Supplier: Valley’s future hinges on many factors

By Don Shilling

The potential for federal aid for General Motors is just the first step in preventing a catastrophe in the Mahoning Valley, local officials said.

The national economy and the automaker itself all need to be repaired before the Valley’s auto jobs are safe, they said.

“An auto bailout is just one component,” said Darrell McNair, who owns a local auto supply company. “It will be a failed exercise without the other elements.”

Without everything coming together, McNair is concerned that GM could fail or at least halt operations temporarily to reorganize.

Failure of GM would be devastating for the Valley, said Bert Cene, executive director of the Mahoning and Columbiana Training Association.

His agency and a similar one in Trumbull County already are providing help for hundreds of workers at auto supply companies who are being laid off because of reduced production at GM’s Lordstown complex. That is on top of the approximately 2,000 workers GM is laying off.

The thought of shutdown of GM reminds him of what the community went through when the steel mills began to close 30 years ago.

“The ripple effect, as it was with steel, would be devastating,” he said.

Steel mill closings crippled machine shops and other manufacturers, as well as railroads, he said. A GM shutdown would cripple its suppliers and auto dealers, as well as these companies’ suppliers and retailers in local communities.

Saying it was worried about such consequences, the Bush administration said Friday that it was willing to provide the Detroit automakers with funds so they would have enough cash to make it to 2009. GM has said it was in danger of not having enough cash to make it to 2009.

Local car dealer Greg Greenwood noted that federal aid wouldn’t save GM, but it would buy the automaker some time.

“This is a short-term solution. I don’t want anyone to be fooled,” said Greenwood, who owns Greenwood Chevrolet and Hummer in Austintown and Greenwood Hubbard.

Congress will have to debate providing more loans to GM early next year, including what conditions to put on those loans, he said.

Greenwood said he doesn’t see GM’s going out of business, even if it had to file for bankruptcy and reorganize its operations. He said he thinks the government would step in and make sure customers’ warranties are valid.

“I’m not worried about GM leaving the planet. I don’t see that happening,” he said.

Greenwood said GM will change as it resolves its financing crisis. He expects the automaker to have fewer brands and dealers, more refined models and develop a financing arm that can provide credit to buyers.

Boardman car dealer Dave Sweeney said he expects the number of dealers to decrease because of changes in the nation’s credit market. Some dealers will find it difficult to finance their inventories of vehicles and go out of business, he said.

The United Auto Workers also is likely to agree to reduce GM’s labor costs as negotiations continue next year, said Sweeney, who owns Sweeney Buick Pontiac and Sweeney Chevrolet with his brother, Doug.

Republican Senators from the South have pressured the UAW to reduce its labor costs to those of foreign-owned auto plants in the U.S.

The AP reported that the UAW agreed Thursday to cost reductions after its current contracts expire in 2011 but balked at making such moves next year.

No matter how such negotiations are resolved, domestic automakers will remain troubled until car sales rebound from dismal results this fall, said McNair, who owns Nescor Plastics, which employs 100 at two plants in Trumbull County.

“The consumer needs confidence,” he said.

That’s hard to obtain when companies across the country are laying off workers by the thousands, other employers are cutting wages and banks are not lending money like they used to, he said.

Politicians have a tough job ahead of them to take the right steps needed to reinvigorate the economy, he said.

Locally, the economy is struggling because of cutbacks at Lordstown, Cene said. The car complex is eliminating its midnight shift and shutting down for the entire month of January.

“We’re being inundated with suppliers cutting back,” Cene said.

Comprehensive Logistics in Austintown has announced 101 layoffs, but Cene said the company told him that 50 to 75 additional layoffs are expected. Flex-n-gate in Salem, which used to be Blackhawk Automotive, is laying off 175.

In Trumbull County, Lordstown suppliers Magna Seating and Automodular are laying off but haven’t said how many, said Bill Turner, administrator of the Trumbull County One-Stop.

Turner and Cene said they are seeing smaller reductions at nonautomotive companies, such as steel plants, distributors and retail shops.

“We’re starting to see it all over the place,” Turner said.

shilling@vindy.com