8
   

GM looking at Chrysler?

 
 
hawkeye10
 
  1  
Reply Sat 11 Oct, 2008 01:52 pm
Quote:
G.M. Held Merger Talks With Ford Before Chrysler


By BILL VLASIC
Published: October 11, 2008
DETROIT " Before General Motors began exploring a possible merger with Chrysler " talks that first came to light on Friday " G.M. proposed a similar deal with its other cross-town rival, the Ford Motor Company, two people with knowledge of the talks said Saturday.



http://www.nytimes.com/2008/10/12/business/12auto.html?hp

this indicates the the owners of Chrysler have come to the conclusion that they can not survive the current environment. Being private we have no way to know how long they can go, but they are acting desperate, as if it is not long at all.
hamburger
 
  1  
Reply Sat 18 Oct, 2008 02:28 pm
@hawkeye10,
G.M. and CHRYSLER : a new company that will need massive injection of money by U.S. government (read : taxpayer) ?
-------------------------------------------------------------------------------------------------
http://ca.news.yahoo.com/s/reuters/081018/business/cbusiness_us_gm_chrysler_talks

so is this a "possible" scenario ?
- combine G.M. and chrysler
- shutdown assembly lines
- lay off "a few more thousand" production line workers and admin staff
- ask U.S. government for cash injection to keep the rump alive
- try to find a foreign automaker (or other money source) ready to take on the job of rescuing what's left ?

Quote:
GM, Chrysler pushing for rapid deal: paper
2 hours, 15 minutes ago

DETROIT (Reuters) - U.S. automakers Chrysler LLC and General Motors Corp are pushing for a quick merger deal ahead of the U.S. presidential election as sales continue to plummet and they cannot gain access to credit, a Detroit newspaper reported on Saturday .

Both parties are racing to conclude a deal before the election, which is 17 days away on November 4.

There has been speculation within the industry and among analysts that if Detroit's automakers face failure, they may seek a bailout from the U.S. government along the lines of the recent $700 billion package for the financial sector.


It is unclear whether the government would support such a rescue package, but both presidential candidates -- Democratic Sen. Barack Obama of Illinois and Republican Sen. John McCain of Arizona -- may be more likely to promise help for the industry before Americans head to the polls.

The U.S. auto industry accounts for thousands of jobs in Michigan and Ohio, and the latter remains a key battleground state in the upcoming election.

The newspaper report said under one possible scenario, GM would absorb Chrysler to get hold of its cash stockpile -- $11.7 billion on June 30 -- then shut down some of its brands and car dealerships in order to cut costs dramatically.
hawkeye10
 
  1  
Reply Sat 18 Oct, 2008 03:04 pm
@hamburger,
this I think: combine the two, pressure Chrysler workers to allow Chrysler to unload legacy health care costs as GM has done (if they have not already), and shut down about 40% of the combined company. Entire car lines will die, as will their dealer networks. The problem with shrinking has always been that they needed to sell a lot of cars to be able to pay the deferred compensation to workers, this now goes away. GM/Chrysler will massively shrink their market share, and only do the vehicles that they can make money on.

the question becomes what can they do better than their competition? I see no reason to think they can do any niche better, and if so this will be a massive phase of a many phased slide into the death of the American auto industry. The big three betting of truck and SUV's when as pointed out at the time the long term energy prospects did not make cheap gas likely was probably the American industries last chance to save themselves. They blew the call, as they almost always have done during my lifetime. The last decade that they did things right was the 1950's.
hawkeye10
 
  1  
Reply Sat 18 Oct, 2008 03:55 pm
@hawkeye10,
the talk is that this is not a merger, Chrysler would be traded to GM for 50% of GMAC. Under that plan GM eats Chrysler, and GM clearly wants the $11 billion cash in Chrysler more than it wants its product lines, factories, or workers. It must really suck to be a Chrysler employee right now, even more than it has sucked when the Germans did not know what to do with it and the next owners, Venture capitalists, cared only for dollar signs. I have no doubt that they will be put out of their missery shortly, the layoff notices will not take long to print.
0 Replies
 
hamburger
 
  1  
Reply Sat 18 Oct, 2008 04:47 pm
@hawkeye10,
hawkeye wrote :

Quote:
shut down about 40% of the combined company


i think that might quite possibly happen .
i have to wonder how such a massive shutdown will cast its shadow over the total U.S. economy ?
how many will become unemployed at GM/chrysler ?
will they find new jobs ? - not very likely imo .
what about the suppliers to Gm/chrysler - how many thousands of people will they have to lay off ?
those people laid off will have to stop buying the things that keep the wheels of the U.S. economy going .
i wonder if such massive layoffs can be handled by the U.S. (and word) economy without major disruption ?
will the government (taxpayer) have to have massive amounts of money ready to prevent a further downward spiral of the economy ?

(the next president of the U.S. is going to have a massive unemployment problem to deal with imo)
hbg
hawkeye10
 
  1  
Reply Sat 18 Oct, 2008 04:57 pm
@hamburger,
for every assembly job at least two parts jobs are dependent, and for every manufacturing job it is what...five service jobs? and let's not forget that a boat lead of dealer related jobs will go as the car lines get compressed. One job at gm/Chrysler cut means about 20 go unemployed I think.

The wrinkle is that hopefully new jobs get created as other manufacturers ramp up US based production. The problem with that though is that a prolonged slump in the economy means that Americans will be buying fewer cars and trucks. We could easily be in for a decade of economic slump, or more, so it will be along time before jobs come back to America in the auto industry. Keep in mind that Canadians have some of these jobs, as the big three fail Canada will feel the effects.
hawkeye10
 
  1  
Reply Sat 18 Oct, 2008 05:36 pm
@hawkeye10,
Ontario job losses since 02
http://www3.thestar.com/static/PDF/080513_auto_manufacturing.pdf
hawkeye10
 
  1  
Reply Sat 18 Oct, 2008 05:46 pm
@hawkeye10,
dated 9/23
Quote:
Since August, the financial services business has chopped 102,000 jobs, according to workforce specialist Challenger Gray & Christmas in Chicago. Meanwhile, the automotive sector has cut 80,323 positions during the same timeframe, according to Challenger’s data.

In recent weeks, the financial services industry’s woes have surged, along with the certainty of more job cuts to come. Recent troubles include: Investment house Lehman Brothers filing for bankruptcy protection and Merrill Lynch merging with Bank of America. Moreover, staggering Wall Street stalwarts Goldman Sachs and Morgan Stanley announced they would soon become bank holdings companies, and will be cutting costs.

These events, plus the possibility of a Washington Mutual buyout and whatever other unexpected calamity comes down the pike, promises to accelerate the number of jobs cuts. Some industry sources estimate that over 200,000 positions will soon be gone"nearly 10 percent of the entire financial services-related workforce, ranging from bank tellers to CEOs.

http://industry.bnet.com/financial-services/1000111/tough-race-wall-street-job-cuts-outpace-auto-industry/
0 Replies
 
hamburger
 
  1  
Reply Sat 18 Oct, 2008 05:55 pm
@hawkeye10,
hawk :

i know very well what might be in store for the auto industry of ontario (and canada as a whole) .
that's why i believe (massive) government (taxpayer) intervention may be required to prevent on "economic downward spiral" .
imo "an ounce of prevention is worth a pound of cure" applies not only for individuals but society as a whole .
just like in situations of war governments have to act , i think governments also have to act in severe economic situations (before the fabric of a nation will be torn to shreds ) .
hbg
hawkeye10
 
  1  
Reply Sat 18 Oct, 2008 06:20 pm
Quote:
DETROIT (Reuters) - The number of U.S. car dealerships closing is expected to increase into 2009 with as many as 3,800 dealerships at risk of closure because of dwindling sales and tighter credit, according to a newly released study by Grant Thornton LLP on Wednesday.

With U.S. light vehicle sales predicted to drop to the 13.7-million-unit range in 2009, the study said that about 18 percent of the total number of U.S. car dealerships would need to close to maintain sales per dealer at last year's level of about 750 units.

"An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines," said Paul Melville, a partner with Grant Thornton LLP.

"In addition, the domestic automakers who badly need retail consolidation are not spending much of their scarce capital on the problem because the economy is doing it for them," he said.

http://www.reuters.com/article/domesticNews/idUSTRE49069R20081001
0 Replies
 
hawkeye10
 
  1  
Reply Sat 18 Oct, 2008 06:29 pm
@hamburger,
this economist is pessimistic about the Canadian "big three" jobs surviving
http://www.reedconstructiondata.com/alex-carrick/post/canadas-auto-industry-the-elephant-in-the-room/
hamburger
 
  1  
Reply Sat 18 Oct, 2008 06:48 pm
@hawkeye10,
and so am i !
luckily we do have a large toyota plant - perhaps it'll survive .
hbg
0 Replies
 
hawkeye10
 
  1  
Reply Sat 18 Oct, 2008 07:01 pm
Quote:
Chrysler: Would become defunct over time. Chrysler and Dodge could be folded into GM’s lineup or, most likely, shuttered completely. Jeep, which has always been one of Chrysler’s most valued brands, would continue to exist. Chrysler’s minivans are the firm’s greatest value; a Chevy bowtie " or Saturn, Buick or Pontiac badge " could simply be slapped onto a new Town & Country in very short order.

As a consumer, this sort of tie-up should almost always be viewed as a net negative. Mergers are good for companies and stockholders because they eliminate competitors. The auto industry has too much capacity and too many companies looking for buyers, but that’s a good thing for you. It keeps prices low and gives you the greatest choice.

What GM is trying to do in one swoop is eliminate a direct competitor so that it can drastically reduce supply and survive until better times " all at the expense of Chrysler, of course. Chrysler sells 26 models; under the above scenario, 18-20 of those models could be eliminated. With fewer players, all car companies could theoretically raise prices or offer fewer, smaller discounts.

http://blogs.cars.com/kickingtires/2008/10/for-the-past-we.html
0 Replies
 
 

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