Big Three unloading local employees
Dana Corporation will lay off 50 workers.
Dec. 2, 2008
The parking lot at the Dana Corporation factory has a few more empty spaces these days. The company, which manufactures axles for Ford, General Motors and Nissan, laid off 50 of its 250 workers last Monday.
The economic downfall has put a hole in the wallet of many Americans, and Missouri's automotive industry is no exception.
Perhaps one of the most devastating blows to the economy was dealt to the major domestic automotive companies. Last year, Ford lost $12.7 billion, while General Motors lost $38 billion and Chrysler lost $1.5 billion.
The companies, known as the "Big Three," have suffered losses because of decreased consumer spending, job cutbacks and poor sales. Consumers and distributors alike are burdened by the losses experienced by the companies.
The effects have begun to be felt locally.
Last week, Dana Corporation, an auto parts manufacturer that makes axles for Ford, General Motors and Nissan, announced that they would layoff 50 of its 250 workers.
Last month, GM said it would cut production at its Wentzville plant, which manufacturers full-size vans, in the first week of December.
The Center for Automotive Research, an Ann Arbor, Mich.-based organization, predicted that 3 million jobs would be lost nationwide if the three companies ceased operations.
Congress has worked to form a plan to provide aid to the struggling companies, but have disagreed on the terms.
Some have proposed that a $25 billion stimulus, which was already made available to the U.S. Department of Energy to give to automakers for the development of energy-efficient vehicles, be used to help keep the companies' out of bankruptcy.
Today is the deadline for the heads of the companies to submit a plan to Congress about how they would use the money.
U.S. Sen. Kit Bond, R-Mo., said the failure of the companies could cost Missouri 200,000 jobs.
"We will make that available to the auto industry to keep them afloat, if they have a plan to cut costs, and to get on the road to profitability," Bond said in a news release.
U.S. Sen. Claire McCaskill, D-Mo., said she would also support a bailout, but not before ensuring that giving the companies money would be a "good investment" for the government, according to an Associated Press report released Sunday.
MU finance professors have expressed doubt that a government bailout would remedy the situation.
Finance professor and Missouri Bankers Chairman John Howe said the situation would work itself out.
"Their short-term strategy is to ask for bailout money and that could keep them alive for a while longer," Howe said. "But they'll still be spending more money than they are bringing in the long run."
Finance professor William Allen, on the other hand, said the bailout plan would function to no avail.
"My personal opinion is that a prepackaged bankruptcy is their only alternative to survive at all," he said. "There needs to be some mechanism to allow them to break a variety of contracts that only bankruptcy can provide."
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