Crash of U.S. Carmakers Risks Three Million Jobs
November 17th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Options expiration this week. Anything can happen.
Via: Guardian:
Three million jobs could be lost in a year if America’s so called ‘Big Three’ carmakers – General Motors, Ford and Chrysler – are allowed to collapse, an expert predicts.
David Cole, head of the Centre for Automotive Research (CAR), an influential Detroit think-tank, said that so many US businesses depended on the Big Three for survival that allowing even one of the carmakers to fail would lead to tens of thousands of jobs losses nationwide.
‘The immediate shock to the economy would be felt well beyond the Detroit companies, negatively impacting the US operations of international manufacturers and suppliers as well. Nearly three million jobs would be lost in the first year if there was a 100 per cent reduction in Big Three US operations,’ Cole said.
His grim prediction came as US politicians continue to debate whether the government should extend financial relief to the carmakers by allowing them access to a portion of the $700bn (£382bn) bail out offered to the nation’s banks.
A bill to rescue GM, Chrysler and Ford with $25bn in emergency loans will be taken up in the Senate tomorrow, but its passage is far from guaranteed as many Republican senators object to government intervention in industry. Even if it is passed, many experts fear that tens of thousands of job losses can not be avoided.
Patrick Anderson, chief executive of the Anderson Economic Group, a US consultancy, believes that at least 35,000 jobs will be lost if the government intervenes to save the industry. ‘The necessary restructuring to take capacity out of the market would lead to between 30,000 and 40,000 job losses nationwide,’ he said.
He said the failure of one carmaker would lead to between 60,000 and 80,0000 job losses nationwide.
Cole said: ‘The likelihood of one or two of the Big Three ending operations is very real.’
Job losses among suppliers of car parts and car sales companies, as well as those on the production lines, would be compounded by a massive drop in taxes and consumer spending power that would further cripple the already hobbled American economy.
‘Our model estimates that a complete shutdown of Detroit three US production would have a major impact on the US economy in terms of lost wages, reductions in social security receipts, personal income taxes paid, and an increase in transfer payments,’ said Sean McAlinden, CAR’s chief economist.
‘The government stands to lose $60bn in the first year alone, and the three-year total is well over $156bn.’
Is this what collapse looks like? The loss of 3 million jobs boggles my mind. How many of these jobs are offshore from U.S. I wonder? While there are plants in the U.S. – certainly much production has been shipped overseas to avoid all of those unprofitable amenities that U.S. workers bargained for to keep this whole house of cards from falling down before now. Not that the loss of a job wherever one resides on the planet is a good thing! NOT!
I saw the title of an article in passing this morning that GM should rebuild all of the public transportation it has destroyed over the years as penance for a bailout. Not to mention killing the electric car. Also, one Senator said on the radio this a.m. that the Big Three have for the most part – and for more almost half a century – been sailing their ship against the prevailing winds that they should modernize. I think that instead they have spent millions, if not billions of dollars lobbying over the years to ensure that they maintain their lockstep partnership with the oil industry. So much for modernization!
I went to one Congressional hearing so far in my career, and in it, one House member asked how much energy would have been saved over thirty some years if we had done what President Carter asked us to do? Much demonized for his energy saving agenda. Ridiculed actually. Sacrifice? HAH. I’m sure GM alone spent enough on propaganda against Carter that Rove would be even be impressed.
Personally, I think we’d become a much kinder, gentler nation (or world)if went by bicycle or managed with public transportation. Or for long distance travel, had vehicles where your rechargable battery could be picked up a stations along the highway. As Howard Kunstler would say “the days of happy motoring are over.”
Didn’t care to watch it but I saw earlier today
GM posted a life without GM type video
on U-toob.
Here is the article mentioned in post 1.
Wouldn’t it make more sense for GM to go to Exxon for the money it wants? After all weren’t they in this together?
I had no idea that destruction of mass transportation and forcing people into cars was done with such intention. What hath they wrought?
GM Must Re-Make the Mass Transit System It Murdered
http://www.commondreams.org/view/2008/11/16-6
Eileen, GM was actually tried and convicted of conspiracy to destroy the mass transit system. That was back in the days when we had a little more accountability in our system.
Eileen, GM was actually tried and convicted of conspiracy to destroy the mass transit system. That was back in the days when we had a little more accountability in our system.
When I first heard about the case on a TV news-magazine show back in the early 80’s, I seem to recall that GM was fined a whopping…$1.00 for the crime they had committed. Seriously, that’s one semolian, not more, not less.