WISCONSINREPORT.COM (11/21/08) - What happens in the automotive industry affects the people of the United States far beyond the immediate employee roster in the U.S. automobile factories and auxiliary industries. It could potentially affect everyone in the country. Estimates indicate that if allowed to happen, the collapse of the U.S.-based auto industry wouldn't just impact the nearly 355,000 Americans directly employed by the Big Three. There is the eventual potential that around 3 Million jobs, and possibly more, in all parts of the USA, in many different types of occupations, could ultimately be lost.
One out of every 10 people in America is employed in a service that is related to the U.S. auto industry. If a plant closes, so does its suppliers, the local stores, the hot dog vendors, and the local restaurants. From plants to parks. From dealerships to driveways. From gas stations to grocery stores, and more.
There are warnings that the effect of General Motors, Ford and Chrysler going under would be devastating in ways of which some people may never have thought:
- Nearly 3 million jobs could be lost in the first year alone Ė with another 2.5 million to follow over the next two years.
- Personal income in the United States would drop by more than $150.7 billion in the first year.
- The cost to local, state, and federal governments could reach $156.4 billion over three years in lost taxes, and unemployment and health care assistance.
- Domestic automobile production would more than likely fall to zero Ė even by international producers, due to supplier bankruptcies.
Part of the current probblem within the auto industry is that the credit crisis which is the big story in the news these days is also wounding the U.S. auto industry.
- Carmakers canít get loans to restructure and to produce new advanced technology vehicles.
- Suppliers and dealers canít get loans for routine business, and customers canít get loans for new cars.
Some television and radio talkers, congressional representatives, and others, have suggested that automakers should file for bankruptcy to work out of their current situation through that means. However, General Motors and Motor Trend magazine agree that filing for bankruptcy probably is an idea that would not save GM.
Motor Trend: Surprise, surprise, buyers donít want cars from bankrupt automakers.
For any automaker that filed for Chapter 11 reorganization, car sales would plummet even further. A study by the automotive market research firm CNW found that 80 percent of people intending to buy a new car would switch brands if the car came from a manufacturer that went bankrupt.
Another argument against Congress "bailing out" the auto industry that is being offered by some: Why arenít automakers using the $25 billion in loans that Congress has already allocated?
The auto industry says: Congress has allocated $25 billion, but the Department of Energy is still writing the regulations that will allow automakers to get access to the loans, perhaps sometime next year.
Further, since the Energy Bill was passed, the credit crunch and sharply lower auto sales have made GMís situation, for example, even more dire, and those loans, while appreciated, may be too little, too late.
Congress apparently is upset with leaders of the Big Three automakers who appeared at a congressional hearing this week after flying to Washington D.C. on three, separate, private jets. Some elected officials took the opportunity to chastise them for coming begging for money to assist them in their "hour of need" when they themselves showed no symbolic, nor realistic efforts to cut expenses for their companies.
Congress has told the companies to get their acts together and come up with a plan that will show Congress that, if monetary help would come from taxpayers, what will the automobile companies do with it. How would they streamline their operations, and, what steps would they take to produce vehicles that fit into the current and future energy and environmental needs of the country, the world, and the typical automobile owner.
Domestic auto makers are expected to present those detailed plans to Congress before congressional members will seriously debate the idea of "bailing out" USA automakers.