GM-Chrysler Merger! WTF?

Monday, October 20, 2008

http://www.businessweek.com/bwdaily/dnflash/content/oct2008/db20081017_939535.htm

 

It appears that I’ve been sleeping.

 

Admittedly, I haven’t been following the business news for a couple of years and especially the nuts and bolts; basically, I’m nearly as uninformed as your “average Canadian”, except I have an econ degree* under my belt and a lot of historical knowledge. Particularly, when I was in University studying Economics, I was focussing my attention on a few industries, namely microcomputers, telecommunications, biotech (especially genetic engineering) and automotive—because of life-long love affair with cars. Not so much repairing them (not good at that) or even driving them, after three accidents in four months (none my fault, wrong place, wrong time). I love them for what they are: rolling pieces of art, sculpture on wheels. I love them for all they represent: freedom, moving forward, exertion, anticipation. I love the way they sound different from each other: how an Infinity G35 purrs all the way through its power curve and how oldskul American muscle ‘blub-blub-blubs’ while it idles, hinting anciently of the open-throated, triumphant roar befitting its status as king of the raw-muscle jungle when the pedal meets the metal. So when news of this merger hit me, it hit me really hard.

 

But after some thought, it really fits in with my current thread of thinking, (see ZeitgeistStrategyDebate #3Debate #2,Palin, the Zen of Joe the Plumber69 Bucks and ‘John Galt’ aka ‘It all started as a new email line for my signature’), by illustrating in the most semiotic of fashions how history is on the move. This time, it’s on wheels.

 

capital management firm owns Chrysler & financial,

 

daimler sold chrysler nearly two years ago

 

say, aren’t these capital managers the one’s who got us into this whole financial mess in the first place.

 

11 Brands under one umbrella and who knows how many models, usually one or two – along with all the tailoring options – per category.

 

The idea of each Brand having a model (or two) in each category is the problem. It is also where the opportunity lay. Here’s why: some Brands have underperforming models in a category while another Brand under the umbrella has the category leader. Simple solution:  Kill the underperforming Brand’s (or Brands’) entries, which, by and large are just “me too” versions of the category leader. This will send some of the underperformers’ custom to your leading Brand while some will necessarily go to your competitors. The benefit is you reduce some of your workforce. You sell some property in the form of vacated plants. You reduce power consumption in a variety of spots down the production/distribution chain. You reduce your carbon footprint (**gag**, makes sound of cat with a hairball). You simplify your production and marketing. You reduce dealers’ cost of inventory. Etc. Lots of advantages.

 

The cost, primarily, will be in the form of Union opposition. It will be fierce.

 

As a political thing, it presents a real opportunity for bold reform. Here’s how: The Auto Industry is begging for handouts. I say give them to with with the condition that all jobs throughout the combined company is rehired, the whole enterprise from receptionist to janitors to line workers to management to office staff to executives as non-union shops. Being sure to include a definite timeline for government withdrawal and a payback schedule for the money injected.

 

The underpinning historical forces necessary for a good bust-up of the UAW/AFL-CIO gang are in place. They are not sufficient in and of themselves. Leadership is required to overcome the sufficiency requirement. Now, I believe, is the time. The signs are around for all to see: vets calling vets to action; John Galt speaks up; collectivist enemies all around; an electorate that is beginning to arouse to the threat. The point being that McCain could easily make this an effective tactic in his memetic battle. After all, he’s already written off Michigan so that big chunk of organized labour press is moot. Upside for McCain: as has been written about by others (sorry, no links) the most fearsome aspect of Reagan to the Soviets and the Arab and the Chinese was his willingness to bust the airline unions. [The more I think about this as I’ve been writing, the more I feel confident saying I wouldn’t be surprised to see a proposal like that from McCain as it would put into context his early withdrawal from Michigan.]

 

The most exciting aspect of this merger, though, is the synergies from their independent work developing electric cars and their complimentary approaches. Fascinating. Zen or foresight? A merger would mean they’d share their existing intellectual property vis. the electric cars. Could it be that Chev has already solved a Chrysler technical stumbling block, the key to unlocking the potential (heh) of the electric car. Or vice versa, of course.

 

My hope is that they keep all of the lead stylists, though. I just love the look of so many of the offerings on both sides of this equation. I had almost written off the GM stylists, but a few recent models have resurrected my faith. But, my god!, can anything compare to a Chrysler 300?

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