Ford-GM Merger Discussion Rumored
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.