The auto industry in this country is rapidly dissembling. Both GM and Chrysler have been talking layoffs all week, and today Chrysler says it is eliminating 25% of its 18,500 white-collar workers. Shares of GM are off about 14% this morning.
The auto industry already got one bailout (in the form of an outsized loan for plant modernization), but now they’re talking the big one.
Detroit Free Press: Absent a deal between GM and Chrysler, Sean McAlinden, chief economist at the centre for Automotive Research in Ann Arbor, told the Free Press that the U.S. auto industry needs a federal bailout to survive the global credit crunch.
“This is an unprecedented, 1933 situation,” McAlinden said, alluding to the Great Depression.
He also likened the current situation to the crisis immediately following the 2001 terror attacks. “We’re facing an economic 9/11 event,” he said.
McAlinden said GM could run out of money within 12 months and that Ford Motor Co. may have enough for 12 months, but probably not enough for more than 18 months.