Monday, September 18, 2006

Will Ford marry General Motors?

The news today is that Ford and General Motors are discussing the possibility of some type of merger. You may recall that a few months ago GM was considering the possibility of merging with Renault of France and Nissan. That may actually make some sense. But Ford and GM? Would they make Ford-o-lets? Chords? It would be a General Mess. Both companies are drowning in overpaid blue-collar and white-collar employees. The unions have fought for and won significant concessions in additional benefits, especially health care. There is no way these companies can pay for lifetime benefits for that many employees and produce cars at a price we are willing to pay. In ten years will Ford and General Motors be subsidiaries of Toyota, Honda, and Nissan? Other companies will follow. Those who ignore foreign competition and the effects of an aging baby boom generation are doomed to fail. Twenty-five years ago Ford and Chevy loyalists would have fought you for just suggesting such a merger. Fifty years ago "Made in Japan" meant cheap, useless, tin toys. Now it means the highest quality automobiles and electronics. Probably in less than 25 years China will have passed us in quality and price--and there are lots of folks in China. Can we assume that USA will continue to be the economic leader of the world? What would it look like if several of our major employers were put out of business by foreign competition? What will the stock market and housing prices do when baby boomers are required to withdraw money from 401k accounts (read mutual funds)? Many of us have seen the economy, property values, stock prices, and net worth only go up all our lives, with the exception of short-term drops. How long could we endure steady declines? How would our values and priorities change?

2 comments:

Lerra said...

I'm all about patriotism, supporting the American economy, etc...but when push comes to shove, I'm going to buy a car that will last & is worth my money. When Ford & Chevy start making cars like Toyotas & Nissans, then I will consider them. As far as the merger goes...yeah, probably not a good idea.

Helen said...

My sister, the smart one... right as usual!! At least IMO... :)