CHRYSLER's proposed takeover of troubled American Motors will presumably benefit both of the United States automakers, assuming the complicated transaction is supported by all the stockholders, governments, and labor unions involved. Chrysler will gain access to AMC's successful Jeep line, as well as AMC's factories - which means the potential for stepped-up production of Chrysler cars and trucks. Chrysler is now producing vehicles almost flat out at its overcrowded facilities. Meantime, AMC, which has turned out as much red ink in the past two years as new cars, will be kept afloat, athough its product line may change.
But staying in business is no small accomplishment for a carmaker these days, given the intensifying global competition.
Indeed, if the proposed linkup underscores anything, it is precisely the rising competition within the world auto industry. The trend toward merger is not by itself new. AMC was itself the result of a merger back in 1954, when Nash-Kelvinator and Hudson joined. Nor was that linkup without consequence on the product front, since the new company - AMC - quickly moved to scuttle its two most famous lines, the Nash and Hudson. AMC went on to build one of America's most innovative cars - the Rambler, the first US compact. But it also produced other cars that were less well received, including the Pacer and the Gremlin. Indeed, it was the eventual purchase of 46 percent of AMC by the French-government-owned Renault in the late 1970s that allowed AMC to stay in the auto business.
AMC has long called itself the No. 4 US carmaker. But that appellation has been increasingly in question in recent years as overseas manufacturers have moved into the US with their own production facilities. In terms of sales of US-built cars, AMC has ranked behind Honda and Volkswagen. And other aggressive overseas companies are also planning major production programs in the US.
A final note is in order. If the folks at Chrysler, particularly chairman Lee Iacocca, are engaging in just a tad of extra grinning these days, that seems quite appropriate. It was only a few years ago that Chrysler was facing what looked like its own demise. Thanks to a federal loan guarantee program, as well as the economic sacrifices of its workers and management team, Chrysler has now made a turnaround that has to be considered a genuine American business success story.
Keeping trade lanes open Trade and commerce, if they were not made of India rubber, would never manage to bounce over the obstacles which the legislators are continually putting in their way.