While Washington was debating the merits and necessity of a $15 billion temporary bailout for General Motors, Chrysler and Ford, several officials in and around the automotive industry in southeastern Wisconsin said quick federal intervention is needed.
“(Wisconsin Senator Russ) Feingold wrote that if the U.S. auto industry collapses that would devastate our manufacturing base, wreck our already ailing economy and possibly end up costing taxpayers even more in pension guarantees, unemployment benefits and other costs,” said Don Hansen, president of the auto dealers association of mega Milwaukee (ADAMM). “It really does affect a whole town. There are 8,000 (auto-related) employees around here. These dealers have invested on average $11 million in their stores and there wouldn’t be anything left if the manufacturers go out of business.”
Dan Graves, an employee at International Automotive Components North America LLC in Sheboygan, and Shop Chair of Local UAW 2376 agreed.
“We depend on the big three and as the big three goes, the parts suppliers will go also,” Graves said. “If they aren’t allowed to right the ship, I guess you could say, most of us suppliers aren’t going to stand a chance. Currently, with the downturn in vehicles over the past month, we have lost approximately 35 percent of our workforce due to indefinite layoffs. And the outlook is pretty grim.”
If a rescue package is not quickly arrived at, cities like Sheboygan and Kenosha, which have significant auto-related manufacturing jobs, will be hit hard, said Frank Pacetti, city administrator in Kenosha.
“If we don’t find a way to continue to manufacture products in this country, specifically automobiles, (think of) the devastation on the families and the people who work there,” he said. “But (also) think of the spinoff of that effect in increased foreclosures and property values that would continue to be stressed even further than they are with people not being able to afford to be in their homes.”
The proposed $15 billion emergency bridge loan will likely not be the only federal financial injection needed for the auto industry, Hanson said.
“That’s just the starter for more money that’s going to be necessary,” he said. “It doesn’t look like next year’s going to be a good year either. But we must kick start the industry. I think these bridge loans will do the job and I think there’s a terrific chance they will all be paid back, as Chrysler did years ago.”
If the Big Three are going to become successful in the future, they are going to need to change the way they do business, whether or not they receive any federal bailout, Pacetti said.
“If you’re going to make resources available for an industry to succeed you’ve also got to stop being so focused on the short term,” he said. “If the American economy is going to continue to be transfixed on what happened in the last three months it’s going to be very difficult to fix things on a long term basis.
One of the successes of Toyota that everyone speaks to – Toyota never worried about nor does it worry about what happened three months ago, they’re worried about what’s going to happen five years from now. Until the American economy looks at things like that – what you do today and how it affects tomorrow – I think it’s an uphill battle.”