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.
Too discrete to give his real age (but certainly in the grizzled veteran bracket), Tom is an Army brat who spent much of his childhood overseas. After moving back to Florida in the 80’s with his family, Tom worked a variety of jobs after college before finding his calling in the mortgage industry. Now, adding his decades worth of experience to this site, Tom hopes to help others with his knowledge.
After working through the 2008 crisis in a hard hit bank, Tom knows only too well the impact his industry has on people’s lives. Now semi-retired, Tom spends his days keeping up with the latest news in the mortgage industry (and finding the odd hour or three to fish).