By Zenitha Prince
Washington Bureau Chief
(December 10, 2008) - Donald Payne is living the nightmare that Washington policymakers and others have merely talked about in their discussions about a proposed bridge loan to bolster foundering U.S. automakers.
“A lot of people I worked with on a day-to-day basis for my entire career at Chrysler, I see them leave in tears—it’s very depressing,” said Payne, 43, who has worked as an electrician for Chrysler for the past 13 years.
The exodus of familiar faces has him worried about his own job, he said. “Rumors run rampant; every day something new is popping up suggesting that the company may not be around,” said the Detroit, Mich. resident. “It’s made me understand that tomorrow is not promised when it comes to depending on Chrysler.”
Citing that uncertain future, executives at Chrysler, General Motors and Ford Co.— The Big Three— trekked to Capitol Hill in mid-November to seek assistance from lawmakers.
Dried-up credit and a precipitous economy had caused a plunge in automobile sales—35 percent, according to an Economic Policy Institute (EPI) report—they said, draining them of the cash needed to survive.
Somewhat burdened by “bailout fatigue” however—after the recent $700 billion bailout of Wall Street firms and the billions-more rescue of mortgage giants Fannie Mae and Freddie Mac—lawmakers stalled on a decision. They wrangled over where the money would come from—Treasury Secretary Henry Paulson rejected an idea to tap into the $700 billion Troubled Asset Relief Program— oversight and consequences should the companies fail to produce a plan that proves their viability.
Those issues, and questions about autoworkers’ union pension and health care costs, remained sticking points in the debate this week, even as lawmakers drew close to an agreement that would extend $15 billion in credit—less than half of what was previously requested.
Sen. Richard Shelby, the top Republican on the Banking Committee and a critic of a government handout for Detroit, said on “Fox News Sunday” that this crisis is of the industry’s own making and that the companies haven’t shown any commitment to doing their part to stave off further decline.
“This is a bridge loan to nowhere,” Shelby said. “These companies basically are — have failed, are failing.
They can't compete today. And the question is, will they be able to compete tomorrow?”
“We would like to save them,” the GOP senator continued. “But they've got to save themselves. And I don't believe they're willing to save themselves, because they could be restructured the right way.”
Even President-elect Barack Obama, who supports some type of aid to the industry, had sharp remarks about the changes automakers would need to make, including investing in fuel-efficient vehicles. “If they expect taxpayers to help…then they can't keep on putting off the kinds of changes that they, frankly, should have made 20 or 30 years ago,” he told Tom Brokaw on NBC’s “Meet the Press,” Sunday.
“They're going to have to restructure, and all their stakeholders are going to have to restructure. Labor, management, shareholders, creditors—everybody’s going to recognize that they do not have a sustainable business model right now.”
In Detroit, people are less concerned with casting blame for the state of the industry.
“It used to be that if you got a job at the Big Three you were set for life—that’s not the same anymore,” said Lorenzo Poole III, president of United Automobile Workers union’s Local 51 branch in Detroit. “[So] people (employees) aren’t trying to place blame; they just want answers about whether these companies will survive.”
Autoworkers are at the center of an economic maelstrom that have seen the shuttering of factory and boardroom doors and thousands of Americans shunted away from their jobs, their homes and their way of life.
And things will only get worse if any or all of the Big Three is allowed to sink, experts say.
“To permit any or all of the Detroit Three manufacturers to collapse, would scar the U.S. economy further at a time when it can ill-afford another blow,” said David Cole, chairman of the Center for Automotive Research about a report the center released in November. “The likelihood of one or two of the Detroit Three manufacturers ending operations is very real. As policymakers consider their positions on assistance to the auto industry, they must decide, is an ounce of prevention indeed worth a pound of cure?”
If all three companies collapse, about 3 million jobs will be lost in 2009 alone, CAR reported. That would more than double the number of jobs eliminated since the recession. From December 2007 to now, 1.9 million nonfarm jobs have disappeared, according to the Bureau of Labor Statistics, with 604,000 of those fading from the manufacturing industry.
For African Americans—who have already borne the brunt of the recession, suffering an 11.2 percent unemployment rate, a 2.8 percentage point increase from last year—those predictions are especially dire, an EPI report said. “The consequences of an auto industry collapse…would be nothing less than catastrophic for African Americans,” report author Robert E. Scott wrote.
U.A.W. representative Maurice Staten said Blacks have already suffered. “African Americans are absolutely disproportionately affected because in many cases, we were the last in, so we were the first ones out,” he said.
For generations, the auto and the manufacturing industry in general, helped build a robust Black middle-class as African Americans moved from stagnant economies in the South to states like Michigan, Ohio and Pennsylvania. “We were making great strides because of the auto industry,” Staten said. “Just getting a fair day’s pay for a fair day’s work provided parity, provided access to higher education for our families, they were able to move to better neighborhoods with better schools…and to establish local businesses.”
“The consequences of an auto industry collapse…would be nothing less than catastrophic for African Americans.”
A job at Chevrolet helped his father raise eight children and survive the 1968 riots in Detroit, Payne, the electrician, said. And his job at Chrysler has helped him support his wife and three children, including his 18-year-old daughter, who’s attending the University of Tampa in Florida.
Now, he added, their whole life is “in limbo,” which has “caused some tension.”
The longtime electrician said he has tried to prepare himself for any eventuality, using UAW’s tuition assistance to obtain an associate’s degree in industrial technology and to pursue a bachelor’s in industrial management. He’s also written two books, which are currently being sold by Amazon.
Not everyone had that foresight, though, Poole said. “I watched a number of people take those buyouts with all these ambitions and goals without realizing that after taxes that $65,000 isn’t much. So, I’ve seen some of these people working at the local McDonald’s,” he said.
Bishop Charles Ellis III, pastor of Greater Grace Temple, an 8,000-member Pentecostal church in northwest Detroit, said his church and others have felt the effects of the beleaguered auto industry. Requests for food and other aid have increased, he said, even as their coffers have dwindled.
“Being a religious nonprofit, we operate and survive on the benevolence of people through tithes and freewill offering. So when people are hurting, we’re hurting,” said Ellis of his church, where 45 percent of the congregation is directly or indirectly affected by the fate of domestic automakers.
In a sign, perhaps, of the desperation covering the community, Ellis led the church, Sunday, in a service that included blessing three SUVs and a sermon entitled “A Hybrid Hope” that called for members to have faith that an agreeable solution would be struck on Capitol Hill.
All week, Ellis told the AFRO, the church would pray and fast until Congress made a decision.
“We as spiritual people call on a higher power,” the minister said. “We’re praying because we don’t have a voice on Capitol Hill, so we talk to God and believe that he is going to move on the hearts of lawmakers.”
Staten warned, however, that even if the emergency loan is received, African Americans in Detroit and elsewhere may not gain immediate relief. “We as African Americans will be benefactors once the economy turns around, once credit is freed up, once we’re able to put people in vehicles, which will help stimulate the economy,” the union rep said. “But let’s not fool ourselves that this is going to happen overnight.”