Tuesday, July 18, 2006
Report: Combined GM, Ford Would Emerge Stronger
Wall Street Journal Offers Own Solution To America's Auto Problem
POSTED: 6:53 pm EDT July 17, 2006
After two weeks of contemplating an alliance between General Motors, Renault and Nissan, the companies paused for 90 days to consider their futures.
The Wall Street Journal has offered its own solution to America's auto problem by combining the "big two" and creating the "big one," according to Local 4 business editor Rod Meloni.
"Now is the time for their conservative minds to consider something truly transformational: a merger of General Motors and Ford Motor," the paper reported.
On the upside, the Journal said a combined Ford and GM would emerge stronger and more able to attack both sets of legacy costs. Together they will attain a staggering 40 percent of North American market share, Local 4 reported.
And by cutting brands such as Buick, Pontiac and Mercury, it will allow the major company to focus on better-selling brands, the station reported.
However, there is an admitted downside: a possible United Auto Workers union strike in opposition and the costs associated with buying out dealers and the lawsuits that would invariably accompany closing dealerships, Local 4 reported.
UAW President Ron Gettelfinger himself seemed taken aback by the idea.
"As you know any merger is a very complex deal, takes a lot of work and a lot of effort. I hadn't even thought about it and it's the first I've heard about it," said Gettelfinger.
"This is one of those instances where 1 plus 1 equals 1.2."
AMCI auto analyst Jim Sanfilippo said this is the kind of idea generated by people who neither drive cars nor pay attention to the business.
"Gee why doesn't the last-place team buy a couple of Yankees and everything would be fine. It's just not a realistic scenario," said Sanfilippo.
Sanfilippo said the only true way for the American auto industry to survive and prosper is for American leadership to step up, roll up its sleeves and solve the problems in their executives' suite and on their own plant floors, and not look outside for help.