Tuesday, September 19, 2006

No Surprise in GM-Ford Merger Talks With Boeing Man at the Helm in Dearborn

That Automotive News story out this morning about a possible GM-Ford merger should come as a surprise to nobody. Why? Look at the guy who is running Ford, a former head honcho at Boeing. GM-Ford is analogous in many respects to Boeing-McDonnell-Douglas.

Seattle-based Boeing, of course, first became famous for its bombers, including the B-17 and B-29 in World War II and the B-47 and B-52 during the Cold War. But Boeing really grew when it became a success in the commercial jet market, beginning with the 707 and carrying through the 727, 737, etc.

Throughout its life, Boeing's chief rival for both defense and commercial business was often St. Louis-based McDonnell-Douglas, which focused on fighter aircraft like the F-4 Phantom and F-15 Strike Eagle. McDonnell-Douglas first became famous for its DC-3 but was perenially number two to Boeing in commercial jets, with its DC-8, DC-9 and DC-10 aircraft.

When the Cold War was won and the Soviet Union ceased being America's greatest threat, reaping the "peace dividend" meant far fewer defense contracts and programs. A tremendous consolidation ensued in which Boeing merged with McDonnell-Douglas in 1997.

Now along comes new Ford head Allan Mullaly and word spreads that GM and Ford have been talking about some sort of alliance apparently since the day after Carlos Ghosyn of Renault-Nissan fame approached GM about an alliance.

The Wall Street Journal reports the two Detroit giants talked but nothing came of the discussion. The Journal notes that Bill Ford Jr. insists that Mullaly was not brought over simply to enginner a merger.

We will see.