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

Everyone, including this year’s presidential candidates, agrees that America needs to wean itself off foreign oil. No one agrees, however, just how to do it.

When it comes to cars, hybrids, electric plug-ins and natural-gas cars all are seen as steps in the right direction. And much has been made in the media about the potential for diesel-powered cars, already popular in Europe. But are they right for American drivers?

Nobody knows for sure, but we’ll find out soon enough. A fresh new group of clean diesel-powered cars will arrive in dealer showrooms as early as this fall.

In Depth: 10 Diesel Cars We’ll Soon Be Driving

BMW is already gearing up to launch its clean-diesel-powered versions of the 335d sedan series and X5 SUV later this fall. The 335d and X5 will make their North American debut at the Los Angeles Auto Show in November and probably will go on sale sometime thereafter. In January 2009, the diesel-powered Audi Q7 luxury SUV also will go on sale.

And there is much more in the pipeline. Between now and 2011, Acura, Nissan, Hyundai and Kia all plan to launch clean-diesel cars of their own.

“This is the perfect storm for clean diesel-powered cars,” says Allen Schaeffer, executive director of Diesel Technology Forum, an advocate for diesel technology. “Diesel engines are a proven technology that never took off. We are now in a climate where people are focused on energy, and diesel is energy-efficient. This is the perfect time to bring out diesel.”

Diesel’s Departure–And Return
Diesel isn’t new. The technology has existed since the dawn of the automobile and remains widely popular in Europe. Auto experts say 50% to 60% of all vehicles sold in Europe are powered with a diesel engine.

Americans also drove diesel cars until 30 years ago, when air pollution concerns mounted. The smelly, smoky diesel cars on the road then were partly to blame for city smog. Most of what remains of diesel engines in America since then are those used to power buses and big commercial trucks. A turning point came in 2006, however, when the Environmental Protection Agency required the introduction of ultra-low-sulfur diesel, meaning the major polluting component of diesel fuel was removed.Now auto experts believe that diesel-powered cars, which can get 25% to 40% better mileage than gasoline-powered cars, may appeal to American drivers.

Right for Everyone?
Before even considering making the switch to a diesel, a car buyer needs to think about the type of driving he or she does. The new clean-diesel vehicles on their way to the American market probably will get better mileage on the highway than hybrids, which do better in stop-and-go city traffic (the battery recharges when the car is idle).

Unfortunately, other details on the clean diesel-powered cars in the pipeline are scarce. Typically, automakers don’t release pricing and other information until closer to the time when the vehicle actually becomes available to the public. Porsche (other-otc: PSEPF.PK - news - people ) has yet to make an official announcement that it is considering bringing a diesel-powered Cayenne to the U.S. next spring, with a Porsche spokesman saying only, “We have not ruled it out.”

Similarly, an Acura spokesman said the company will introduce a diesel in 2009 with an engine called i-DTEC, but would not confirm which model of car will get the upgrade.

Some diesels have already arrived in the U.S. as 2009 models, however. The 2009 VW Jetta sedan and sport wagon went on sale this spring, and this month the 2009 Mercedes-Benz trio of crossover SUVs (GL320, ML320 and R320 Bluetec) will go on sale. All the cars meet emissions standards in all 50 states.

Promise of Popularity
“We expect diesel in the U.S. to increase from 3.2% of the market in 2007 to 3.6% this year and reach 10% market share by 2015,” says Mike Omotoso, senior manager of powertrain forecasting at auto industry analyst J.D. Power and Associates.

“Despite all of the publicity surrounding hybrid vehicles, diesels have outsold hybrids in the U.S. by a large margin,” says Omotoso, as hybrids, popular as they are, still make up only a small part of the total auto market. “We expect that to continue as the European manufacturers introduce more diesels in the U.S. market.”

The advantage to consumers is that, while the diesel models will cost $500 to $2,000 more, much or all of that additional cost can be offset by a federal tax credit of up to $1,300 that is available on certain diesel vehicles. The credit applies to vehicles purchased before the end of 2010.

The rest can come in savings on fuel. While diesel currently averages $3.96 nationwide (regular gas is $3.40), highway drivers gaining extra mileage on diesel can rack up savings quickly. A drop in the price of diesel could fuel the cars’ popularity even more.

The future success is still a question mark, but no matter what, the diesels are coming, says Schaeffer, because the driving habits of fuel-conscious consumers are as different as the cars they drive.

“This is not a one-size fits all market anymore,” he says.

SOURCE: Jacqueline Mitchell@FORBES

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