Auto industry's pain being felt outside Michigan

Published: Monday, June 1 2009 12:00 a.m. MDT

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the Barber brothers have been told their Chrysler dealership is being closed and their General Motors franchise may be withdrawn.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.

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.

Tammie Middagh, secretary-treasurer of the Arapahoe Chamber of Commerce, said Chrysler and GM sales in the town have accounted for $20,000 for the street and alley fund since January 2008 — money that could be lost forever.

"This is what brought it closer to home for us," she said.

And it's hard to understand, Middagh said, how closing a dealership that didn't cost Chrysler a dime saves money, when, from what she can tell, it just forces people in her town — many of them older — to go farther to buy a car.

Still, most Americans oppose using government money to aid the car companies, said Scott Rasmussen, whose firm Rasmussen Reports has polled public views on helping the auto industry. Last Thursday and Friday, his firm polled 1,000 likely voters across the country and found that 67 percent oppose any plan that would provide GM with $50 billion and give the federal government a majority ownership stake in the company. The poll has a margin of error of plus or minus 3 percentage points.

Most Michigan voters support U.S. aid to GM and Chrysler, he said, but 56 percent nationally would prefer that GM close rather than have the government rescue it.

Still, Harley Shaiken, a labor specialist at the University of California, Berkeley, said the picture that this crisis affects a lot more than Michigan is sinking in.

"What many have lost sight of is that this is not simply a GM story or simply an auto story," he said. "It's a story at the center of the economy — are we going to have a manufacturing base?"

Contributing: Jim Kuhnhenn and Ken Thomas, Associated Press

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