Chrysler merger seen as possible last hope for Detroit, U.S. auto industry

DETROIT–The idea of a possible Chrysler merger has left many wondering about the future of Detroit and the surrounding region.

DETROIT–The idea of a possible Chrysler merger has left many wondering about the future of Detroit and the surrounding region.

A major deal involving Chrysler, which appears inevitable, will reshape Metro Detroit forever in ways that probably can’t be imagined.

Not that the area isn’t already in the midst of a major shift. The ‘Detroit’ as it has been known for decades is now over.

As of June 2008, General Motors, Ford and Chrysler had announced the shutdown of 35 plants since 2005, according to the Ann Arbor based Center for Automotive Research. Those plants, along with 35 additional plant closings at GM and Ford’s chief suppliers, have led to the elimination of an estimated 149,000 hourly and salaried jobs, according to published reports.

In addition, last week, Chrysler announced that it is planning more than 5,000 white collar job cuts by the end of the year. The automaker also announced it is cutting 1,825 factory jobs.

GM is reporting that despite the fact that early retirement and buyouts had helped to reduce its workforce, the company will still have to make some involuntary layoffs.

The auto job cuts could have a rippling affect on other businesses. It’s troubling news on a number of fronts. The auto industry is ingrained in the economic, social and cultural fabric of the region.

Arguments that Detroit will weather this storm are likely true. The city has a history of surviving tough times. But considering the current condition of the American-based automakers, the idea of what that survival mode looks like is a growing concern.

The only real question is what, if anything, can be done to salvage what’s left of the American auto industry? The only thing that seems to offer a glimmer of hope is a potential merger with either GM or Nissan-Renault.

A lot of issues have been raised that a GM/Chrysler merger is counterproductive for both automakers when considering that GM is already struggling to streamline its product lineup to cut costs.

There also have been questions raised about the costs associated with some Chrysler plant closings for the already cash-strapped GM. Much of the criticism of a Nissan-Renault/Chrysler merger has focused on concerns that to make the partnership work, Nissan would have to dedicate human and other resources that they don’t have.

Still, a GM and/or Nissan-Renault deal would have its benefits. For one, GM has an understanding of the issues affecting today’s American auto market – even though recently much of that insight has been gained from trying to work through their own challenges.

The automaker also has the ability to deal with the unions to work through the issues affecting the company. In addition, political support for a $10 billion federal rescue package for a Chrysler/GM merger is said to hinge on the deal saving as many jobs as possible.

Under the leadership of CEO Carlos Ghosn, Nissan-Renault, has shown that it’s more than capable of turning around a car company. Ghosn is credited with resurrecting Nissan from bankruptcy and making it a contender in the U.S. and global market. The automaker has also proved to be a major economic stimulus in areas in which it operates.

A Nissan plant in Mississippi is expected to employ about 30,000 people by 2010, including those directly employed by the manufacturing facility, suppliers, retailers, service and sales. The plant has spurred the growth of hundreds of businesses in the Mississippi area.

Also, Nissan is already jointly developing products with Chrysler, which means the automaker has an understanding of Chrysler’s operations.

More importantly, both GM and Nissan are in the business of making and selling cars. With the urgency that Cerberus Capital Management LLC seems to want to unload Chrysler, Detroit can’t afford for the automaker to end up in the hands of a company that has no real interest in the automotive industry other than turning a quick profit.

The thought of Chrysler trying to rebound from another situation like that on any level seems unlikely. A Chrysler merger with GM and or Nissan-Renault might be the last glimmer of hope for not only Chrysler but for the American-based auto industry as well. To date, there doesn’t seem to be any other viable plan on the table. It seems the only thing to really consider regarding whether a potential Chrysler merger is a good idea is whether Detroit and thousands of jobs are deserving of another shot. Real Times News Service

______ Copyright 2008 Real Times News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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