GM reorganization failure would be ‘devastating’ to Mahoning Valley economy

By Don Shilling

Bert Cene hopes the safety net under General Motors holds — for the sake of the Mahoning Valley.

The former steelworker lived through the demise of the local steel industry 30 years ago, and now as a director of job training programs, he knows the area can’t afford another major industry to go under.

“It’s hard to say what the devastation would be, but it would be bad,” said Cene, executive director of the Mahoning Columbiana Training Association.

Valley leaders are on edge because GM is expected to file for bankruptcy protection after months of trying to restructure on its own. Fritz Henderson, GM’s chief executive, is planning to meet with reporters at mid-day.

Unlike 30 years ago when area steel companies collapsed, the bankruptcy is not expected to be the end of GM because the federal government has been working to protect the automaker.

“We have to hope for the safety net,” Cene said.

The government has loaned GM $19.4 billion and plans to provide more financing if there is a bankruptcy. It also is offering money to the automaker’s suppliers and leaned on bondholders and unions to take concessions.

The automaker hopes bankruptcy will give it time to spin off its Chevrolet, Cadillac, Buick and GMC brands into a separate company with less debt and lower costs. That company could be on its feet in two or three months.

GM’s plan positions the company for success, but only if several conditions fall into place, said Don Constantini, chief executive of Falcon Transport and Comprehensive Logistics, two local GM suppliers.

Besides favorable rulings from the bankruptcy judge, GM also needs increased car sales to cover its costs, Constantini said.

Failure of GM’s plan would be disastrous for the Valley, Cene said.

GM’s assembly and fabricating plants in Lordstown have 4,500 hourly workers, although both plants are starting a six-week shutdown today to reduce inventory. Throughout this spring, the complex was operating with just one shift and about 1,800 workers. The rest are hoping to be called back when the car market picks up.