Auto workers in the US and Canada are not too happy with the prospects of the Big Three becoming the Big Two (See: GM in talks with Chrysler, Ford). News of a potential deal between General Motors and Chrysler has them worried auto workers' unions in the United States and Canada worried about the consequential loss of jobs that any merger brings with it.

United Auto Workers (UAW) President Ron Gettelfinger, speaking to Detroit radio station WWJ said he would not loke to see any development that could result in a consolidation which in turn would mean ''the elimination of additional jobs." He said that the UAW is about creating jobs, not losing them.

According to an earlier report in The New York Times, GM and Cerberus Capital Management, who owns over 80 per cent of Chrysler having acquired it from Daimler around a year go, would like to have the autoworkers unions on their side, and that a number of the cuts proposed would mostly be in common overlap areas such as research and development (R&D).

Gettelfinger said there had been no formal discussions with either GM or Chrysler about a possible deal between the two. He said that the auto worker's union had contributed significantly to the Big Three, helping in their survival by agreeing to healthcare concessions in 2005, and a new contract around a year ago that aided them shave production costs.

GM has announced a few days earlier that it plans to close a metal stamping plant newar Grand Rapids before the end of 2009, and that it would also move up the end of sports utility vehicle (SUV) production in Janesville, Wisconsin to 23 December. Gettelfinger said the move impacts over 2,500 hourly workers, and added that each time a facility went down, ''we suffer with the people because we know the impact that it's going to have on their lives".

US auto sales as of the end of September have bottomed out at their lowest in 15 years, mainly on account of a lack of credit for many buyers. GMAC Financial Services, General Motors' finance arm has announced a tightening of credit criteria for consumer automotive lending, and will now ask for credit scores of over 700, in addition to restricting the length of loan terms.

Further north, the Canadian Auto Workers union is reported to have asked the two auto majors for clarifications pertaining to reports that suggested that they are considering a merger. News agency Reuters Thomson quoted CAW president Ken Lewenza as saying that this would be a ''massive consolidation and massive job losses."

GM-Chrysler synergies couldaccelerate plant shutdowns
A merger between GM and Chrysler is sure to have a direct impact on a number of areas in the auto industry, with the widespread expectations being job cuts, reduction in the number of plants on account of more streamlined operations, trimmed product lines and lesser number of models, and a reduction in the number of dealerships.

For example, GM's pickup offerings resemble Chrysler's Dodge Ram and Dodge Dakota, and if a merger takes place, most likely Chrysler's line up would be the one to go, with GM being the larger partner that would 'rescue' Chrysler. The two automakers together presently utilise a 205,000 strong workforce to make 12 million cars per annum in North America.

As was seen with the recent spike in oil prices a few months back, the Big Three lost considerable market share to more fuel efficient Japanese car makers as customers of their previously profitable gas-thirsty trucks and sports-utility vehicles shifted preferences to fuel efficient and hybrid vehicles.

GM has eliminated around 19,000 hourly jobs represented by the UAW through buyouts and / or early retirement programmes during the past six months, and now employs around 64,000 blue-collar workers in the United States. Chrysler has also announced plans to reduce 22,000 hourly jobs since February 2007, and has 33,000 hourly workers in the United States in addition to 9,000 in Canada.

Around a month ago, the US government approved a $25 billion financial aid package for the auto industry that will help the industry offset costs of developing fuel efficient cars. A day ago, Democratic presidential candidate Barack Obama said that, if elected, he would push to have the distribution of that package expedited.

Auto industry commentators say that GM already has its hands full with issues like an excess of both brands as well as capacity, and therefore a merger would only complicate things for the company. Moreover, benefits from synergies are likely to take a long time to come forth. They say that though a combination of the two auto makers could result in synergies to the tune of $6 billion, though there would be no assurance of the long term health of the combined entity, since it would not be able to maintain 11 distinct brands and a third of the market as market share.

Reports suggest that discussions between GM and Chrysler are not quite on the same trajectory as far as the value of Chrysler goes, and it would be weeks before the two come close to a resolution.

Labour relations experts are of the view that though the unions don't have a direct say in whether the two companies will or will not strike a deal, a disgruntled workforce would be a huge problem for the unified company.

That said, it would be in the interest of both GM and Chrysler to get a union buy-in before proceeding with any plans to unify in the face of unprecedented economic adversity that they have been facing. Some others have a contrarian's view, that the deal could be forced on the unions, since union member's jobs are dictated by the number of automobiles GM and Chrysler sell. In the absence of sustainable profitability, there would be no job security for auto workers anyway, and hence the unions would need to adopt a more pragmatic approach to the deal. Reports quoted David Cole, chairman of the Michigan-based Centre for Automotive Research as saying that the unions could be convinced as long term profitability is the only job security.

JPMorgan Chase is acting as Chrysler's adviser on the potential deal, reports suggested. JPMorgan was also one of the financial institutions that raised funds for Chrysler during its purchase by Cerberus.