GM/Chrysler merger: 200,000 unemployed, most Chrysler vehicles gone

Yesterday we posted our analysis of the much-hyped GM/Chrysler merger, quoting sources which said as many as 70,000 Americans would be thrown out of work if the merger goes through.

Today we have more - and worse - news from industry journal Automotive News.

"A merger between General Motors and Chrysler LLC would result in the closing of as many as half of Chrysler's factories and elimination of all but about seven core models, according to a report by consulting firm Grant Thornton LLP.

"A deal also could result in a loss of 100,000 to 200,000 jobs at the two automakers, suppliers and other industry stakeholders, said Kimberly Rodriguez, principal of Grant Thornton's automotive practice (italics ours).

"Rodriguez said she believes negotiators could reach an agreement in principal as soon as Tuesday, Nov. 4, election day. Reuters reported yesterday that GM and Chrysler's owner, Cerberus Capital Management LP, have resolved major issues and the final form of any accord will depend on financing and U.S. government support."

We still say - and hope someone is listening - that the first step and best solution to America's auto industry problems is to merge the Detroit Three into one company which would be able to take advantage of the entire $25 billion industry bailout from DC and create an entity which all Americans would be happy to support (as long as the cars and trucks produced are right for the market).

Of course, financial aid, retraining, help with mortgages and car loans and leases and whatever else Washington could do to help those thrown out of work is a necessity.

Why does there always have to be a "loser" in American business? Whether GM merges with Ford or Chrysler, or Ford and Chrysler merge, it would create a company so powerful that the "odd man out" would be putting up "Closed - Gone Fishing" signs on their factories within two years.

Comments

[robinhood2]

I don't recall ever reading that a foreign auto maker built a new car plant in Michigan. What's wrong with that state? Will it become the first failed US state, brought down by onerous labor laws? Detroit is for all practical purposes a failed city, more famous for its high murder rate and Halloween arsons than its once lofty bond rating (AAA in better times).

[PrahaPartizan]

The merger of GM and Chrysler resembles nothing so much as two black holes eating up each other. In the current environment, neither is really structured to survive. Both firms' managements squandered twenty years of time finally learning how to build attractive, economical, and desirable small and mid-size cars so that they could pad their bonuses selling iron behemoths to bestride the highways. Now, they demand the rest of us compensate them for their bad decisions, while the management, executives and boards continue to blame the line workers for their bad decisions and impending debacle. When those who received the bonuses and outsize dividends pay back everything they received for the past twenty years, then let's be magnanimous to these dinosaurs. Nothing can save these losers. Run away quickly from the black hole before it becomes even larger with the citizens' money.