By Nick Carey DETROIT (Reuters) - Merger talks between automakers Chrysler LLC and General Motors Corp leaves Michigan politicians stuck with conflicting feelings: hopeful a combined entity would prosper but fearful it would mean job losses and tax revenue, plus a huge real estate headache. 'If it means the survival of Chrysler, then I'd be all for a merger with GM,' said L. Brooks Patterson, chief executive of Oakland County, home to Chrysler's headquarters. 'If Chrysler were to go under it would be catastrophic.' 'Unfortunately, some of the steps they would need to take to guarantee may well entail the loss of a lot of jobs,' added Patterson, a Republican. 'This would exacerbate a lot of problems we're struggling with here in Michigan.' Michigan's automotive labor force, once the world's powerhouse, has been decimated in years as Detroit's Big Three -- GM, Ford Motor Co and Chrysler, owned by private equity group Cerberus Capital Management -- have cut costs in a continuing battle to become consistently profitable. In the last eight years the state has lost 300,000 manufacturing jobs, many of those in the auto industry. In August, the unemployment rate in Michigan hit 8.9 percent, well above the national average of 6.1 percent. 'The auto industry has been hit really hard in Michigan,' said Robert Ficano, the Democratic chief executive of Wayne County, which includes Detroit. A slowing U.S. economy has only made things worse, hitting the Big Three's sales hard -- particularly of the gas-thirsty and lucrative pickup trucks, sports utility vehicles and minivans. As sales drop in the market segments they dominated, GM, Chrysler and Ford are also burning cash to survive.