Auto industry's pain being felt outside Michigan

Published: Monday, June 1, 2009 12:04 a.m. MDT
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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the Barber brothers have been told their Chrysler dealership is being closed and their General Motors franchise may be withdrawn.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.

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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.

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