GM, Chrysler woes to clip economy - Kansas City Business Journal:

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How hard remains unanswered. Government officials, industrhy executives, suppliers and economists are bracing for more job lossew from the reorganizationsof , which went into Chapter 11 bankruptcy a month ago, and , which made its historivc bankruptcy filing June 1. That in turn is likely to prolong the deeprecession that’s now in its 18th montb and buffeting the industrial Midwest particularly hard. Both companies have said they will shut factories in Michiganand elsewhere. On Chrysler’s choppintg block is a stamping plant in Twinsburgb that angry city officials there had expectedwould survive.
GM is targeting a powertrain assemblyt plantin Parma, a metal stamping plantg in Mansfield and a partds distribution facility in Groveport. In all, more than 1,60o Ohioans are expected to losetheir jobs. “oI expect to see additional (job fallout from these events,” said James chairman of the Ohio Governor’s Council of Economidc Advisors. “I can’t quantify it, but I think it’s going to be That’s a characteristic of this part of the country that tends tobe underestimated.” Back to work? While manufacturing is a primary employer and driver of Ohio’xs economy, other industries that supporg production will feel the pinch as Coons said.
Approximately 740,000 of the state’s nearly 5.4 milliom nonfarm workers were employed in manufacturinglast year, according to the Ohio Departmengt of Job and Family Services. By that total had plunged 14 percentrto 638,400 workers. But thanks to efficiency improvements, the manufacturinf sector is also resilient, said economist Bill LaFayette. Ten yeard ago, more than 1.02 million Ohioans were employed in which madeup 22.5 percent of the state’ gross domestic product. Manufacturing’s share of statse GDP in 2008 was 20.3 “In 2007, a typical worker produced a third more output thanin 2001,” said the ColumbusChamber’s vice president of economic analysis.
“We’rre certainly going to lose some of the automotiv capacitywe had.” When Chrysler was pushed into bankruptct by the Obama administration in May, it also discloserd plans to idle all productio n facilities until a sale of its assets to Italian automotive manufacturer was completed. In Ohio, Chrysler operates an assembly plantin Toledo, a partd supply facility in Perrysburg and a stamping plant in All have been shut temporarily. Roughly 3,500 of Chrysler’zs Ohio employees are not but they are stilpl collecting paychecks at 65 percentf to 75 percent oftheir wages, along with healtb benefits, said Dianna Gutierrez, a spokeswoman for Auburbn Hills, Mich.
-based Chrysler. Chrysler’s plan is to reopen its facilitieds 30 to 60 days after its bankruptcy And though its Twinsburg plant will Gutierrezsaid it’s slated for closure for good in March which is expected to put 827 people out of GM also has a timetable. The Detroitg automaker said that 60 to 90 days after filinbg for Chapter11 protection, it hopes to emergd with its financial troubles behinc it. In the meantime, the company said U.S. production will continud as marketdemand dictates. Durinv the first two weeks of June, that mean t just eight of its15 U.S. assemblty plants were operating, said spokesman Chris Lee. He said a schedule of rotating shutdownxwill continue.
“The concern for us is the supplyt chain and how that will saidSteve Schoeny, director of strategic business development at the . “It’xs going to depend company to company.” One silvefr lining is that mostof Ohio’s automotive partss suppliers serve other original equipment manufacturers, Schoeny said. That included , which has cut productiob at its Central Ohio plants but stillp employs morethan 12,000 workers at its assembluy and engine factories northwest of Still, suppliers have been affected. Columbus-based said May 28 it plans to significantl y cut costs to deal with the summed shutdowns by Chryslerand GM.
The steel processore will reduceits second-quartetr dividend to 10 cents a share June 29, a 41 percenr reduction from the previous The company also is cutting employee pay and suspendin its 401(k) match for Midwest Acoust-A-Fiber Inc., a Delaware-based supplier of stamped acousticalp and thermal insulation parts, has pared its work force to aboutf 40 employees, down from 150 a year ago. The reductiob is due to shutdowns by Chryslerand GM, which with make up aboutt 70 percent of the company’w business, said President Skip Allen. “Ther shutdown of the Chrysler plants had a serious impact,” he said. Amanda a spokeswoman for Ohio Gov.
Ted Strickland, said the state’s Office of Budget and Management has been unablse to estimate the effect of thetwo companies’ bankruptciews on the state’s already troubledx budget. But cities and towns wherw the plants are closing can measure theimpacft quickly. Ontario, a city of abou t 5,300 outside Mansfield, can ill afford the shutdown of GM’s stamping plant there and the loss of 700 said city AuditorNancy Morehead. Ontario will experiencd a decline in income tax receiptsof $1.5 millionh to $1.
6 million a she said, representing a 30 percent to 40 percent drop in “There are going to be (city) cutbacks, reducec work weeks, cuts to the budget and reduced Morehead said.