Automaker question: Why don't Ford and GM merge?

[MercutioATC]

I freely admit that I don't begin to understand the politics or complexities, but it seems that the savings they'd realize by eliminating relatively redundant platforms would save them a TON of money.

...so why isn't this even a discussion?

[pitohui]

1. ford and chevy = hatfield and mccoys EOM

,

[MercutioATC]

3. Well, yeah, that...but it might be the only option for their mutual continued existence.

Seems they might at least be discussing it...

[dysfunctional press]

2. why don't all the airlines merge? why not fed-ex and ups? why not all the japanese automakers?

why don't all competing industries in any/all fields merge to eliminate relatively redundant platforms?

why don't canada mexico and the u.s. merge?...

:shrug:

[MercutioATC]

8. Because not all of THEM are in danger of ceasing to exist.

We have the "Big Three" U.S. automakers...really the "Big Two".

Chrysler is privately held now, so who knows where, exactly, they stand.

Ford and GM are the last two U.S. automakers. If United and American were the last two U.S. airlines, and both were in danger of failing, I'd be asking the same question about them.

[dysfunctional press]

20. neither is ford.

and you might want to re-check the balance sheets on the airlines.

[MercutioATC]

41. Ford asked for $9B less than 3 weeks ago.

It's nice that they now think they're fine, but I don't see them lasting another year without some infusion of cash.

As far as the airlines, many of them ARE in trouble...but there are more than two U.S. airlines...and there are regulations that protect the ones that are here. Fuel costs are also helping them quite a bit.

[dysfunctional press]

45. they only asked for it as a "backstop", and only because congress was offering...

they always said that they didn't "need" the money...

but I don't see them lasting another year without some infusion of cash.

yeah...seeing how your expertise on the subject has been well-demonstrated here, and all...
:rofl: :rofl: :rofl: :rofl:

[MercutioATC]

48. I'm sorry, I didn't catch your qualifications...

If you have some expertise or inside information, please share.

If not, your assessment of the situation is no more valid than mine...or anybody else's.


Do you really think that Ford is going to last a year without additional cash? Yes, they've been more proactive than GM, but they have many of the same issues...high legacy costs, a declining market, and an image tarnished by making garbage cars.

As I stated in the OP, I'm certainly not an expert, but I don't see Ford as a particularly viable company over the next 5 years.

[dysfunctional press]

53. i know how to read...

which apparently makes me more qualified than you.

[Name removed]

54. Deleted message

Message removed by moderator. Click here to review the message board rules.

[MessiahRp]

22. Well UPS is taking over all of DHL's domestic operations

if that makes you feel any better. :)

Rp

[dysfunctional press]

25. that wasn't a merger- dhl pulled out of the market.

nt

[MessiahRp]

26. Still it essentially has the same end result.

Less and less companies to provide a service.

Rp

[stillcool]

23. What a great idea!

than they would really be too big to fail. Nice if they could squeeze out all those foreign car companies operating in the U.S. too. I'm sure it would work wonders for the bottom line. Think of all the labor they'd save. Mergers are always good for laying off a few people. I wonder what the hold up is. Maybe the major stock holders are seeing how far they can push the price of the stock down before they can make a deal. Or maybe the bail-out package is part of sweetening the pot.

[ContinentalOp]

4. I don't know that much about it but...

It seems to me that this is the kind of thing that would happen only if GM went into bankruptcy and Ford bought their remains. There's probably no reason for Ford to want anything to do with them now, considering their debts and other problems. Personally I think we should go in the opposite direction and force GM to split up. They should completely get rid of their interest in GMAC for starters.

[muntrv]

5. The following quote sums it up: "I'd rather push a Ford than drive a Chevy."

[madokie]

10. I'd rather have a picture of a ford as the keys to a chevrolet

:rofl:

[MercutioATC]

12. Yeah, and I wouldn't stoop take a leak on either...but this about the COMPANIES, not brand loyalty.

I'd think the COMPANIES would see the value of the savings they could realize by merging.

If customers are that rabidly loyal, call the new company something completely different...

[MazeRat7]

6. see post #1... it will never happen. n/t

[PeaceNikki]

7. For ONE... Ford doesn't need or want the bailout.

They secured loans in 2006 and reduced production to meet demand.

[MercutioATC]

13. They're not asking for bailout money?

I thought they were...

[Kalyke]

14. Nope.

However, they said that if we could spare some money for them to put aside (read: draw interest) in case they needed it, they'd do that... but, really, they don't need it right now.

[MercutioATC]

17. If they're surviving on their own, maybe it WOULD be better to just let GM fail...

...and to let Ford buy up the assets they wanted to meet demand.

[PeaceNikki]

18. No.

A bankruptcy by either G.M. or Chrysler could have started a domino effect of financial failures at parts manufacturers that supply Ford as well.

[muntrv]

15. They wanted a line of credit, from what I heard.

[PeaceNikki]

16. Nope

http://www.huffingtonpost.com/2008/12/10/ford-bailout-money-unnece_n_149824.html

Ford set up $23.5 billion worth of credit in 2006. The borrowing, coupled with restructuring and new product plans, will get them through the recession without relying on the government. They cut factory capacity to match demand. They anticipate no further cuts will be necessary as long as the U.S. auto market doesn't worsen considerably. Ford also had been working on improving its fuel efficiency long before there was talk of bailing out.

[dysfunctional press]

24. you sure do know your current events pretty well...

:eyes:

maybe you want to reconsider your op in light of havin' been learned a little something?

[MercutioATC]

29. Very helpful. Thanks.

As of less than three weeks ago, Ford was asking for $9B from the government.

http://money.cnn.com/2008/12/02/news/companies/automakers_plans/

I see that they now say they're fine.

Thanks for your help :eyes:

[dysfunctional press]

35. no problem- that's what i'm here for.

:hi:

[Statistical]

28. Ford only asked for a $6B line of credit.....

the line of credit was for ONLY if/when GM failed.
Since Ford & GM share suppliers Ford is forward thinking they figure many suppliers will fail and this will affect Fords ability to get parts.

Ford was requesting a $6B line of credit to be tapped ONLY if GM went into Ch 11. The goal was to keep suppliers afloat w/ short term low interest loans so GM death wouldn't kill them also.



GM ended the olds brand but GM is still brand heavy. Including international brands GM has 12 brands. Many are direct competitors. Brands like Buick & Cadillac directly compete so rather than selling 80,000 of one model they sell 40,000 Buicks and 40,000 Cadillacs. That hurts economies of scale. Its not a problem when its 1970 and the big 3 have 70% of the market share and auto market is growing.

Ford & GM were going down the same path until about 6 years ago. Since then:
* Ford closed plants, trimmed workforce -> GM did not
* Ford paid down existing debt -> GM did not
* Ford secured lines of credit in anticipation of weakening demand -> GM did not
* Ford anticipated demand falling (not as much as it did, nobody expected that) -> GM did not

The huge risk for Ford is that via the UAW and shared suppliers they are closely linked to GM. GM failure will severely hurt Ford.

To answer your original question:
No way in hell!

Ford mgmt would never allow it.
GM doesn't have the funds to finance or force it.
Ford shareholders would NEVER vote it.

GM & Chrysler makes even less sense. GM has about 5 brands too many. To merge with Chrysler and gain 3 MORE brands! I mean Hummer? Saab? are you serious. Niche brands at best. Chevy + GMC. Virtually identical. Buick + Caddy = too similar they compete with each other. GM is one of the few companies where their biggest competitor is themselves. For GM to merge successfully would require mgmt willing to pick the best and toss the rest. GM will never do that. Wagner will die rather then let GM get sold off.

[12string]

36. oldsmobile

ia a GM product.

[Statistical]

39. Damn. Your right. I guess memory is the first thing to go (n/t)

[madokie]

9. Ford is pretty much doing fine

Please don't advocate watering down ford vehicles by crossing them with gm's, please.

[gravity]

11. A Chrysler and GM merger was being talked about

I don't think Ford has reason to merge though because its finances are better, and it doesn't want to be forced into bankruptcy because of an arranged marriage.

[Festivito]

19. 1. Monopoly, 2. Now GM in deep doo-doo.

1. It's already and oligopoly domestically where there were once a hundred auto makers. I'm a Dem, I don't like monopolies, I think they are bad for competition and I like the idea of breaking them up. Pubbies say they like competition (they lie). Pubbies let monopolies fester.

A Dem president cometh. Gobbling wouldn't be prudent.

2. GM and Chrysler have GMAC HOME LOANS to handle, and they cannot handle the truth. The bubble leaves them with too little in their vaults to cover the too rapid losses. They're already six feet underwater hoping to hold their breath long enough to survive until Obama restores an economy. The loan to GM at least lets them breath for a couple of months.

FMCC, Ford Motor Credit Company, subsidiary of Ford, did not get into the ultra-lucrative home loan business. Ford just deals with the bad economy where few feel comfortable buying a car. They're breathing and can swim for several months.

Buying GM would buy all those GMAC debts that would sink Ford and GM.

A merger is possible. Just not likely. Perhaps the Germans will make an offer and merge Chrysler and GM. But, I doubt it.

My unrelated explanation of our economy problem:
http://journals.democraticunderground.com/Festivito/48

[lumberjack_jeff]

21. Since "you wouldn't stoop to take a leak on either" you're ill-positioned to give advice. n/t

[MercutioATC]

31. Not at all...that's a consumer's point of view.

I'm asking what makes from a management standpoint.

...and I'm certainly not "giving advice", I'm asking a question.

[lumberjack_jeff]

34. You're not a consumer. You're a critic. n/t

[MercutioATC]

42. The two roles are not mutually exclusive.

I'm a consumer because I buy cars. If an American company made a car that fit my needs, I'd buy it.

I'm a critic of American-made cars because (for me) they haven't been able to do that.

[lumberjack_jeff]

50. Fine. I'll bite. What are your needs, specifically?

Failing that I'm left to conclude that your criticisms are nothing more than bias.

[MercutioATC]

55. I need a reliable large sports sedan.

I want fast, I want big. I want a car that starts when I turn the key and will continue to do that for 200k miles. I want all-wheel drive and traction control. I want levers and knobs that don't feel like they're going to break off when you use them. I want an all-aluminum car that doesn't rust (Ohio winters are hard on cars).

Show me an American car that fits the bill.

[MessiahRp]

27. If they merged how many hybrid cars would they have together?

Two? How many SUVs and oversized trucks? 20 or more?

They'd still fail. It's idiotic leadership that has helped lead them astray and unless that changes the poor hard working Americans whose jobs hang in the balance are doomed.

Rp

[MercutioATC]

33. The idea was that those 20 oversized trucks would become 6 or 7...

A single company would reduce the number of different models...hence, the savings on redundant platforms.

[Statistical]

46. The problem is that GM ALREADY needs to trim brands.

The problem is that GM ALREADY needs to trim brands.

GM current brand line up (including international brands):
Buick
Cadillac
Chevrolet
GM Daewoo
GMC
Holden
Hummer
Opel
Pontiac
Saab
Saturn
Vauxhall

12 Brands!!!! Its INSANTIY.

GM sells a lots of vehicles but it is broken up across 12 brands and are you ready.... 106 model lines!
GM has needed to sell off or eliminate brands for a decade now. They have resisted every step of the way.

GM merging with Ford would just add even MORE brands to a mgmt who has shown they are unwilling/unable to make hard decisions.

All the efficencies you mention GM can get right now WITHOUT A MERGER by simply selling/killing brands.

GMC vs Chevy. Pick one
Buick vs Cadillac. Pick one
GM Daewoo. Kill it and use Chevy to support low end.
Hummer. Sell? or kill.
Saab. Sell? or kill.
Pontiac vs Saturn. Pick one

The foriegn brands I am not completely sure but they should be combined.

GM hasn't done it. They mention MAYBE selling Hummer OR Saab at some point in the future when they can get a better value.

I mean seriously GM executives are clueless. They live in another world. Ford by comparison is a well run company.
Believe me I am no Ford lover either. I got SOOO burned on a Mercury Sable that I will NEVER buy a Ford again. I don't care if it is 20% cheaper than anyone else. They lost me for life. Still from a mgmt perspective GM "plan" is like putting a bandaid on someone who had their head cut off.

[liberalpragmatist]

56. Honestly, GM should really just be Chevy and Cadillac

Other than that, I have a soft spot for Saturn, although Saturn's current model lineup is just rebadged Opels/Vauxhalls. Maybe keep Saturn as a "budget" brand? Still, unlikely. Too bad, they have a pretty good lineup nowadays.

Buick is also likely to be retained -- at least the naming rights. The reason: the Buick nameplate is a very hot seller in Asian markets, especially China. Even if GM stops producing Buicks in the U.S., they will probably want to retain the name and sell rebranded Cadillacs as Buicks in China.

If they do keep the Buick name, they *could* keep a couple large, mid-tier luxury models in the U.S. with the Buick name, but sell them through Chevy dealerships.

[blue_onyx]

38. Actually they would have 8

According to their websites, GM has 6 and Ford has 2.

[blue_onyx]

30. There are really no positives

GM is already planning to get rid of brands. Merging the two companies would create more brand redundancy. The Chevy and Ford brands would basically be fighting each other for consumers, as would Buick/Mercury, and Lincoln/Cadillac.

"Eliminating relatively redundant platforms" would also eliminate jobs. I don't want to see any of the US automakers merge. If any two companies did merge, GM and Chrysler seem more likely to do so. I would prefer a foriegn company buy Chrysler than to have them merge with GM...I think there would be less jobs lost in this scenario.

[MercutioATC]

32. Jobs ARE going to be lost. That's what happens when demand is reduced.

Contracts are also going to be renegotiated...

I'd like to see UAW workers keep their jobs and their contracts, but that's not going to happen regardless of how this plays out.

...and yes, there would be brand redundancy if no cuts were made. I'm allowing that the single company would eliminate those redundancies.

[blue_onyx]

37. Your scenario would eliminate a company

Eliminating an entire company would make the job losses that are coming far worse.

[MercutioATC]

44. Demand is demand.

People will buy X number of cars next year. Because of the economy, that number will be historically low, but losing a manufacturer won't appreciable change that number. If GM doesn't build the cars to fill that demand, somebody will...and they'll hire workers to build those cars.

[blue_onyx]

47. If only things were that simple

The elimination of one of the US automakers would have a huge impact, whether through merger or bankruptcy. The people who lose their jobs because of the merger wouldn't be able to buy cars and would hurt demand. Many suppliers would also go down, causing more job losses and this would hurt demand even more. I idea that some company will just step in to fill demand is unlikely when nobody has a job to buy any car, regardless of brand/company.

[MercutioATC]

49. Yes, it's an oversimplified model in the short term, but the principle is sound.

There will be a small decrease in demand caused by people losing their jobs in the short term. Some autoworkers will be without incomes in the short term (some permanently, but that's a result of reduced demand...which exists regardless).

However, if one or more of the "Big Three" stop making cars, demand will exceed supply in the U.S. Another automaker will step in and fill that demand...and (especially with legislative incentives) they'll hire displaced U.S. workers to do it.

[Jack_DeLeon]

40. Why would Ford want to be dragged down by GM?

They are doing relatively well, relatively meaning that they can go it alone for a while longer, more so than GM or Chysler.

Actually if GM went under it wouldnt surprise me if Ford did a bit better picking up some of the slack.

[Statistical]

43. Ford big problem is suppliers

Ford & GM share a lot of suppliers. They actually even share parts.

If GM goes down a lot of those part suppliers go with GM. Ford will see part disruptions and that could affect their ability to keep making vehicles. Idle factories are not good when they are already hurting.

Ford fear is that GM going into a disorganized BK will cripple them.

Of course this is why Ford requested bailout funds in form of a line of credit so they could keep suppliers afloat durring the transistion.

I agree long term (say 2-3 years from now) Ford is actually better off w/o GM. The big ? is can Ford survive the upheaval?

[Bombero1956]

51. not in a million years would Ford merge with GM

Ford has played it smart so far and I heard on NPR that Ford has $30 billion in reserves due to closing plants and the sale of the Jaguar and Range Rover lines to India's Tata Motor Co. and a possible sale of Volvo would increase the cash reserves on hand. Here's a thought, if Ford and GM were to merge which pony car would they kill, the Camaro or the Mustang. Either way you slice it some folks would be pissed.

[salguine]

52. Corporations constantly merging into behemoths played a big part in causing this mess in the first

place.