Bye Bye Chrysler...

[Bill <Y1TopBanana73@xxxxxxxxx>]

I pulled this from the MML...

Consultant: GM merger would eliminate most Chrysler vehicles
Ford wants 'parity' if government gets involved


Bradford Wernle

Automotive News | October 30, 2008 - 2:50 pm EST

DETROIT -- A merger between General Motors and Chrysler LLC would
result in the closing of as many as half of Chrysler's factories and
elimination of all but about seven core models, according to a report
by consulting firm Grant Thornton LLP.

A deal also could result in a loss of 100,000 to 200,000 jobs at the
two automakers, suppliers and other industry stakeholders, said
Kimberly Rodriguez, principal of Grant Thornton's automotive practice.

Rodriguez said she believes negotiators could reach an agreement in
principal as soon as Tuesday, Nov. 4, election day. Reuters reported
yesterday that GM and Chrysler's owner, Cerberus Capital Management
LP, have resolved major issues and the final form of any accord will
depend on financing and U.S. government support.

"Chrysler as we know it will cease to exist very soon," she said at a
briefing with reporters today in suburban Detroit. "There are few
options available to either company."

Chrysler now has 14 factories, two of them already scheduled to close:
Newark, Del.; St. Louis South.

Chrysler has also offered its Viper business for sale, along with the
Conner Avenue plant in Detroit where the sports car is made. Grant
Thornton believes an additional four plants could close. Among the
plants on the cusp would include Sterling Heights (Chrysler Sebring,
Dodge Avenger), Toledo North (Jeep Liberty, Dodge Nitro), St. Louis
North (Dodge Ram) and Saltillo, Mexico (Dodge Ram heavy duty trucks).

The blended companies would command about one third of U.S. auto sales.

In a related development today, if GM and Chrysler get federal aid,
Ford Motor Co. will expect some help, too. Ford executives are staying
in touch with federal policy makers and "the powers that be" to make
sure they understand the challenges Ford also faces, said Mark Fields,
Ford's president of the Americas.

"We just want to make sure we continue that ongoing dialogue and make
sure that, whatever happens, there's a degree of parity," Fields told
reporters at a press event today.

Lesser of the evils

Rodriguez acknowledges the merger of GM and Chrysler was not "an
optimal solution," but is still better than the alternatives, which
would include one or both of the companies going out of business.

"Despite the significant number of families that will be impacted, the
benefits of combining the two companies are both structural and
strategic," Rodriguez said.

Consolidation of the dealer bodies of both companies would likely
accelerate with a merger, according to the Grant Thornton study. The
two companies have about 22,000 dealer franchises, more than half of
those in the United States.

The remaining Chrysler dealers would have many fewer vehicles to sell.
Grant Thornton estimates Chrysler now has 26 models, but only seven
are core. Surviving Chrysler vehicles would likely be the Dodge Ram
pickup; Chrysler and Dodge minivans; and several Jeep models,
including the Wrangler and Grand Cherokee.

The merger, while unpalatable in many respects, would provide several benefits:

• GM's leadership in plug-in hybrid technology

• A stronger position in full-size pickups, displacing Ford as industry leader

• More liquidity, thanks to the cash on Chrysler's balance sheet

• Cost reduction by elimination of overlapping staffs, especially in
sales, marketing and administration.

An expensive deal

Rodriguez says the industry consolidation that would follow a
GM-Chrysler merger would be a very costly proposition, especially if
the industry approaches it responsibly, as she expects it will.

The lost work to the supply base would put hundreds of companies at risk.

"It will actually cost the combined GM-Chrysler entity, as well as the
other OEMs in the industry that will have to deal with suppliers who
will no longer be viable," she said.

"The suppliers have been hit by the financing crisis and the raw
materials crisis and volumes falling off. This will be a final blow to
many suppliers and that will be costly to all the OEMS, but in a
controlled fashion, it's something that the industry with access to
financing should be able to weather."

Rodriguez says that up to 50,000 additional non-Chrysler jobs could be
lost from the supply base if Chrysler was to close the plants Grant
Thornton expects.

The timeframe could be years. Some vehicle platforms could go away,
some plants could be closed as early as the holiday shutdown and other
plants could take years to close, she said.

Still, the impact to the supply base is, according to Rodriguez,
potentially one of the largest effects of a transaction of this type.

"For every one job you might lose at a direct plant, you can multiply
that by 5 or 6 in the industry as a whole," she told reporters at a
briefing.

Bill M