The Big Three effect

Jenni Chase
December 11, 2008
AUTO : FORECASTS, TRENDS & ANALYSIS, TRENDS

At press time, Detroit’s General Motors, Ford Motor Co. and Chrysler Corp. were fighting for their financial lives, petitioning Congress for $34 billion in emergency loans.

GM, in particular, seemed to be on the brink of financial collapse. In the manufacturer’s third-quarter financial release, officials noted “GM's estimated liquidity during the remainder of 2008 [would] approach the minimum amount necessary to operate its business.”

“A bankruptcy filing would be catastrophic for the nation: would have massive and far-reaching systemic economic and social costs,” said GM officials in their November 2008 “Case for Federal Support for GM and the Automotive Industry.” Even a 50 percent collapse of the Big Three in 2009 would result in a loss of 239,341 jobs for those directly employed by the auto manufacturers; 795,371 jobs at companies that sell commodities, products or services directly or indirectly to the Big Three, including automotive glass manufacturers; and 1,427,663 jobs as a result of the effects such a collapse would have on the general economy, GM reps claimed in their case.

Even with financial assistance, the Big Three project a number of dealerships will cease operation in 2009. Richard Wagoner, GM chairman and chief executive officer, told Congress Dec. 4 that a key element of the manufacturer’s plan was to “make significant changes to our market and retail operations, including a reduction in brands, models and retail outlets.”

Similarly, Ford officials told Congress the company would reduce the number of U.S. dealerships to 3,790 by year-end, “a reduction of 606 dealers overall—or 14 percent from year-end 2005—including a reduction of 16 percent in large markets.”

Such closures could significantly affect the retail auto glass replacement industry if AGR providers lose business to dealerships closing their doors.
 

Jenni Chase is editorial director of Glass Magazine, e-glass weekly and GlassMagazine.com. Write her at jchase@glass.org.