TWINSBURG, Ohio - A stamping plant near Cleveland is the Ohio auto factory most likely to feel the reverberations of a possible merger of General Motors Corp. and Chrysler LLC.

The companies continued Tuesday to discuss a potential merger amid an economic downturn, weak auto sales and hardships for the companies.

The Twinsburg stamping plant is one of four Chrysler factories that employ a total of about 5,000 in the state. General Motors has nine factories in Ohio that employ about 11,700.

The future of the Twinsburg site under different ownership is cloudy, because the current trend in automobile manufacturing is to integrate stamping plants with vehicle assembly plants, said Ned Hill, professor of economic development at Cleveland State University.

Chrysler is the largest employer in Twinsburg, providing 1,000 jobs and 18 percent of the tax base in the small city about 20 miles southeast of Cleveland.

Mayor Katherine Procop said she hopes the stamping plant, which celebrated its 50th anniversary last year and has been upgraded with modern technology, will remain viable. The plant makes parts for Chrysler’s minivans, trucks and other vehicles.

“They are an important corporation here,” Procop said. “It should continue to have a long future here.”

Analysts have said government funding might be needed to help spark a combination of Chrysler and GM because of difficult economic conditions and frozen credit markets.

A GM acquisition of Chrysler could cost 30,000 or more Chrysler jobs because GM would be forced to eliminate duplication and may be interested only in Chrysler’s minivans and the Jeep brand, industry analysts have said.

“No matter what happens, south Ontario (Canada) and Michigan will be in a world of hurt,” said Ned Hill, professor of economic development at Cleveland State University. Those areas have Chrysler and GM plants near each other making competing products.

The iconic Jeep brand needs an injection of new models but likely will be manufactured no matter what happens to Chrysler, Hill said. That bodes well for the Toledo area, where there is a Jeep factory, he said.

Chrysler employs about 49,000 in the U.S. and has roughly 125,000 pensioners. GM has 177,000 U.S. workers and around 500,000 people receiving pensions.

For each auto manufacturing job, there are at least seven jobs with parts makers and other support companies, according to the Center for Automotive Research in Michigan.

Hill said it would be difficult and costly for GM to downsize Chrysler’s extensive dealer network.

SOURCE: The Chicago Tribune

The opening of trading this morning on the New York Stock Exchange will give investors a chance to put their money on what they think of the possibility of General Motors Corp. merging with rival Chrysler LLC.

Revelations that GM officials were talking with Chrysler’s majority owner Cerberus Capital Management — and reports that the odds of a deal happening are as high as 50% — came to light late Friday. So Monday’s trading will be the first opportunity for investors — coming off of one of their worst weeks ever — to pass judgment.

Several industry analysts were skeptical that Wall Street would greet the news positively. “I don’t know if the market is going to receive this well,” said Erich Merkle, an analyst from Crowe Horwath LLP. “You’ve got GM, who most people think is on the verge of bankruptcy in the not-so-distant future, given their cash position. And then taking on Chrysler at this point — I just don’t know if the market is going to look at that favorably, unless there is something more under the surface.”

Aaron Bragman, an industry analyst with Global Insight, echoed those thoughts. “Basically, everybody I’ve talked to from the analyst community is like, ‘Really? What?’ ” Bragman said. “For GM, I don’t see how this is a positive.”

As U.S. auto sales have continued to drop to levels not seen in more than a decade, GM and Chrysler have struggled. GM lost $18.8 billion in the first half of the year, while the severity of Chrysler’s financial position is unknown because it is not required to make public its audited figures. Both companies have had to combat rumors of possible bankruptcy.

GM’s shares fell 45.7% last week amid a volatile stock market that produced stomach-aching results for many companies and their investors. The Dow Jones industrial average fell 1,874.19, or 18.2%, for the week.

Chrysler has not been publicly traded since Cerberus acquired it a little over a year ago from then-DaimlerChrysler AG.

When DaimlerChrysler announced in February 2007 that it was considering the sale of its U.S.-based Chrysler unit, the market responded enthusiastically. DaimlerChrysler’s stock rose over several months, making it practically impossible for DaimlerChrysler executives to back away from the idea.

A similar response from investors during the next few weeks would seemingly put similar pressure on a GM-Chrysler deal.

During the weekend, several analysts floated the idea that there is more to the deal than simply GM taking Chrysler and the reported possibility of Cerberus taking the final 49% share of GM’s finance arm, GMAC.

“There has to be more to the deal than meets the eye,” said Kevin Tynan, an analyst at Argus Research. “Seeing how the Cerberus-Daimler deal went at a time when the market was more stable, and they paid to get rid of it, I can only imagine the deal Cerberus is offering.

“I don’t know how the deal makes sense without government incentives,” Tynan added.

GM, Cerberus and Chrysler are not talking publicly about a merger. The auto companies have both issued similar statements that said, in essence, automakers routinely talk to each other.

People familiar with talks have told the Free Press that a potential deal would benefit GM by allowing the automaker to pick the best from both companies, aiming to keep the sales revenues of both, but dumping the redundant fixed cost. It also would eliminate a competitor.

The talks reportedly stalled with the recent financial market upheaval, though it is believed discussions will resume.

“There’s been speculation that GM could save $10 billion in synergies. I would say it’s probably $5 billion,” Tynan said. “Maybe the angle is, in terms of synergies and rationalizing the combined businesses, it’s easier to get the UAW to agree to take capacity head count out of the combined system than two.”

SOURCE: Detroit Free Press

By KATE BRUMBACK | Associated Press Writer
5:20 AM EDT, September 25, 2008

COLUMBUS, Ga. - Bill Heard Enterprises Inc., the biggest Chevrolet dealer in the country, said Wednesday it is closing its 13 remaining dealerships, unable to survive in a weak economy with high gas prices and an inventory heavy on trucks and SUVs.

The Columbus-based company said in a statement it tried to avoid the closures, which will affect about 2,700 employees.

“However, the conditions necessary to sustain the business through the current challenges were not present,” the statement said.

The difficult sales environment was made worse by the ongoing banking and financial crisis, it said. GMAC Financial Services last month discontinued credit for new inventory for some of the company’s dealerships.

Phone calls to several Bill Heard dealerships Wednesday afternoon went unanswered.

One employee at a Bill Heard dealership in Memphis, Tenn., said, “We’re closing, that’s all I can tell you,” before abruptly hanging up. At another Bill Heard dealership, commotion could be heard in the background as an employee said managers would not come to the phone.

The Heard operation was the single largest chain of Chevrolet dealerships in the country, said GM spokeswoman Susan Garontakos.

GM will honor all Chevrolet warranties at other nearby dealerships, which can be found on the Chevrolet Web site, she said.

She would not comment on reasons for the chain closing other than to say it was an independent business with GM franchise agreements.

“GM dealers are responsible for managing and financing dealerships,” she said.

GM will work with the Heard chain and do research to decide if any of the dealers will reopen, she said.

The automaker is trying to reduce its dealership ranks as its U.S. market share has declined, and Garontakos said the closure opens an opportunity to look into whether any of the Heard outlets can be consolidated into nearby dealerships.

“Wherever it makes sense to keep a point open, and it’s attractive enough for other dealers to take a look at it and keep it operating, we’ll be doing that,” she said.

The company had five dealerships in Georgia and eight in five other states — Alabama, Florida, Nevada, Tennessee and Texas. A dealership in Scottsdale, Ariz. closed on Sept. 12.

Late last month, the Governor’s Office of Consumer Affairs said in a court filing in Georgia’s Fulton County that the company has participated in deceptive and misleading business practices. The company denied those allegations.