Sunday, April 19, 2009

What The GM Bankruptcy Could Do

I have made comment on here before about how dangerous will be a GM bankruptcy. Anderson's Herald Bulletin brought all this out quite well in GM bankruptcy would threaten city
Ward mentions companies in Anderson — like Taditel, on Eighth and John streets — that once were suppliers to GM and its affiliated companies. Now the companies are left with a large manufacturing capacity and no customers, forced to retool their business.

Many companies went under or took great hits when GM left town, but those that survived still stand to lose more if the auto giant goes bankrupt.

***
In Madison County, where 25,000 GM employees once worked, the buying power of the company’s retirees is great. Many made high wages as members of the United Auto Workers and have enjoyed comfortable retirements with their pensions.

GM’s bankruptcy, however, could put many of those retirees in a tight spot.

“We’ve got a situation that’s almost like a divorce, except for the fact that we’ve still got a huge payroll coming in here from retirees,” Ward said. “For the sake of everybody, I hope they don’t (file for bankruptcy), and I don’t know whether they will or not.”

GM has not said how its bankruptcy would affect retirees’ pensions, but Ward guesses it could involve a federal program that insures pensions, which likely would leave retirees with about half their monthly GM income.

***
Without pension dollars flowing to local retirees, businesses in Madison County that depend on that money could be in trouble.

“GM filing for complete bankruptcy would have a disastrous effect on elements of Anderson,” said city Economic Development Director Linda Dawson. “Any time you affect the income coming into your community through wages or retirement benefits, you affect the town and spending power. Obviously businesses are affected because they won’t be able to utilize those spending dollars that they’re used to depending upon. It ends up having a snowball effect.”

I hope this puts into perspective for those glibly telling us we - and that is the whole country - can afford a GM bankruptcy.

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