today in black history

June 16, 2024

Author John Howard Griffin, who posed as a Black man for his seminal book on southern racism,"Black Like Me," was born in 1920.

Auto Makers Ask for More

POSTED: February 18, 2009, 12:00 am

  • POST
    • Add to Mixx!
  • Text Size
  • PDF

March was tagged as a critical month in the nation’s economic recovery because General Motors and Chrysler were due to report back on their finances after receipt of federal funds from the Troubled Asset Relief Program (TARP). The two Detroit automakers sought the federal government’s assistance in the face of declining sales and mass layoffs. Of the “Big Three,” only Ford opted not to take government assistance. Both GM and Chrysler pointed to the first quarter of 2010 as a significant milepost.

Last night both car companies released their required reports to the Treasury Department and the news is grim. General Motors announced it needs to increase its loan request to $30 billion to avoid bankruptcy. That is $12 billion more than the nation’s largest auto manufacturer initially requested. GM also revealed it plans to cut 47,000 employees, phase out its once promising Saturn brand and halve its lineup of brands to four: Chevrolet, Cadillac, GMC, and Buick. Chrysler also filed its report to the government and indicated it needs an additional $2 billion on top of $3 billion from the initial request that had yet been used. Chrysler also announced it will also cut 3,000 jobs.

One of the biggest challenges ahead for GM and Chrysler is whether they will be able to negotiate with unions and cut their costs. One of the original requirements of their initial loans was that the companies reach parity with foreign automakers on their unionized labor costs. Both companies have been in talks with the United Auto Workers over restructuring health care costs for retired workers and their spouses.

The requests for additional aid will be considered by the Presidential Task Force on Autos, the Cabinet level body that is overseeing the reorganization of Chrysler and General Motors.

These reports point to the desperation that has set in Detroit. All three U.S. manufacturers have begun to shed jobs by the tens of thousands, blue collar and white-collar professionals, in a last ditch effort to stave off bankruptcy. It is a remarkable nosedive for an industry that once symbolized American progress and ingenuity. Now, the scene in Detroit is beginning to take on the air of a deathwatch. Even with the proposed layoffs and other cost saving maneuvers there is no guarantee that either company will be able to survive through the next quarter. The loss of either will have a ripple effect and be a psychological blow to a nation that has defined success by the car in the driveway and the freedom to explore the open road.

The implosion of the auto industry is a particularly harsh blow to the Black community as the sector was one area of the economy that employed Blacks in high wage jobs with significant benefits, and contributed mightily to the development of a Black middle class. As plants close and automakers trim professional staff, the impact will be felt in Black neighborhoods in Detroit and its surrounding communities, and in other places. The financial strain will also be felt in the form of mortgage foreclosures and health problems driven by stress and the loss of insurance. It will also affect college students whose parents’ income has been lost and younger children whose education might be interrupted due to the necessity of the family to relocate. Not to mention the hit auto workers will take on their savings as they dip into funds to cover daily living expenses. Workers in the auto industry face severe consequences as the U.S. industry is facing its most difficult moment in its history and Detroit becomes “ground zero” in the economic crisis.

Related References