Friday, December 5, 2008

Automobile Industry Failure Impact Not Understood

Automotive industry failure - not an option. It is clear based on the news, that Congress and the media in general do not understand the importance of the American Automobile industry's manufacturing jobs to our economy.

While Congress is quick to throw 100's of billions of dollars at failing financial institutions that made poor decisions, they treat the automobile manufacturing industry with disdain. I think it is pretty clear that they do not have an understanding of the importance of manufacturing in our economy. Very little is being said about the importance of maintaining a manufacturing base in the United States.

I think these people really do think that"consumer spending" can support the US economy!

In an NPR interview yesterday, Melissa Block scolded Rick Wagoner, CEO of GM, focusing the whole interview on asking him, what his biggest failure was, does a $1 salary really mean a $1 dollar salary, why not just go bankrupt while not discussing - at all - the implications for the economy; for the workers and retirees or the cost to the economy if the automobile industry does fail - unemployment and health care benefits lost for millions of people, and the ripple effect throughout the economy.

Peter Delorenzo wrote this piece for calling the U.S automobile industry a priceless national asset.

"For the record, one out of every 10 working Americans is either directly or indirectly dependent on the U.S. auto industry for their livelihoods. Think about that figure for a moment.

And then think about the fact that if this key American industry is allowed to fail, almost three million people would be out of work in a matter of months, adding up to a $150 billion loss in personal income and a corresponding drop in taxes available to communities all across America.

And what about this notion that if Detroit fails “it won’t affect me” so why should I care? Let’s take one example, the NUMMI joint manufacturing operation between GM and Toyota. It’s the only San Francisco Bay Area car factory and it employs 5,000 people.

But there are tens of thousands of additional jobs involved because there are more than 1,000 suppliers in California that provide parts to NUMMI, and they in turn employ 50,000 people.

That’s just one factory. Now multiply that by the staggering totals involved if GM - which has 22 stamping plants and 26 powertrain plants alone in North America on top of its assembly facilities - and the rest of the domestic automobile industry is allowed to fail. The tentacles of this kind of cataclysmic disaster would spread throughout the nation’s economy like a virus that could not be contained.

In towns all across America, countless mom and pop diners, stores and peripheral neighborhood businesses that depend on the workers who toil at these factories and plants for their incomes would simply dry up and blow away if the local auto manufacturing facility or supplier plant shut down. That’s not an exaggeration, that’s a simple fact."

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Image: more of Derek Farr ( DetroitDerek )'s photos, or visit his profile.

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