CHRYSLER <C> DEAL LEAVES UNCERTAINTY FOR AMC WORKERS
Chrysler Corp's 1.5 billion dlr bid to
takeover American Motors Corp <AMO> should help bolster the
small automaker's sales, but it leaves the future of its 19,000
employees in doubt, industry analysts say.
    It was "business as usual" yesterday at the American Motors
headquarters, one day after the proposed merger was unveiled by
Chrysler and AMC's French parent Renault, according to company
spokesman Edd Snyder.
    But AMC's future, to be discussed at a board meeting today,
would be radically different as a Chrysler subsidiary than if
it had continued with the state-run French car group as its
controlling shareholder.
    Industry analysts said the future of AMC's car assembly
plant in Kenosha, Wis., and its Toledo, Ohio, Jeep plant would
be in doubt if the overcapacity predicted in the North American
auto industry by the early 1990s comes to pass.
    Both plants are far from "state of the art" for car
manufacturing sites, and AMC has a history of poor labor
relations at each.
    "Chrysler doesn't need that many new plants," said Michael
Luckey, automotive analyst for the Wall Street firm Shearson
Lehman Brothers. "They probably will close the Toledo plant and
move Jeep production to Canada."
    Ronald Glantz of Montgomery Securities said that at the
very least, the new owner of the Toledo plant would be able to
wring concessions from the United Automobile Workers union
local representing Jeep workers.
    "The UAW won't be able to hold them up for ransom as they
have AMC because during a down year, Chrysler will have
underutilized facilities to transfer production," he said.
    Analysts said they foresaw no major complications that
would abort a combination which historians said would be the
auto industry's biggest merger since American Motors was formed
in 1954.
    AMC was in need of a financial savior because of its losses
of more than 800 mln dlrs since 1980 and pressures in France
for Renault to cut its backing. The company had said it could
not forecast consistent profitability until 1988 at the
earliest.
    In announcing the takeover agreement, Chrysler chairman Lee
Iacocca cited AMC's Jeep division as well as its new 675 mln
dlr assembly plant at Bramalea, Ontario, and its network of
1,200 dealers as the major attractions.
    Analysts reasoned that Chrysler might feel moved eventually
to sell off or close some of the older plants to cut overhead
costs in view of the new debts and liabilities it would incur
in the AMC buyout.
 Reuter
