Thursday, January 25, 2007

Where's J.P. Morgan when you need him?

Did you know that J.P Morgan tried to roll-up the U.S. auto industry back in late 1907 and early 1908? Former GM communication exec William Pelfrey tells the story in Billy, Alfred, and the General (Amacom). The emerging auto industry was bracing for a shake-out when Buick's Billy Durant tried to broker a deal in which the Big Four -- Ford, Maxwell-Briscoe, Buick, and Reo -- would merge in a U.S. Steel-type scheme under the auspices of Morgan and Company. It was Henry Ford who threw a spanner in the works by refusing to invest in the new company's stock and demanding a $3 million cash payment. Durant moved ahead on his own, merging Buick with Oldsmobile under a newly formed holding company named General Motors.

Today, Ford announced it lost $12.7 billion in 2006 -- the biggest loss in its 103 years -- and doesn't expect an upturn until 2009. GM is having a better year, but it took its big hit to the tune of $8.6 billion last year. Maybe what's left of Detroit should be looking for a modern-day Morgan.

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