Unemployment Rates and the Domestic Automotive Industry

(noon. – promoted by ek hornbeck)

This very interesting map is from The Economist and one of my favorite people, manfrommiddletown.  

The Economic Policy Institute has a new report out today about the economic impact of an auto industry collapse. A previous report by the Center for Automotive Research (CAR)estimated that a total collapse of the big 3 would result in the loss of almost 3 million jobs, and $554.6 billion(4% of US GDP) in economic losses. What was missing was a state by state breakout. I’ve mocked up the state by state job losses consequences of a GM only collapse, and what would happen if the big 3 all failed.

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So while AIG pays bonuses, gives raises, and sponsors sport’s team, Harry Reid and our limp dick useless Democrats continue to fiddle while the real economy burns.  With friends like these, who needs enemies.  

The next person who gives me another tired old talking point on unions or domestic autos is going to get hit.  These people don’t have a clue about the industry and are stuck is Herman’s Wayback Machine.  

This crisis has industry critics dusting off old arguments. U.S. companies, however, are largely competitive with foreign rivals. According to Strategic Vision, Ford ties Toyota in quality. Products such as the Chevy Malibu and Ford Flex are fashionable, efficient and world-class. The best selling hybrid SUV is a Ford.

Some call for new blood at the top, which has largely occurred. Both Ford and Chrysler have CEOs recruited from the nonautomotive world and both have former Toyota executives in key posts. GM’s CEO is responsible for pushing development of the Chevy Volt, a potentially game-changing electric vehicle scheduled for sale in 2010.

Despite these gains, the U.S. companies cannot shake the damage done to their reputation — self-inflicted — from the 1960s to 1980s. A blind consumer clinic found that a sample car was rated higher simply if it was thought to be foreign. In order to reverse the fortunes of the industry, they will need to overcome this, and that is something they must do on their own; there is no government program for it.

Domestic autos could have said, screw it, and unceremoniously dumped everyone into the streets in one fell swoop.  Instead, domestic autos and the UAW have tried to do a controlled burn. Just like all the legacies they carry for every ones health care past and present, this has cost these 100 year old companies and their workers dearly.  

The unjust and unkind irony of all of this is that MI has been sitting on a 6.3% and greater unemployment rate for eight years without any acknowledgement, help or declarations of “emergency aid” for anyone by anyone.  MI couldn’t even get unemployment extensions for its people until the unemployment rates for the rest of the US caught up with our eight year low of 6.3%.  October 2008, MI is at 9.3% and growing.  

To add further insult to injury, we are and remain a donor state.  So while our residents are losing their jobs, homes and filing for bankruptcy, MI is bailing out states like Alabama so they can use our money to pay companies like Toyota and Honda to locate in their right to work for less states.  

14 comments

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    • dkmich on December 5, 2008 at 13:11
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    because Alabama and the red states have all of our mojo.    

    • Edger on December 5, 2008 at 14:13

    I kept seeing that first sentence in that first quote as beginning with:

    The Economic Collapse Institute has a new report out today…

  1. while all this drags out:

    Economy lost another 533,000 jobs in November

    The job reductions were the most since a whopping 602,000 positions were slashed in December 1974, when the country was in a severe recession.

    Job losses in September and October also turned out to be much worse. Employers cut 403,000 jobs in September, versus 284,000 previously estimated. Another 320,000 were chopped in October, compared with an initial estimate of 240,000.

  2. than all your car companies.

    We’re even expanding — in December!

    Get in on the ground floor!

    And when you come by, hey, have a banana!

    (And maybe you can take those onions (bottom, left) off of our hands…)

    My point is this: the era in which “prosperity” can be had through production for exchange is over.  There are already enough cars on the roads to satisfy all of America, and many of them are tooling around with far fewer passengers than they can accomodate.  Get back to the satisfaction of basic human need.

    • Alma on December 5, 2008 at 18:56

    Like your maps.  They might be the only way to get through to people how much the auto industry affects. It would be an avalanche to the USA becoming rubble.

    Just in the last hour here in Michigan, I’ve heard that my brother in laws plant is moth balling.  He’ll be one of the last ones gone, and that my sister, his wife, might lose her job because she’s low man on the totem pole at the hospital shes at and they are planning cut backs.  Her previous hospital went out of business, also found out my nephew is on furlow from his job, hopefully only for a month.  Normal day in Michigan.  Just imagine my list thats not from the last hour.

    • TomP on December 5, 2008 at 20:08

    We need a unionized auto industry.  The ones in the South are not.

  3. …well needed and informative!  Thanks.

  4. that the Economic Policy Institute has taken into consideration the domino effect that will occur if ” only GM” fails. There will be no “GM only” scenario.

    Tier 1 suppliers are dependent on busness from all automakers across the board. If one fails, all the parts suppliers will also fail. In turn, this will force the other manufacturers to close their doors due to a lack of parts.

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