Gm, Chrysler Deal Could Wound Michigan

As the adage says it – if you want to be excellent in all you do, master the right timing. Timing is everything. When you want to open and close the valves on your engine at appropriate times, you need to install something as effective as the Volvo timing chain. Same is true with decisions. In connection with the possible deal between General Motors Corp. and the Chrysler Group, most critics say this is not the most opportune time to do it.

With the potential acquisition by the world’s largest automaker of another ailing Detroit car manufacturer, thousands of white-collar jobs would be at risk. To sum up, all results would likely wrench and wound Michigan. Detroit’s Big Three would be trimmed to the Big Two; as such, GM is expected to eliminate redundant positions.

People familiar with the GM-Chrysler talks say that discussions are still in the early stages however industry experts are predicting that the pairing of the two Detroit automakers would just bring chaos to Michigan since they have almost similar product lines.

“If the two combine, in my mind, it’s insanity,” Gerald Meyers, a business professor at the University of Michigan, said Monday. “With the exception of their international operations, the companies duplicate each other.” Several economists have said that the possible deal is likely to economists said but it could result in a strengthened U.S. auto industry if more plants are closed to eliminate excess production capacity.

“What Michigan needs at the moment is a strong domestic auto industry,” said Lou Glazer, the president of Michigan Future Inc., an Ann Arbor think tank studying work force and economic trends. “If this gets us there, that’s more important than anything that will happen in the short term.”

Meyers, a former chairman of American Motors Corp., which was acquired by Chrysler in 1987 added, “Whether or not anything comes of the negotiations, Chrysler has been told it’s in play. All 80,000 people [at Chrysler] know they’re not wanted. That has a severe effect, not only on morale but on the whole operation.”

Carl Galeana, president of the Galeana Automotive Group, which has Dodge and Chrysler dealerships, said he felt like a part of DaimlerChrysler. “I’ve always been extremely loyal to Chrysler Corp. and DaimlerChrysler. It’s kind of like being a kid and having your parents talk about getting rid of you,” he said.

GM and Daimler have over 10,000 dealerships in the United States. They employ about 130,000 hourly workers and nearly 50,000 salaried staffers. About 94,000 individuals or nearly 50 percent of their combined work forces are in Michigan. This is the very reason why Michigan would be greatly wounded by the pairing of the auto giants.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said he did not believe a GM-Chrysler combination would affect the rate of decline in U.S. factory workers. He expects that number to keep shrinking. “With or without these mergers, we’ll see continued restructuring,” Cole said. “We have to get better aligned between profitable sales and production. On the other hand, a GM-Chrysler deal is likely to accelerate white-collar cuts. That’s where you get your economies. For instance, you don’t need two economists.”

One of the reasons why critics predict the merger is the battle to make GM far ahead Toyota Motor Corp., its closest rival. “Maybe this is (a) way for General Motors to go from 25 percent share to 39 percent share” of the U.S. market, said John Schenden, general manager of Pro Chrysler-Jeep in Denver, Colo., and head of Chrysler’s national dealer council. “Is this a tactic for UAW (United Auto Workers) negotiations?” he said. “Like I told my people, it’s out of our control. We have to just worry about our day-to-day of selling cars.”

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