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News: Auto biz teeters on decision

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Auto biz teeters on decision

Effect of bankruptcy would be widespread, many experts say

By JENNA MINK, The Daily News, jmink@bgdailynews.com/783-3246
The Bowling Green Daily News
Friday, December 5, 2008 11:47 AM CST


Bowling Green, Kentucky - It’s a loss that Bill Londrigan says would devastate Kentucky.

“When you think about it in terms of the amount of jobs and how dependent Kentucky is on the jobs of the auto industry, it’s not hard to understand the importance of the maintenance of these facilities,” said Londrigan, president of the American Federation of Labor and Congress of Industrial Organizations Kentucky branch, a federation of national and international labor unions.

State officials discussed the auto industry’s impact on Kentucky on Thursday during a news conference about 24 hours after the United Auto Workers agreed to lend the industry a helping hand by agreeing to a contract restructuring and as automakers pleaded with Congress for financial aid this week.

The conference also preceded today’s announcement that General Motors will layoff 2,000 workers at three assembly plants in Ohio, Michigan and Ontario in February.

During an emergency meeting Wednesday in Detroit, the UAW decided to let General Motors delay its $7 billion payment to the UAW’s retiree health care fund until the company can get back on its feet. The labor union also agreed to suspend its job bank - a system that allows laid off employees to receive wages while not working.

Local UAW president Eldon Renaud attended the Detroit meeting, and while the UAW was willing to make changes to help the auto industry, they will require difficult sacrifices from the workers, he said.

“Everybody realizes how hard it is, but we also understand that we have to act now or GM could be a bankrupt company in just a matter of weeks,” he said. “At no time at all has anybody opened up a contract twice, and I want people to realize all that’s being sacrificed.”

Wednesday’s changes would impact some local workers.

So far, about 50 local GM employees have lost their jobs at the Bowling Green Assembly Plant and close to 150 are slated to be laid off in January. Many laid-off employees had put their faith in the job bank system, but now they must find an alternative source of income, Renaud said.

“That will impact about 18 (percent) to 20 percent of the entire work force,” he said. “After 18 weeks, they will no longer have a paycheck based on the job bank, so now they have to worry about finding a job in the community until, hopefully, the automobile industry comes back.”

Renaud said job banks were created to protect workers in the case of a layoff, which was common in the auto industry even before the economic slump.

“I’ve worked for the industry for 40 years, and it’s not unusual to be laid off every two years,” he said. “We haven’t experienced it in Bowling Green because we have a car (the Corvette) that has made it through difficult periods.”

Still, the UAW made more sacrifices, which Renaud said should regenerate the industry and allow the companies to continue operating. UAW leaders mostly agreed with the decisions made at Wednesday’s meeting, he said.

“A lot of people had thoughts about it; we had different ideas we wanted to share,” he said. “But everyone was in agreement that we had to act now and quickly, because GM’s not going to be able to pay their bills at the end of the year.”

And, if that happens and the company files bankruptcy, the effects will be felt by more than just Bowling Green residents.

“As we think about automotives, we focus on assembly plants like Ford in Louisville and GM in Bowling Green,” said Kevin Sheilley, CEO of Northwest Kentucky Forward, an economic development organization for Henderson and surrounding counties. “But the impact, the loss of these jobs in rural communities will be more devastating than in these larger areas ... we’re already seeing the impact.”

Sheilley is acquainted with a home-grown auto supplier in northwestern Kentucky that, despite the economic downturn, was flourishing. But, because the company is tied to the sputtering auto industry, it is experiencing financial troubles.

“They’re making money; they would like to expand,” he said. “However, they’re facing a real threat because banks are cutting off their lines of credit ... (the banks) don’t want to have anything to do with them.”

And if one company fails, other automotive companies would also falter, officials said.

“The ripple effect would be a tidal wave,” Sheilley said. “Many of the same suppliers that support Chrysler support Toyota ... they’ll have to go on hold if they can’t receive the parts.”

The Ford plant employs more than 5,000 people, and the company is the third largest taxpayer in Louisville. The automobile industry employs about 80,000 Kentuckians, Londrigan said.

A failed auto industry would shatter the state’s economy and overwhelm small communities that depend on auto-related businesses, officials said.

“I don’t believe average America realizes the impact this will have on small-town America, particularly rural Kentucky,” sai
 

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