Auto industry's pain being felt outside Michigan

Published: Monday, June 1, 2009 12:04 a.m. MDT
 |  E-MAIL | PRINT | FONT + - 

In Spanish Fork, Utah, just south of Provo, the Barber brothers have been told their Chrysler dealership is being closed and their General Motors franchise may be withdrawn.

They'll still sell RVs, tractors and Mitsubishis, but the changes will force showroom layoffs, reduce taxes they pay to the city and inconvenience folks wanting to buy cars. Already, their donations to the rodeo, county fair and Scout troops have dried up.

In Arapahoe, Neb. (population 1,000), Faw's Garage isn't closing but it won't be selling new Chryslers anymore. That means the town's street and alley fund, supported by sales taxes, is about to take a big hit.

Lots of Americans — most, in fact, according to recent polls — remain deeply skeptical of using taxpayer money to rescue GM and Chrysler. But as more plants are poised to be shuttered, suppliers close or go bankrupt and dealerships are phased out, the view from Main Street outside of Michigan becomes less insulated from the pain of job cuts and lost services linked to the restructuring of the domestic auto industry.

General Motors will file for bankruptcy protection today in a deal that will give taxpayers a 60 percent ownership stake and expand the government's reach into big business.

Story continues below

It would be the largest industrial bankruptcy in U.S. history, and the fourth-largest overall. In addition, a GM bankruptcy would be unprecedented as the federal government would pump $30 billion dollars into GM as it makes its way through bankruptcy court. That's besides the $20 billion in taxpayers' money that the Treasury already lent to the automaker.

Underscoring the government's extraordinary role, President Barack Obama planned to announce his support for GM's restructuring strategy at a midday appearance at the White House, much as he did in April when Chrysler sought court protection.

Despite its sizable ownership, administration officials said the government intends to stay out of day-to-day management decisions and shed its ownership stakes "as soon as practicable."

In recent weeks, Obama and his auto task force have acknowledged the industry's importance while calling for an aggressive restructuring that — while making the companies viable and protecting the taxpayers' investment — means thousands of job losses.

In recent weeks, those losses have come home: Nearly 800 Chrysler dealers will lose their franchises in June; GM's dealer cuts will be larger, if not so sudden. And between the two companies, about 20 manufacturing plants are expected to close. Last week, two major auto suppliers, Visteon as well as Metaldyne, announced bankruptcy filings. More are expected.

Recent comments

Sorry but you have it backwards..The average U.S. auto worker was...

RE:Depression yet? | June 1, 2009 at 10:37 a.m.

Many countries have already called their economy in a depression. Are...

Depression yet? | June 1, 2009 at 7:06 a.m.

Related content
previousnext

Latest comments

Aggies looking to fine-tune

Oh good grief, trying to measure instate teams by comparing scores of...

I tried to help a friend like this get out of an abusive marriage and her...

Marriage is the most sacred and most important thing we will ever do in our...

Hall, Cougars crush Cowboys

BYU is headed to Vegas!! Yeah Baby. What happens in Vegas, stays in Vegas!...

Utah Jazz fall apart against Kings

Okay, so D-Will scored 29 points. Evans, whom D-Will was "defending," had...

Juan Diego is not as good as they were last year. They are very good, but...

Ok so how many games like that Miller will need to see until he will fire...

Argh!!!!!!!!We always take the weak teams lightly. On any given night teams...

Hall, Cougars crush Cowboys

Yeah!!! Coogs are headed to Vegas! Yeah baby... its Vegas for the Coogs where...

House passes health care bill

Were the republicans in power, this vote would have been to lower taxes,...

Advertisements
Advertisement