health care. I've heard that it adds to an average additional $1,500 cost per car -- as in this website:
http://www.microsoft.com/industry/healthcare/businessvalue/hsa.mspx

Other countries have national healthcare plans that hold down the cost of healthcare while making it available to all of their people. Thus, auto companies in those countries have a cost advantage over the US. If we could adopt a national healthcare plan in the US, we could help make the US auto industry more competitive in the world.

[Chavez08]

The Auto execs have one excuse after of why the cost of cars is so high.

For 30 years, they cried continuously that the cost of "Union Labor" was keeping the car prices high. Reagan and his Friedman Band implemented trade deals that allowed the Big-3 to eliminate 75% of their U.S. UNION workforce from 198x to present. Now, they pay the FOREIGN workers 1/10th (at BEST) of what they paid Americans, no healthcare obligations and the sticker prices **are still going UP**. Explain THAT!!

It's Capitalist greed, plain and simple. All this shell-game talk about cost analysis is just Struassian bullsh*t, - the ignorant, cold-busted myth of "Supply-Side" theory.

[Bluebayou101]

I'm just expressing an idea that could possibly save some jobs over in Detroit. If not now, maybe some time in the future. Really, I think we'd all be better off with a national health care plan. And I'm not happy about ordinary people losing their jobs.

As far as the auto execs are concerned, I hear what you're saying. I saw a 60 minutes interview with GM executive Bob Lutz where he admitted that he had two private jets and two helicopters. I use him as an example when I talk to people about Obama: I explain that McCain will give people like Lutz a huge tax break on top of the Bush tax breaks for the rich already in place, while Obama will give ordinary people the majority of the tax breaks while making people like Lutz shoulder more of the burden.

[tops]

Good point.

Having national health care would help American Corporations. I think some in the corporate community are starting to figure that out. Unfortunately others still think it's in their best interest to offer no health coverage at all.

[firstwizard]

Haven't you heard? This is what the Republican mantra calls Socialism. Like it's evil or something. But half of them don't even know what the "evil word of the day" means. Don't let your government do anything for you, they might control your life. I think that it is a crying shame that we are supposed to have one of the richest societies in the world and yet people in this country can't afford to go to the hospital if they get sick. Yes, the people in Europe end up paying higher taxes than we do to take care of these types of programs. But I say that if that's what it takes for me not to have to worry about how I would pay for an $100,000 unexpected surgery then I'll pay the taxes. I am not asking for a free ride, all I'm asking for is for my government to take care of its citizens.

[demandfortruth]

i have no pity for the car companies. they made terrible business decisions. they are all pro-capitalism: capitalism allows the strong to continue and the weak to fold. let the cowards fold. and let intelligent companies (IE TOYOTA, HONDA, VOLKSWAGON) take over.