Ford-GM Merger Discussion Rumored
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James Joyner | Monday, September 18, 2006 |
AutoBlog passes on word that “senior executives within Ford and GM have explored the possibility of an alliance, even a merger, in the near future.”
Automotive News reported early this morning that
The supposed talks between the two Detroit titans began sometime in July, soon after Rick Wagoner and Carlos Ghosn began investigating the benefits of a GM/Renault/Nissan threesome. The sources cited by Automotive News have not been able to confirm who opened the door to the talks, with one insider saying that Wagoner was the instigator, while another source disputes that assertion. It is known that a possible merger was discussed between the General’s CFO, Fritz Henderson and Don Leclair, Ford’s own CFO sometime in August.
Although the idea of a Ford/GM alliance may seem odd at first glance, one only needs to look at the tremendous stake each company has in the other’s continued existence. The most potentially catastrophic scenario would include GM or Ford declaring bankruptcy, leaving their mutual parts suppliers blowing in the financial winds and subsequently cutting off the other from much-needed materials. It could be argued that both would go down and quickly.
This would be a groundshaking event in the auto industry, if not American manufacturing, period. It was not all that long ago that there were four major American automakers–GM, Ford, Chrysler, and American. Chrysler bought AMC solely to acquire the Jeep badge and Chrysler merged with German DaimlerBenz years ago. As powerful as GM and Ford are, though, they may not have the diversification any longer to thrive in a global market with significant barriers to international competition and pension and other benefits hampering their domestic competitiveness.
About the Author: James Joyner is the publisher of Outside the Beltway and the managing editor of the Atlantic Council. He's a former Army officer, Desert Storm vet, and college professor with a PhD in political science from The University of Alabama. He lives just outside the Beltway in Alexandria, Virginia with his wife and infant daughter.
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Just think, all the crappy cars made in America united under a single brand!
So the plan is to weld the Titanic onto the Lusitania so that it won't sink?
As I wrote in my post on this yesterday (linked by RealClearPolitics) outright merger is farfetched and it's hard to see what an alliance would accomplish. Maniakes above has it about right but I can see how top management would look at this as a good idea.
Also, remember that soon the Chinese will be entering this market and the rules of the game will change for everybody.
but I can see how top management would look at this as a good idea.
Shooting top management on their own quarterdeck would do more for both companies than any farfetched merger/synergy/whatsit.
I think the tag on Fark put it best - Ford, GM to merge, form sucky Voltron.
Do either of these companies really believe they can improve their positions by simply slashing workers? As opposed to changing basic business practices that have been failing them for years now? Sigh. Note to self: begin shorting stock.... NOW!
Meh. The reports I've seen indicate there's nothing supporting this speculation but ... speculation.
The silly season is running twelve months a year these days.
Bring it on! I want to sign up at my nearest dealership for the New Edsel Corvair...Chevy Pinto...Ford Vega....
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