Filed under: Ford, GM, Earnings/Financials
BREAKING! GM and Ford rumored alliance
Automotive News reported early this morning that senior executives within Ford and GM have explored the possibility of an alliance, even a merger, in the near future.
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.
Although it's doubtful anything of this magnitude would come to fruition, the dependency each of the players share may warrant a second look at a union between what's left of the 'Big 3.' At this point however, spokespeople for both GM and Ford are relying on the "no comment" approach to get them through the next few days.
[Source: Automotive News - Sub. Req.]
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Reader Comments (Page 1 of 4)
Finished Law School 4:05AM (9/18/2006)
This would do nothing for the fact that both GM and Ford make crap vehicles that most people are not interested in.
You would get two companies who make crap vehicles merging to form one large company making crap vehicles all the while being raped by the UAW.
A real solution would involve getting rid of the UAW and then creating quality vehicles that appeal to the public at large rather than a few people in the midwest. Getting rid of the UAW would allow Ford and GM to price their offerings competitively and creating vehicles that the public at large is interested in is self explanatory (maybe not for some of the people here but they are a small minority ignorant to the rest of the world).
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hmmm 4:11AM (9/18/2006)
Ahhhh great 1 automaker loosing money like crazy joins another so they both loose money together like water under a bridge ! and you thought rebadging was bad now, just wait ! ( very bad idea detroit )...
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Andre 4:27AM (9/18/2006)
From a strategic point of view thisis complete nonsense!
First a merger makes sense if two companies or product lines can add up with AS LITTLE overlay as possible. Say Renaults sales network in Europe and GM in Amerika, and joint activities for the rest of the world.
The only thing Ford and GM could do is to cut each of their business exactly by half, now imagine number of layoffs etc. (well now that might even be necessary but even after a merger they will simply be unable to do that, I mean just imagine!!!)
And second two invalids do not make one athlete, walking joint may feel a bit easier but can neither be a cure nor speed up their walk.
Hardly any merger EVER worked when the company that takes over is not in a very sound position!
If ideas like these even start being considered that to me is a REALLY REALLY bad sign. The american automotive industry will see extreme measures for sure, although the industry has always been cyclical (think model cycles) this is getting out of hand, and no company can handle such huge losses when not making better profits in good times.
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Garth 5:54AM (9/18/2006)
They are certainly very desperate to even think about such a dumb headed move.
So what bad news or truth are they hiding from the public and the shareholders ???.
Just make better cars that the public WANTS to buy fellas.
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Nick 6:55AM (9/18/2006)
This is interesting, but I call BS anyway. Honestly, these stories just keep on comin...*sigh*.
Andre, just so you understand, as it seems you're as cynical as anyone who posts here. A merger doesn't necessarily mean that GM and Ford would be joined at the hip in all possible areas...you must understand that there are varying degrees.
GM and Ford have cooperated on ventures in the past...a terrific 6-sp tranny. Hell, I can think of one spot where they'd probably enjoy tremendous success....commodity and parts purchasing, in certain areas. Can you imagine the potential gains if they were to combine, oh say, they're steel purchasing in North America. There are potential gains to this, depending on how it's done.
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Hamud 7:07AM (9/18/2006)
Blah, blah, blah, i know everything, they should do this, this and this...
That´s all that i read when something about GM and/or Ford comes up.
Crap cars?? Yeah, of course, i would like to have companies that make crap cars and still are among the biggest car companies in the world.
I don´t know if this merge is a good ideia, but they might have their reasons to think about it.
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PiCASSO 7:16AM (9/18/2006)
Two rivals, for some hundred years, now want to have an alliance or perhaps even merge? VERY stupid idea, especially when each company makes overlapping vehicles in every segment.
Bottom line, is to get rid of the UAW/CAW, and begin hiring people from scratch. Those who have been working in the same plant/building, would get better wages (due to experience) compared to newbies from off the street.
GM is on a roll, and will pull out of the red within a few quarters. Ford, is just beginning to dive into red, but all in all if these two companies get rid of their legacy costs, in due time they can pull through without being in some alliance or merger.
Chrysler group should also follow suit, and get rid of the UAW/CAW, since they are no better off than GM or Ford.
Although I've been driving 4 Japanese cars in the past 7-years, I do hope the best for the domestics. With the problems I've been getting with my Mazda3 in the past 2-years, you may see me driving a domestic vehicle if GM's Opel division delivers something special into Saturns showrooms (aka Astra).
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Ralph 7:46AM (9/18/2006)
There would be nothing in a merger deal for GM, because Ford is in far worse shape. This really seems more designed to show that GM has considered all possible alternatives so that it is insulated from shareholder suits, i.e., that bum Kerkorian, when they decide not to have an "alliance" with the people that developed Le Car.
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Tri-Bob 7:54AM (9/18/2006)
How many of you neysayers have actually driven a car from either of these brands? Nick (#6) was right that there could be benefits if they do it right, however I think this is just gossip and bad reporting.
The worst part would be for the consumer. Look at Ford's minivan, yes it was bad, but how happy were Toyota/Honda/Chrysler to see one more competitor leave? Competition keeps prices down and options available for the consumer. I for one, enjoy being able to purchase a vehicle in the low 20's (Chevy Venture) that has given me no problems and has options I wanted, versus the imports for several thousand more.
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Stoneman 7:57AM (9/18/2006)
I think GM and Ford should merge into one company, chop all the executives and run the most efficient company as possible.
Stoneman
http://www.stonemanautoreview.com
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GENERALMOTORSMAN4LIFE 8:08AM (9/18/2006)
I AM OUTRAGED AT THIS INFORMATION! IF BOTH BOARDS APPROVE THIS, I WILL BEGAN IMMEDIATELY TO LIQUIDATE ALL OF MY GM PRODUCTS. I WILL ALSO CANCEL ANY FUTURE PURCHASE PLANS OF EVERYTHING FROM GM-YES INCLUDING THE CAMARO! HELLO TOYOTA LAND CRUISER, LEXUS GS AND CAMRY FOR THE WIFE! FORD DID THEMSELVES IN BY NOT DESIGNING VEHICLES THAT PEOPLE WOULD WANT TO PAY 20-30 THOUSAND FOR! THE FORD ENGINEERS STAND AROUND TALKING ABOUT THEIR GOLF GAMES ALL DAY EVERYDAY INSTEAD OF DESIGNING VEHICLES (THEIR JOBS)! GM IS NOT COMPLETELY OUT OF THE WATER BUT THEY ARE IN A BETTER POSITION THAN FORD THEY TOOK THE STEPS NECESSARY EARLY ON TO ELIMINATE WEAK SELLING DIVISIONS AND NOT RELYING SO MUCH ON THE LARGE SUV, WHICH GENERATED 10-15 THOUSAND PER VEHICLE SHEAR PROFIT. GM ALSO NEGOTIATED WITH THE UNIONS TO RID ITSELF OF WORKERS WHO NEEDED TO RETIRE, SOME OF WHICH COULDN'T EVEN WALK NOR STAND UP STRAIGHT FROM 40+ YEARS OF WORKING IN THE PLANT! ALSO FORD JUMPED THE GUN TO PURCHASE VOLVO AND JAG JUST TO KEEP GM AND DMX FROM PURCHASING THEM FIRST AND EVENTUALLY PUTTING FORD ENGINES AND TRANSMISSIONS IN THESE VEHICLES-65 THOUSAND DOLLAR JAG WITH A FORD ENGINE-THEY THOUGHT THE PUBLIC WAS STUPID! THEN THERE IS THE UNION TO BETTER HELP WHO AND HOW?
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LMdealer 8:13AM (9/18/2006)
Who are the "sources"? Sounds like a bunch of bullshit to me. Although it is reasonable to imagine they might form an alliance to regulate free trade and the unions better. As I have said before, what would all the armchair CEOs on autoblog have to do if it weren't for Ford & GMs difficulties.
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PuffyC 8:15AM (9/18/2006)
Man, does Autoblog ever change? Some of the regular posters must have some sort of autoblogger that searches for text containing GM or Ford and then pastes the same old tired anti-worker, anti-American car company BS over and over and over again. GM builds crap cars, Ford builds crap cars, American companies suck, go Japan, go Korea, blah blah blah. Get a clue, or just a life. GM is the number 1 auto manufacturer in the world and Ford is number 3. Combined they would produce twice as many vehicles as number 2 Toyota. Buick, Lincoln and Cadillac consistently rate higher in long term dependability than Toyota, Honda, BMW, Nissan and Hyundai, among others. Some of you guys need a big dose of reality or at least some other channel in which to spew your hate. I realize everyone needs a cause, but why not something more productive like global warming, the global aids crisis, American foreign policy, or healthcare? With all the problems in the world surely there are better targets than blue collar workers and American manufacturing companies.
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WhyNot? 8:16AM (9/18/2006)
Why kill the UAW as some of you are suggesting? The UAW gives common people the chance too have a good life and good benefits. Getting rid of them is just crazy talk by pro-import owners. If there was no UAW who other than people who make big bucks would really be able too afford them new cars and trucks? Should all UAW workers such as myself go to working for McDonalds for minimum wage? Who can survive on that and have a life and future for their children and what not? Are we all suppose to crawl under a rock and not have anything because we want rights and securities at work, as well as a decent wage? My family has been involved with the UAW for generation after generation. To listen to the BS that everyone talks about getting rid of the UAW makes me ill. Why not cut some of those corporate guys big paychecks? Do you honestly think that they are making small amounts of money? Try 6 figure incomes or more for a good portion of some of them. Delphi is a prime example of this. Unless you know exactly how unions work, or have personally worked for a UAW or CAW company, you should not judge what you dont know. As for Ford and GM merging, I can agree that at this time, that is not a good idea. New designs for automobiles that grab peoples eyes and are more reliable and efficent are essential to the survival of these companies as well as cost. Sending our jobs to China and Mexico will not help that, but hinder us with more job losses and prices that dont change. Look at how many people have lost their jobs so GM and Ford both could save money by making them out of country. If they are saving so much money doing that, why is the prices of the vehicles the same or even more than they were before hand? Corporate greed is the answer...Bust some of those corporate wages and see what happens...Put a cap on wages and work with the UAW, not against them. If there was a strike that involved all the UAW for Ford and GM, it would cripple them beyond belief. Who could fill all those jobs and know what was going on with no-one to really train the people that were to replace them? Careful what you wish for...
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mavkato 8:36AM (9/18/2006)
if anything it would probably be like when Microsoft invested in Apple Computers to keep them in business; GM would likely make some type of investment in FoMoCo to keep them afloat
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Vinny 8:42AM (9/18/2006)
WhyNot?
(Fair warning - this is an off-topic-union-bashing post for you whiners)
Ever think that those that make the 6 figures actually may EARN their money? If McDonalds was union you would be paying $5-6 for a quater pounder so that they could make a profit while paying their off-the-street guy $20 bucks an hour for no skills; "just flip this lever when the alarm goes off. That's your job".
It's called business. Like it or not, the people that own the business are in business to make money, not employ people and make THEM rich.
By the way, I agree with everyone else on this post that says GM/Ford merger is not going to work. "My boat and your boat are sinking. Get your leaky life raft and I'll get mine and maybe we can beat the Toyota yacht in this race!"
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Richard Warren 8:43AM (9/18/2006)
Two guys in the golf course restroom:
Fritz "Nice game, how are things?"
Don "Yeah not bad, how is the family?"
Fritz "Fine, thanks for asking. Yours?"
Don "Fine, fine thanks."
Don "Are you guys really thinking about a merger or alliance with Renault?"
Fritz "Can't really talk about it Don but lets just say something is going on."
Don Hell Fritz, why not merge with us?"
Automotive news reporter in stall begins wacking off thinking what a story, man I'll get a Pulitzer for breaking this story.
He missed the huge laughs after Don and Fritz left "God Don, that was great!" "Yeah, Fritz that troll is always hanging around looking for something, maybe they'll fire his ass now."
And they laughed into the sunset as the Automotive News guy scribbled his story on toilet paper.
Of course, Boeing did buy Douglas----------
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Adam 8:45AM (9/18/2006)
The simple fact is both are facing huge legacy costs and falling demand for their products, and they are unable to downsize their workforce thanks to the UAW. Where else does the workforce get such lavish severance packages?
The design groups of both companies could use some improvements but merging just leaves you with double the problems.
I'd presume a merged faction would utilise the same platforms for cost savings, unless demand dramatically picks up (unlikely) then you've got a idle workforce twice the size of before.
UAW's problem isn't just the monopoly they hold, it's the restrictions they place on companies wanting to downsize.
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JackOfShadows 8:47AM (9/18/2006)
To Finished Law School I offer my solution for solving problems between GM/Ford and the UAW.
"First, kill all the lawyers".
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laserwizard 8:52AM (9/18/2006)
I bleed Ford blue and would never buy another product from Ford should it hook up with GM. There are some things in life that have meaning and GM is a fubared company with incompetent management, a blowhard in Robert Lutz who has padded his resume like he has stuck a sock in his shorts, and offers Chevrolet - a company worth urinating on, not embracing.
If such a merger were ever to go through, I'd buy Hyundais. I sold them early in my career and now appreciate that they are doing the things to sell vehicles that both Ford and GM are clueless about.
Put this rumor to bed. Funeral services for Ford should be held with dignity - not soiled by conjoining them with America's worst company.
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