Failure of Big Three Could Cost 3 Million Jobs, Car Says Nov 5 2008

Failure of Big Three Automakers Could Cost 3 Million Jobs

Detroit, November 5, 2008 – A sobering new analysis released today by the Center for Automotive Research cautions that collapse of even one of the “Big Three” US automakers – General Motors, Ford, or Chrysler – carries grave national economic risks from significant job loss spreading through every state if Wall Street lending crises force bankruptcy.

“With Wall Street frozen and unable to provide operating credit for even robust companies, threats loom imminent that either automaker revenue seizures from frozen sales channels or failure securing stopgap federal loans could spiral cascading plant shutdowns and massive white collar workforce contractions almost overnight,” noted chief CAR researcher Sean McAlinden.

The group’s apocalyptic 50-page “Quick Read” brief predicts initial rapid impacts including:

  • Up to 3 million US job losses within the first year
  • Personal income reduced $150.7 billion annually
  • Steep GDP and tax revenue declines

The steepest blows land across Midwest “Rust Belt” factory cities and Southern auto corridor regions from the Carolinas towards Alabama as hundreds of thousands of newly unemployed auto workers and parallel manufacturing supplier trade laborers suddenly stop stimulating regional economies.

More broadly, CAR’s predictive models foresee 66 percent faster onset recessions nationally. Housing catastrophes spread more rapidly and banking crisis resolutions face heavier fiscal burdens and vastly increased bailout costs given economic multiplier effects and lost tax revenues crushing state and local government budgets.

While automotive leaders convene contingency disaster response plans praying steadier sales or secured federal loans keep disastrous 2009 bankruptcy doomsdays at bay for now, CAR still urges the incoming Obama administration works urgently planning bold job creation or industrial realignment strategies before economic annihilation scenarios emerge testing leadership and societal resilience unlike anything since the Great Depression eras.

One thing remains abundantly clear – leaders better act swiftly while looking far down the road keeping long term workforce impacts central navigating these pivotal months ahead. Livelihoods of millions precariously hang in the balance as Detroit remains the still beating heart of American industry, innovation and determination against all odds.

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