- The Washington Times - Tuesday, September 19, 2006

Ford merging with General Motors?

How about merging the Yankees and the Red Sox? France and England?

But rumors of a merger of Ford Motor Co. and General Motors Corp. echoed inside Internet automotive chat rooms yesterday, holding out the tantalizing possibility, if not the probability, of Detroit’s Big Three reducing itself to a Big Two. Nostalgia for the glory days of the American automobile industry soared even if the companies’ stocks didn’t.

Speculation about a merger between Detroit’s biggest automakers began to spread after Automotive News reported that the chief financial officers for Ford and GM met last month to discuss an alliance.

The talks began after Nissan chief Carlos Ghosn broached the possibility of an alliance among Renault, Nissan and GM in July, the trade publication reported yesterday, citing unnamed sources.

GM and Ford officials declined to comment on the report.

The different management styles of Ford and GM, along with the iconic rivalry of two brands, make such a partnership highly unlikely, said University of Michigan management professor John Tropman, who follows the automotive industry.

“I just feel the cultural impediments [of a potential merger] are significant,” he said. “I think we see that with DaimlerChrysler.”

Meetings between Ford and GM executives aren’t uncommon, said Bruce MacDonald, an industry analyst and former GM executive. “The word ‘alliance’ gets everybody excited, but we don’t know whether they were talking about a strong alliance or collaboration or just something like sharing a part or purchasing orders,” he said. “Nobody should jump to any conclusions that an alliance is just around the corner.”

But if the speculation didn’t arouse a lot of speculation among automotive analysts, it stirred the passions of collectors.

“It would merge two American icons, so for me personally it wouldn’t be a good thing,” said Rich Selg, president of the DelRods, a Delaware classic car club.

He, too, doesn’t expect it to happen.

“They’ve lasted this long, so I think they’ll be all right,” said Mr. Selg, who owns two late-model Fords and a 1966 Chrysler Plymouth Barracuda. “There’s just too much competition and brand loyalty with those two.”

Jay Klehfoth, chief executive of the Model T Ford Club of America, said he would be saddened by a merger but was more pragmatic about the possibility. “If a merger helps them both survive, then more power to them,” he said. “My Model T isn’t going away, even if tomorrow it becomes General Ford, or Ford-Gen.”

Mr. Klehfoth said talk of a merger doesn’t put much of a scare into classic car collectors. “I’d love to tell you people are going to be out there waving flags [in protest], but I don’t think so,” he said. “People who really follow the automobile industry realize the world has changed, and it started with Chrysler’s merger [with Germany’s Daimler-Benz AG in 1998].”

Doug Wade, an independent mechanic from Frederick, Md., agreed that most Americans wouldn’t be upset by a Ford-GM merger, as long as the new company kept making Ford and GM’s most popular models.

“The car business isn’t the way it used to be,” said Mr. Wade, who owns a Ford F-250 pickup and Chevrolet Monte Carlo. “People aren’t driven by brand loyalty anymore. Now it’s all about the dollar.”

Kim Korth, president of IRN Inc., a Michigan automotive consulting firm, was more blunt. “It makes absolutely no sense strategically on any level, and I don’t think it make much sense operationally either,” Ms. Korth said.

She thinks a merger or even a less-formal alliance would be of little advantage to GM — the stronger of the two companies financially. “There’s no reason for GM to do anything of substance with Ford,” Ms. Korth said.

Mr. Tropman said a partnership wouldn’t solve the problems at Ford, which lost $1.4 billion during the first half of the year under increasing pressure from GM and Asian competitors.

“These problems might be a further distraction to improving their ability to being a committed manufacturer, because you only have so much time and energy,” he said. “It’s like rearranging deck chairs on the Titanic; it seems like you’re busy — until you’re dead.”

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