It’s been a year of ups and downs

By Don Shilling

The business news came in a familiar form in 2008: “Do you want the good news or the bad news?”

The good news for General Motors was that President George W. Bush this month approved $9.4 billion in emergency loans in order to keep the company operating. The bad news was that GM saw its finances deteriorate so badly this year that it needed government help to avoid bankruptcy.

GM and Chrysler, which also received a loan, have until March 31 to tell federal officials how they will be viable going forward. More job cuts and plant closings are expected as the automakers and the United Auto Workers look for ways to cut expenses.

Good news for GM’s Lordstown complex also came with some bad news attached.

In August, the complex added 1,400 workers in order to fill a third shift that had been created and to replace about 500 workers who had taken early retirement offers. The Chevrolet Cobalt, which is made in Lordstown, was selling so well that GM decided to increase production at the assembly and fabricating plants there.

Community officials rejoiced over the additional jobs and tax revenue as the Lordstown complex hired workers and took on transfers from other GM plants and Delphi Corp.

The bad news came in November and December when GM said Cobalt sales had slowed so much that it was eliminating the midnight shift, slowing down the speed of the assembly line and shutting down production for all of January.

About 2,000 hourly workers — nearly half the work force — will be laid off when production restarts, and about 50 salaried jobs are being cut.

For the future, the complex is hanging its hopes on the Chevrolet Cruze, a new small car that GM intends to begin producing there in 2010. The car is supposed to get about 40 miles per gallon, and is a key part of the automaker’s efforts to develop a fuel-efficient lineup.

In June, GM committed to building the Cruze in Lordstown.

Much of what happened at Lordstown this year was tied to gas prices.

Consumers and businesses struggled as gas prices rose steadily in the first half of the year. Prices topped $4 a gallon in July.

The good news was that world oil prices began to fall as markets realized that speculators had bid up prices too high. By December, world oil markets had collapsed and the average price for gas in the Mahoning Valley was under $1.70 a gallon.

The bad news was that prices were driven down by a recession that took hundreds of thousands of jobs from the economy.

The recession was aggravated by a collapse of the nation’s credit markets, which in turn caused stock markets to nosedive.

Some of the nation’s biggest investment banks found themselves in financial trouble in September when their bets on subprime mortgages unraveled. The chaos spilled over to the stock markets on Sept. 29 when the Dow Jones industrial average plunged 777 points, or 7 percent.

Investors were stunned as the stock markets continued to sag. Some local residents pulled their investments from the market, fearing more losses, while others stayed in and hoped that the markets would bounce back eventually.

The end of the year did bring a sign of hope from V&M Star, which operates a minimill in Youngstown that produces pipe for oil and gas exploration. The company said it was considering a local site for a possible expansion that could bring hundreds of new jobs.

In December, the state approved tax credits for the project, and Youngstown and Girard officials agreed on a plan to share income taxes created by an expansion. The local and state officials are hoping that this is one bit of news that won’t turn bad in 2009.

shilling@vindy.com