Jeff Roe of Oregon works on a six-speed transmission at GM’s Toledo Transmission plant. In 2009, employment at the plant had fallen to fewer than 500, said Ray Wood, president of United Auto Workers Local 14. Now the Alexis Road plant employs 1,890 people. ‘Our plant is alive and well because of the bailout,’ Mr. Wood said.
After selling its last shares of General Motors, the U.S. Treasury has written off a loss of about $10 billion, an enormous sum by anyone’s standards.
But this wasn’t an ordinary stock market investment, and the return the federal government got from its $49.5 billion infusion to keep GM alive includes so much more than a straight $10 billion market loss.
The number that is most important in this equation is 87,795. That’s the number of workers on General Motors’ payroll at the end of the third quarter of this year. But behind that number are hundreds of thousands of other workers employed at parts suppliers and others who owe their livings to the U.S. auto industry.
A recent report from the Center for Automotive Research in Ann Arbor concluded that had GM gone out of business in 2009, the U.S. labor force would have almost immediately shed 1.2 million jobs.
It’s impossible to come up with an exact dollar amount that was saved by the government’s bailout of GM, but the numbers bandied about are staggering: $129.2 billion in paychecks saved in 2009 and 2010 alone. Between outlays for unemployment checks, food stamps, and other welfare programs, and a dearth of payroll taxes coming in, the end of GM would have cost the government $39.4 billion.
“It’s not back of the envelope. It’s a real calculation of what would have happened,” said Debra Menk, a senior project manager with the Center for Automotive Research and one of the report’s authors.
To Ms. Menk, that figure is one of the clearest illustrations that the money put into GM by the government was not only necessary but prudent.
The Center for Automotive Research has looked at the issue several times, but this is its most definitive research yet into one of the industry’s darkest times.
“It was a very scary period,” said Sean McAlinden, the center’s chief economist and one of the report’s authors. “We knew the U.S. would sell off the last stock in December and we were afraid a lot of critics would jump on GM and the bailout, so we wanted to remind people it was more than that.”
It’s nearly impossible to determine the total amount GM pumps into the U.S. economy by way of wages. The company doesn’t publicly disclose that information, and multiple people who closely follow the industry told The Blade they did not have that data.
However, Ms. Menk said that generally the number of jobs is more important in the grand scheme of things than how much a company pays in total payroll.
“What a person makes tends not to have a bigger impact on the economy as that they’re employed,” she said.
Collectively, GM’s plants in Toledo, Defiance, Cleveland, and Lordstown, Ohio, employ about 9,200 people, according to fact sheets distributed by the company.
A rough estimate of total payroll from those operations, based on information from GM, is approximately $793 million a year, with $166 million paid back in payroll taxes annually.
Avoiding a shift
The Center for Automotive Research projected that most of the U.S. auto manufacturing employment would have recovered by 2011, even had the government not intervened.
However, the center said that employment would have shifted to the southern portion of the United States.
“The U.S. economy as a whole has a healing tendency,” Ms. Menk said. “We all scramble to do something else. Locally for the Midwest, Toledo, Detroit, Michigan in general, our economy might not have recovered.”
The center also said research and product development jobs would likely have been lost from the U.S. economy altogether.
Still, critics of the bailout — and many remain — will point to that $10 billion loss of taxpayer money and say that was an unnecessary cost for a nation struggling to control its spending and debt.
But Mr. McAlinden and his colleagues argue that the true result for the U.S. government’s involvement was a net positive.
All about jobs
In auto towns such as Toledo, the GM bailout was all about jobs — some of the best-paying manufacturing jobs in the city.
In 2005, a couple years before the recession, GM’s Toledo Transmission plant employed about 3,500 people. By 2009, the plant employed fewer than 500, said Ray Wood, president of United Auto Workers Local 14.
Now the Alexis Road plant employs 1,890 people. Line workers regularly put in 50-hour weeks to keep up with demand for the six-speed automatic transmissions they build.
“Our plant is alive and well because of the bailout,” Mr. Wood said. “We may have gone under like some of the other plants did, but we are in a great position now.”
According to figures from GM, the plant has an annual payroll of $174 million.
Not only does that put money in workers’ pockets that is then spread around the community, it also funnels money into the city of Toledo’s budget.
The city can’t say how much workers of any individual company contribute in municipal income taxes, but at Toledo’s 2.25 percent rate, that would be nearly $4 million annually from GM workers at Toledo Transmission.
GM says the plant contributes more than $36 million a year in total payroll taxes.
Had that plant closed, a cascading effect would have continued into local government budgets, said Patrick McLean, former finance director for the city of Toledo.
“The automotive industry has so many tentacles stretching into so many aspects of life in northwest Ohio and southeast Michigan,” Mr. McLean said. “It’s safe to say it would have been significant had we lost either of Chrysler or GM.”
He predicted that Toledo would still be plagued with an unemployment rate exceeding 13 percent, which would drastically reduce revenues needed to pay for city employees such as police officers, firefighters, and street crews.
Current unemployment estimates placed Toledo’s unemployment rate at 8.7 percent.
GM also continues to spend in Toledo as it works to build more high-efficiency transmissions. With last week’s announcement of $30.6 million, GM has committed to spending $373 million at the plant since 2011.
“We see it from a plant-floor, real-life perspective,” Mr. Wood said.
“We know they can do a lot of calculations, and rightfully so, but there is no question that the Great Recession would have turned into the Great Depression and this community would have been tremendously impacted.”
Blade Staff Writer Ignazio Messina contributed to this report.
Contact Tyrel Linkhorn at firstname.lastname@example.org or 419-724-6134.
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