About 20% of jobs in area tied to Detroit 3

12/23/2008

The widespread economic impact of the Detroit Three automakers in Toledo and elsewhere in the Great Lakes area holds the key to tens of thousands of jobs, a new study says.

At least 12 cities in the region, including Mansfield, Ohio, and Monroe, Mich., have 5 to 8 percent of all local jobs tied to the automotive industry, the Brookings Institute study found.

Counting those workers buying food, go-

ing to doctors' offices, and conducting other everyday activities, the industry helps support 15 to 24 percent of all employment in those cities, the Washington think tank determined.

For the Toledo area, Brookings found nearly 13,100 auto-related jobs, or 3 percent of the total local employment, and 40,000 local jobs, or 9 percent of overall employment, supported by the industry. It used 2005 statistics for its calculations.

The study, begun before the federal $17.4 billion rescue plan was announced last week for General Motors Corp. and Chrysler LLC, specifically examined the impact in the Midwest if GM, Chrysler, and Ford Motor Co. all went out of business.

But it demonstrated the economic tentacles the three firms have in major Ohio cities and elsewhere. Brookings' report found that 50 metro areas in the Great Lakes region have at least 1 percent of employment tied to auto or auto-parts manufacturing and are home to at least one Detroit Three plant or one of a major parts maker.

"Although 1 percent of a metropolitan area's employment may not sound like a large number, the jobs and incomes created by the Detroit Three companies and their suppliers support up to twice as many jobs in industries that provide local services," the report said.

Howard Wial, author of the report released last week, was not available for comment yesterday.

The automakers and suppliers provide 3 to 5 percent of overall employment in a dozen cities in the region, including Lima, Ohio, the report stated. With the multiplier effect on other supported jobs, the impact rises to 9 to 15 percent of employment in those local areas.

There would be little hope that foreign automakers would step in to create auto jobs in the event that the Detroit 3 automakers were to collapse, the report said. The foreign automakers use only two-thirds as much U.S.-manufactured auto parts as GM, Ford, and Chrysler combined, the study said.

As a result, many supplier jobs lost if the Detroit Three were to close would disappear and would not be replaced, Brookings found.

An effort to help two struggling members of the Detroit Three was announced Friday. The Bush Administration agreed to provide GM and Chrysler with $13.4 billion in loans to continue their operations, with the possibility of an additional $4 billion becoming available for GM. Both automakers had indicated they were on the brink of filing bankruptcy or going out of business.

GM and Chrysler have until March 31 to produce a plan for long-term profitability, including concessions from unions, creditors, suppliers, and dealers.

Another report this month by the Economic Policy Institute said that if one or more of the Detroit Three failed, it could lead to a collapses of the U.S. auto industry and eliminate 3.3 million jobs nationwide within a year.

The biggest jobs losses would be in Michigan (112,500 to 407,300), California (84,500 to 305,900), and Ohio (60,500 to 219,100), the report found.

The size of the losses would depend on how many and which automakers failed.