With General Motors Corp planning to end production of Saturns and
Pontiacs at its Delaware plant which employs more than 1,000 people,
state leaders are scrambling to win new work at the facility or
persuade the company to move other operations to the region.
This would appear on the surface to leave us in bleak
circumstances, said U.S. Sen. Thomas Carper, a Democrat and former
governor who helped save the 62-year-old Wilmington plant from closure
in the early 1990s.
We're encouraging them not to close the plant. At some point, GM
will need more capacity, Carper said in an interview with Reuters just
weeks ahead of a June 1 deadline for GM to show a White House/Treasury
task force overseeing industry restructuring that it can be viable
without government aid.
Failure to satisfy the task force would trigger bankruptcy where GM
could try to finalize concessions. It is seeking givebacks from
debtholders and the United Auto Workers and wants to more than halve
its network of 6,000 dealers. GM plans to cut 21,000 factory jobs.
Lawmakers deferred to the task force as smaller Chrysler spiraled
into a bankruptcy court. But there has been a broader political
response to GM over the past week since a second carmaker bankruptcy
would compound Detroit's uncertainty and likely radiate economic
anxiety beyond the industry's Midwest core.
GM A BELLWETHER
Autos has one of the heaviest economic multipliers of any U.S.
industry. For every job loss in auto assembly, another nine disappear
elsewhere, Mark Zandi, chief economist and co-founder of Moody's
Economy.com, has told Congress.
GM employs 88,000 factory and salaried workers in the United States.
It has also been a bellwether for industries like steel, plastics,
warehousing, software, healthcare, trucking and makers of glossy paper
for car catalogs.
Michigan State University economist Charles Ballard believes GM's
reach is vast enough to affect U.S. GDP if the whole thing were to
implode, which he believes is remote.
Still, the possibility of bankruptcy is rattling Washington, which
has extended GM $15.4 billion since January. The Treasury likely will
be on the hook for more GM financing before month's end as well as in
any court restructuring.
GM's restructuring would wipe out half the current debt to taxpayers.
Lawmakers are under pressure from constituents and interest groups
like labor, car dealers, and suppliers to intervene as the Obama
administration reviews the GM business plan and prepares the company
for a possible bankruptcy filing.
In meetings last week on Capitol Hill, GM Chief Executive Fritz
Henderson fielded concerns of lawmakers from the primary auto states of
Michigan, Ohio and Indiana. He also met with officials from Missouri,
California, New York, Minnesota, Texas, Georgia, Illinois and Colorado.
Carper said he suggested to GM North American operations chief Troy
Clarke that the company locate research work on batteries and other
technologies to the mid-Atlantic.
Creating a business center close to Washington where key funding and
other decisions on advanced technology programs will be made in coming
years would make sense for Detroit, Carper said, noting that GM,
Chrysler and Ford Motor Co have lost political clout as they have
Ford is restructuring but has not sought government aid.
Sen. Robert Corker, a Tennessee Republican, discussed with Henderson
the fate of the Spring Hill assembly, storage and powertrain operation
that employs 3,200 people in his state.
We want those plants to stay open, Corker said in an interview.
We realize the company has got to be restructured and tough decisions
have to be made.
Related businesses are also feeling pressure and gaining attention from Congress.
Last week, Democratic Sen. Charles Schumer pressed GM and bankrupt
Delphi Corp to reach a deal for GM to buy back four of the supplier's
production plants. Two of the plants are located in Schumer's home
state of New York.
I will continue to do whatever is necessary to see this purchase through, Schumer said.
On Wednesday, the House of Representatives small business committee
heard from suppliers, which employ 685,000. Suppliers want Congress to
authorize new assistance programs and encourage banks to resume lending
to the sector once restructuring is completed at GM and Chrysler.
Congress is also considering legislation that would accelerate
federal aid to communities facing sharp job losses. Michigan tops the
nation in unemployment, with joblessness above 12 percent.