GM puts out a video on the dire consequences to the US economy if the big 3 automakers are allowed to collapse. GM, Ford and Chrysler are hoping for a government bailout in the form of 25 billion US dollars in loan guarantees.

When a corporation sets up a website and puts out a video to beg for a government bailout, you know they are desperate.

We've considered earlier whether the doomsday scenario that GM has posited in their appeals for aid to the US Congress and the Bush administration would actually occur should GM become insolvent. They claim that if they go down, they will take the rest of the industry and its suppliers with them, with hundred of thousands of job losses and a contraction of the GDP since the auto industry makes up about 2.3 percent of that. One thing you can be sure of is that they believe it themselves. Otherwise, they would wait for an Obama administration since the President-elect (along with the Democratic-controlled Congress) is in favor of the loan guarantees.

Some analysts believe that the US auto industry would be able to survive and be made up mostly of local suppliers funneling parts to foreign automakers manufacturing vehicles inside the United States. That may be true. But those foreign automakers have their own interests at heart and they won't care much for GM, Ford and Chrysler's employees, nor the unions that represent them since foreign automakers like to set up plants in the South with non-unionized work forces. And what about the thousands of businesses and jobs at risk at Big 3 dealerships?

About 100,000 automaker and supplier jobs have been lost in the US this year alone, accounting for 10 percent of total job losses for 2008.

And GM does make one argument in this video that is interesting.

The continued erosion of the US manufacturing base is an old story, since we all know how nearly everything available for purchase in the United States is made either in China/Pacific Rim (low-cost goods) or Europe (luxury goods). But the automotive industry still represents the core of US industrial might.

GM claims than in a nation security emergency the US would be dependent on foreign manufacturers to build heavy vehicles for the military.

That may be an exaggeration but it is obvious that if the big 3 are no longer around that the bulk of research and development for new products and technologies will be done outside of the US. And that is a big hit in itself to American industrial power.


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