[star]The American Mind[star]

September 18, 2006

Ford-GM Have Talked about Merging

GM and Ford merging would rock more than Detroit:

Senior executives at General Motors and Ford Motor Co. have discussed a merger or alliance, according to several sources familiar with the talks.

The talks began after Nissan CEO Carlos Ghosn broached the possibility of an alliance among Renault, Nissan and GM in July.

The Chevy and Ford fanatics would puke. For me, I'd want to short the combined company's stock. Nothing good happens when you take one faltering company and mush it together with another faltering company. Either GM or Ford will have to go under before the labor unions and calcified management really shake things up, become more innovative, and make cars people want to buy.

Both Ford and GM have to get under their union contracts and start from scratch. That means some factories would be unionized while other wouldn't. It means building cars would be more like building computers. Cars would go from designs to sell-able product in months instead of years. It means designing factories and manufacturing processes to quickly shift production from slow-selling vehicles to more popular cars. That way the companies wouldn't have to shut down production or offer margin-crimping incentives. GM and Ford have learn much from Toyota, Honda, and the other Japanese car companies. Now, they should look to Silicon Valley as their model. If they did it right they'd leapfrog the Japanese and be kings of the next generation of car making.

"The Ultimate Alliance"

UPDATE: GM's and Ford's home state has an abundance of economic problems as Jay Reding notes.

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Posted by Sean Hackbarth in Economics at 03:15 PM | Comments (0) | Trackbacks (0)