DETROIT – A merger between General Motors and Chrysler LLC would cost jobs in every state in the nation, but Michigan would take the brunt of the job and revenue losses, a report by an economist said.
State officials have not yet worked out a projection on what the state could face in terms of jobs and revenue losses if two of the three domestic automakers merge. One official contacted said that at present, “all we know is it would be bad.”
A study by the East Lansing-based Anderson Economic Group does not project actual numbers of job losses but does consider the overall potential dramatic effect a merger could have on the nation.
GM and executives of Cerebrus, the owner of Chrysler, have been in talks for some weeks over a potential merger. Cerebrus has also held discussions with the Nissan-Renault alliance.
Michigan stands to lose the most in overall jobs from managerial, product design and engineering, and manufacturing as well as workers in dealerships that would likely close if GM and Chrysler merged, the AEG study said.
Because of expected of production cuts, Chrysler production workers could expect to lose jobs in Ohio, Indiana and Missouri along with Michigan. Other Midwestern states would be affected because of the loss of jobs in the supplier chain.
Jobs would be lost in every state with dealerships closing, the AEG report said.
Meanwhile consumers should expect to see car prices go up once a merger is completed, the report said. With over capacity of automotive production, car companies have had to subsidize the price of their products with low interest rates and other incentives. The need to do that will be lessened as fewer models of cars become available, the report said.
Such a merger could also set off other companies to merge in an effort to cut production costs and rationalize product choices, the report said. That in turn, especially if Ford seeks a partner, could mean more job losses but it could also mean the entry of more foreign production from China and India.
The weakness of the industry and the dramatically changing market dynamics makes it more likely that the U.S. government will get involved to help a merger take place and be successful, the report said.
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