Possible GM bankruptcy has officials, suppliers on edge

By Don Shilling

One business owner likened the situation to an economic Katrina.

Auto suppliers already are wobbly, and a bankruptcy by General Motors or another automaker could knock out many of them, a local company owner said.

“We’re going through our own Katrina,” said Darrell McNair, owner of Nescor Plastics Corp., which employs 100 in Mesopotamia and Champion.

McNair spoke with reporters Wednesday as part of GM’s effort to promote its case for $12 billion in loans from the federal government. GM arranged a conference call so public and private officials from throughout Ohio could explain how their companies and communities would be affected if the automaker were to shut down.

McNair’s company supplies plastic parts such as air conditioning outlets and cup holders to larger suppliers, who ship them to automakers.

Business has been tough because three of Nescor’s customers have filed for bankruptcy in the past 13 months, and car sales have dropped dramatically, McNair said.

To keep his company afloat, McNair has cut wages, scaled back production, changed health-care plans, increased employee contributions for health care, delayed buying new equipment and hired a consultant to find ways to run operations more efficiently.

If GM were to file for bankruptcy, auto suppliers such as Nescor would close, and that would further delay the nation’s economic recovery, he said.

He said no one is sure how far-reaching the effects of an automaker bankruptcy would be, but he called the effects devastating. If suppliers were to shut down, communities would lose tax revenue and retailers would suffer because fewer people would have disposable income, he said.

Tom Humphries, president of the Regional Chamber, also was part of the conference call and said that the General Motors Lordstown complex has a payroll of $479 million a year, much of which is spent at local stores and health-care facilities.

In their own conference call Tuesday, GM executives said the automaker would go into default without the government loans. They declined to say what would happen to the company if that happened and didn’t address the possibility of trying to operate under bankruptcy protection.

Speakers on the conference call Wednesday said the federal aid shouldn’t be seen as a bailout because it would be loans that GM intends to pay back.

A Columbus auto dealer, Chris Haydocy, said the nation has lost too many manufacturing jobs already, placing the nation at a crossroads.

“We will be the laughingstock of the world if we do not invest in the engine that has powered the backbone of our economy for years,” he said.

Debbie Lieberman, a Montgomery County commissioner, noted that GM is closing an assembly plant near Dayton this month that once employed 5,000 people. As the operations have been scaled back, the tax bases of communities have suffered and calls to a suicide prevention center have increased, she said.

She added, however, that the area still has auto suppliers who employ many area residents.

“Further losses would be devastating,” she said.

shilling@vindy.com