- The Washington Times - Friday, November 21, 2008


Plans are commencing in this Detroit suburb for a holiday celebration. There will be horse-drawn wagon rides, Christmas caroling and a petting zoo for the children.

But as much as Warren tries to embrace the coming holidays as normal, things here are anything but merry for local residents - about a quarter employed by U.S. automakers - as they wait uneasily for word from Washington about a possible bailout plan that could save their flagging industry. Or without it, bring about its demise.

Jim Fouts acknowledges that it’s a tough time to be mayor in Warren, a city that is as dependent on the car industry as Washington is on the federal government.

About 35,000 of the city’s 140,000 residents are employed in auto-related jobs with thousands more auto industry retirees calling it home. Here, a massive GM technical center sprawls across a 330-acre campus, while Dodge maintains three high-tech facilities that employ about 6,000 workers.

Up the road in Sterling Heights, in another 3 million-square-foot complex, DaimlerChrysler employs about 2,400 workers.

Simply put, Mr. Fouts says, if one of the Big Three crumbles, the ripple effect would likely turn Warren into a ghost town.

“I think everybody here is apprehensive,” Mr. Fouts says, noting that nearly every conversation from his constituents begins, “Do you think we’ll get the bailout?” And, “What will happen if we don’t?”

“My city is highly dependent on the auto industry. GM is to Warren what Coca-Cola is to Atlanta or what the president is to D.C. I cannot conceive that Congress would turn them down. It’s not whether they will - but they must.”

He pauses and adds sadly: “If they don’t, it’s going to be a cheerless holiday season here.”

Across the Detroit area, residents are bracing for the unknown, envisioning a Motor City without a motor industry.

Some are bristling at the national backlash as the CEOs of Ford, General Motors and Chrysler were pointedly called on the carpet Tuesday by members of Congress for their wasteful ways, even as they pleaded for more money to halt their fiscal nose dive.

“Why do they hate us?” asks an editorial in the Detroit News, acknowledging the chilly reception to a once-proud industry that served as the backbone for the national economy.

Even native son Mitt Romney, a noted corporate change artist whose father turned around American Motors, called his hometown industry on the carpet for its blatant and reckless mismanagement, suggesting a jaw-dropping “managed bankruptcy.”

“Detroit needs a turnaround, not a check,” Mr. Romney wrote in a published editorial. His terse admonition echoes the sentiments of some here who want the industry to stay afloat but say it needs massive oversight, rather than just more cash, to stem bad business practices.

Those include fat labor union agreements and benefits packages for retirees that have crippled the industry as it failed to compete with foreign manufacturers with streamlined costs.

Detroit Pistons basketball legend Dave Bing, who owns a steel parts-supply business in the city and whose major clients are Ford and GM, says the blame is being wrongly directed at Detroit. Several Midwest states will be gravely affected if Congress does not offer a loan, creating a domino effect that will shut down businesses like his.

Mr. Bing, who is one of 18 candidates running for Detroit mayor, says timing is crucial for the loan the auto companies are asking for, and not something they won’t agree to pay back.

“I don’t think they are crying wolf,” he says. “The situation is dire, and people are scared to death. I don’t think suppliers to the auto industry can survive.”

Elizabeth McCoy, a resident of the upscale Detroit suburb of Clarkston, sells high-end autos and already is feeling the trickle-down effects as the U.S. industry plummets in a faltering economy.

“People are very scared,” she says of many in her neighborhood who work for Chrysler or GM.

Credit is drying up, she notes, and even doctors and dentists and those with high incomes normally invested in the luxury market have slowed down their purchases of BMWs and Mercedes. The people who might have splurged are taking a wait-and-see approach, she says, either buying used or electing to fix their current vehicles.

“They are very unsettled,” she says of prospective buyers. “I think people here are cautious and tentative. It’s affecting everyone, not just auto people.”

Still, Mrs. McCoy says, as much as it is causing some to be fearful, she is hearing from a growing chorus in the area who also are resentful of the way U.S. automakers have handled their business.

“They feel like if we step in and bail out the Big Three, then there should be some accountability. It shouldn’t be handing them a big check to muck up again,” she says.

“They have overspent and overspent and they haven’t been fiscally responsible in the past, so why should we as taxpayers just hand them more money without some accountability. Look at what happened with AIG.”

Grace Shore, the CEO of the Macomb County Chamber of Commerce, defends the industry and says calling assistance a “bailout” is wrong. Her county’s history is steeped in the tool and die industry and is home to not only auto companies but also related support businesses that employ even more workers who would be gravely affected by an auto industry shutdown.

“You hear a lot of negativity, but this is a very complex problem that is going to take a very complex solution,” she says. “People like to label this as bailing out the auto industry, but it’s not about that. What they are asking for [is] a bridge loan.”

Whatever Congress decides, Detroit-area automakers must face the cold realities of “right-sizing or downsizing” to align their companies with their sales, Ms. Shore says. And with that, those in and connected to the industry are right to feel trepidation.

“I’ve been here for 30 years, and I don’t know that I’ve ever seen this level of pessimism,” she says. “I believe that whatever happens will spark a spin-off effect and there will be virtually no industry segment untouched here. I hope we’ve hit the bottom, and we are on our way up. Times have got to get better than this.”



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