Senate suggests GM, Chrysler merger as precondition for aid

06 December 2008

As the Senate committee hearing on aid to the auto industry continued for the second day, the possibility of a merger between General Motors and Chrysler came up again and some Senators suggested that a merger would be a pre condition to receiving a tax payers money.

The merger of GM and Chrysler faded into darkness when it became clear to GM that it could not raise the finance from the credit markets to get the deal done as well as stiff opposition to the merger from United Auto Workers union and the governments refusal to give it $10 billion in government loans to let the deal go through.

During the Senate committee hearing, when Chrysler CEO, Bob Nardelli and CEO of GM, Rick Wagoner were asked as to whether they would consider a merger in order to receive aid, Nardelli said he would back the merger with GM if it was a condition for getting aid while Wagoner said he would reconsider the merger, only if the United Auto Workers union supported it.

The UAW had opposed the merger on the grounds that it would cost tens of thousands of workers to lose their jobs.

"It would be unbelievable the number of people who would lose their jobs," said UAW president, Ron Gettelfinger at Thursday's hearing.

However, Nardelli said that a merger could save the merged company $8 billion to $10 billion a year, since it would also merge their white-collar employees as also its manufacturing operations.