The decline of U.S. automakers has for years affected those who live in Pontiac.

Now the city's dead look set to feel the pain as well.


A view of a Pontiac G8 sedan at a General Motors dealership in Nanuet, New York April 27, 2009. Reuters/Mike Segar

Mayor Clarence Phillips says we can no longer afford the $400,000 the city spends each year on the upkeep of cemeteries in light of fresh local plant closures and job losses at General Motors Corp, the largest employer and taxpayer in the city of 66,000.

As a city we put all of our eggs in one basket with GM, he said. Now, as goes GM, so goes Pontiac.

Michigan cities and towns are not the only ones feeling the pain of the recession. Cities nationwide also are struggling as revenues slide and states -- grappling with their own budget gaps -- are cutting back on revenue-sharing programs.

But heavily reliant on the suffering auto industry, cities around Detroit such as Pontiac are in a bad way.

Pounded by the U.S. recession and the credit crunch, U.S. auto sales have fallen to their lowest in decades, pushing GM and Chrysler Group LLC into bankruptcy, and forcing them to close facilities and shed jobs.

GM said on June 1 that by October it would close a truck plant in Pontiac that employs 1,100 people. A GM stamping plant employing another 1,100 has been idled indefinitely.

At its peak, GM employed 30,000 hourly workers in Pontiac in the 1970s. After its latest cuts, the company's total hourly workforce will barely top that figure.

GM's news just left people numb, said city council member Kone Bowman. Just how much reality do people have to take?


Even before June 1, the city was in a pickle. Unemployment hit 27.2 percent in April, more than three times the national rate of 8.9 percent that month. Property and income taxes have fallen and there were 1,000 home foreclosures in 2008.

Pontiac's budget has a deficit of $7 million, prompting Michigan Governor Jennifer Granholm to appoint an emergency financial manager in March to clean house. The GM plant closure makes that job harder.

Sorting out our finances now is like trying to climb a glass mountain wearing greasy socks, Mayor Phillips said.

Council member Bowman said Pontiac should have seen it coming.

One of our mayoral candidates warned in 2000 that we had to diversify our economy, he said. No one even blinked. Now we've found out what happens when you don't listen.

Stand on Pontiac's main street and one can almost feel the pulse of Pontiac as it once was: a prosperous Midwestern city. Now most of the stores have been abandoned.

Business is down maybe 20 percent, said Joyce Deda, manager at the Saginaw Grill. People are hurting here.

The only store doing well is the Main Street Pawn Shop, with a steady stream of customers filing in.

I've never seen anything like it, said owner George Bee. Nobody has any money. Not just my normal customers. Nobody.

On the door of the imposing gray former bank is a sign implausibly offering luxury apartments. On the wall is a large image of Pontiac, a Native American chief who waged a failed revolt against the British after the French and Indian War in 1763.


GM's Pontiac brand is named for the city and the chief, but rather symbolically it is being phased out after 83 years.

To salvage its finances, Pontiac may sell assets like the Silverdome where the Detroit Lions National Football League team used to play, and cut services.

We have too few police officers, which is going to lead to rising crime, Bowman said. If you see a murder and dial 911, the police won't reach you for 30 or 40 minutes.

A silver lining are plans to build a movie studio that would create more than 3,000 jobs. But Bowman said that is a plan for the future that provides no help now.

A few miles away, the town of Orion is also hurting. Many of its 34,000 residents are either GM workers or white-collar employees at Chrysler's nearby headquarters.

Orion got some good news on Friday, but it also got bad news. GM said it had selected its plant in Orion over one in Tennessee and one in Wisconsin to build a small car for GM, but only 1,200 out of 3,400 jobs would be saved.

Orion town supervisor Matthew Gibb said regardless of GM's decision, the town would have to slash spending, asking contractors to take a 10 percent cut in fees and scaling back nonessential services.

People don't see the domino effect, Gibb said. But we're all going to have to share the pain.

Many U.S. cities face similar tough choices. In February, the National League of Cities found a record number of cities were facing fiscal difficulties. Almost all said they would have to cut spending on vital programs, implement hiring freezes and take other painful measures to cover costs.

Mayor Phillips sees this all as the end of an era.

The American Dream is being challenged in ways it never has been before, he said. We don't know what will become of it. But it won't be like it was.