Are Mergers a Mistake or a Perfect Match?

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With a recent declaration by Congress of an unsuccessful bailout plan and the ''Big 3'' now facing bankruptcy, or approaching another arm of the government for bailout options, talks are continuing regarding the controversial General Motors and Chrysler merger. To call it a distraction is a gross understatement. From all reports, this merger most likely means GM swallowing Chrysler. It is not an even merger by any stretch of the imagination. Further, with so many of each automaker's models that appear very similar, it makes one wonder the purpose of doubling either company's product lines with the other's replica. There are, of course, a few exceptions; but still many are hard pressed to differentiate the two products.

Considering these facts, there would be a near 50% cut in employees since one company hardly needs the same employment numbers as two companies. These imminent layoffs would most likely come from the Chrysler side of the merger. Keep in mind, these two companies would still be seeking separate bailouts from Congress, which is incredibly impractical since the two companies would become one and it would appear that there would be double the funds for what would become a single company in the end. The "funds" discussed here are the taxpayer dollars. Majority of the taxpaying Americans are vehemently opposed to a bailout of any kind. Apart from all this, General Motors has announced on several occasions of its intent to sell its Hummer and Pontiac divisions. If they cannot be sold, their intent is to drop, these two brands.

There are other repercussions as well. There was a recent poll conducted by the media that revealed with so many of the remaining employees, specifically those with engineering jobs, with no confidence in their employers, there are talks of widespread resignations. Some of these employees have been employed with their respective automakers for years. It makes you wonder who would be able to replace those who choose to leave (if they have not already done so) to find jobs elsewhere. Unfortunately, those who are involved in these talks refuse to confirm if the talks are in progress. What many cannot understand is how two failing companies could combine to make one successful company. Frankly, many believe the country would survive with only one of these automakers. Unions disagree, as expected. The players in this game read like a good mystery novel, with secret meetings, poorly veiled threats from the major players, including holding bankruptcy over the Government's head as well as thousands of disheartened workers who feel betrayed, and rightfully so. There are retirements at stake, of current employees as well as those who have already retired. Health insurance has been drastically cut in the number of benefits offered to present and former workers. The only thing certain at this point is the two automakers agreeing to merge should Congress dictate it before any negotiations are solidified on paper.



One of those who believe that the merger is a good idea is Senator Robert Bennett, who surprisingly is a Republican, said, "it is a marriage that makes sense". This declaration has lead to sarcastic remarks using the Hatfield's and McCoy's as the metaphors. Somehow, Congressman Bennett believes this could speed the process up across the board regarding these automakers. It should also be noted that these continuing negotiations, after most believed had been shelved, were revealed during last week's congressional hearings as part of the big three's disclosure agreements. The GM CEO, Rich Wagoner, admitted the acquisition was being considered but due the market drop on Wall Street coupled with the realization of more funds being needed than previously thought, most attention was now being paid to its own business instead of considering another company's business that happens to be as bad as GM.

Simply stated, a merger between these two companies is yet another bad business choice, should they choose to move forward anyway. It appears now that Congress agrees and the Chief Financial Officer for Chrysler underwent a verbal battering when it was demanded he tell why he was still seeking seven billion dollars in funds for a company that might not even exist in as little as a week. Further, he was also put on the spot and asked why Congress should release the funds if its parent company refused to inject funds, the parent company being Cerberus. Tennessee Republican Senator Bob Corker stated, "You guys were getting ready to be bankrupt and all of a sudden GM is in trouble and have clout, if you will, to come up here and ask for public money, all of a sudden there is life again. You might get seven billion even though your portfolio parent would not inject more cash. I have a little trouble with that." He is not the only one. He just happens to be the one who had these executives in front of him and took the opportunity to ask the questions all of us are wondering. Clearly, answers to any of the publics' questions are going unanswered. Meanwhile, we will continue to receive breaking news, emails, and anyone who happens to know that when Blackberry's and Palm Pilots begin going off at the same time, it's usually, some update via these breaking news reports, of yet another jaw dropping comment, from one of these entitled executives, as more of their once-loyal employees seek job opportunities elsewhere.
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