Failure of auto industry could set off catastrophe
By Joshuah at 16 November, 2008, 7:02 pm
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Source: Yahoo! Finance
Advocates for the nation’s automakers are warning that the collapse of the Big Three — or even just General Motors — could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue.
Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation’s largest automakers, which are struggling to survive the steepest economic slide in decades.
“We’ve got to do this because the cost of inaction is so high to communities, to workers, to companies,” said Sen. Sherrod Brown, a Democrat from Ohio. He was among many lawmakers worried that an industry collapse would be devastating for everything from school districts to small businesses.
Even if just GM collapsed, the failure could bring down the other two companies — and even the U.S. operations of foreign automakers — as parts suppliers run out of money and shut down.
Concern about the automakers hit new heights Friday when GM and Ford reported they spent a combined $14.6 billion more than they took in last quarter. GM said it could run out of money by the end of the year.
Ford said it could last through 2009, but only because it arranged a hefty credit line last year.
All this comes after tight credit and economic uncertainty in October reduced U.S. auto sales to their lowest level in 25 years — with no rebound in sight.
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