The Journal News, December 12, 2008, Friday

Copyright 2008 The Journal News (Westerchester County, NY)
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The Journal News

December 12, 2008, Friday
GWPR Edition

HEADLINE: N.Y. lawmakers back auto bailout; state cites 230,000 jobs linked to industry

BYLINE: Brian Tumulty

BODY:
WASHINGTON - Most members of New York's congressional delegation support the auto industry bailout that passed the House of Representatives on Wednesday amid conflicting predictions of what would happen if General Motors Corp. and Chrysler were allowed to file for federal bankruptcy reorganization.
The bill, which stalled yesterday in the Senate because Republicans want to amend or derail the $14 billion in loans, would help stanch the erosion of New York's manufacturing sector in economically distressed upstate communities.
"The bottom line is that I'm not willing to play Russian roulette and see what will happen in Detroit if we allow the automakers to file for bankruptcy," said Rep. Eliot Engel, D-Bronx, explaining his support. "I think this is uncharted waters, and we need to do everything we can to avoid bankruptcy."
Only two members of the state's delegation - retiring Republican Reps. Tom Reynolds of Clarence and Vito Fos-sella of Staten Island - voted against the bridge loans approved by the House 237-170.
Rep. John Hall, D-Dover Plains, described himself as a reluctant supporter who was persuaded because of taxpayer protections that include a prohibition against bonuses or golden parachutes for top executives and the creation of a "car czar" to oversee the reorganization plans of the automakers.
"I'm trusting that person will do a good job," Hall said.
Supporters of the Detroit automakers say a forced bankruptcy filing would be devastating because car buyers would be fearful that warranties would not be honored.
That's one reason Rep. Nita Lowey, D-Harrison, supported the bailout.
"GM, Ford and Chrysler are responsible directly or indirectly for 5 million jobs nationwide," Lowey said. "Three million would be lost the first year."
But Americans are deeply divided on the issue. A poll released yesterday by Marist College found 48 percent of registered voters disapprove of the legislation compared with 43 percent who support it. Nine percent were uncertain. The telephone survey of 883 registered voters taken Tuesday and Wednesday had a margin of error of plus or minus 3.5 percentage points.
The American Conservative Union urged the Senate to reject the bailout plan, noting that the Tribune Co. - owner of the Los Angeles Times and the Chicago Cubs baseball team - filed for bankruptcy Monday without a public outcry for a bailout.
"It's time to draw a line," said David Keene, chairman of the ACU, whose organization maintains that federal bankruptcy laws would help the companies with their restructuring.
The loans do not apply to Ford Motor Co., which is not in immediate need of financial help, or foreign-based man-ufacturers such as Toyota and Hyundai that have plants in the United States.
Most Senate Democrats, including Sens. Chuck Schumer and Hillary Rodham Clinton, support an auto industry rescue.
Senate Minority Leader Mitch McConnell expressed support yesterday for an amendment proposed by Sen. Bob Corker, R-Tenn., that would require GM and Chrysler to file for federal bankruptcy reorganization if they do not meet certain conditions by a fixed date.
Among the requirements Corker wants: lowering their labor costs to a rate similar to those of Nissan, Toyota and Honda; reducing their debt through an equity swap with bondholders; and paying part of their contractual obligations to labor unions with stock instead of cash.
"The best route for the long-term viability of ailing car companies may be a rocky one," said McConnell, R-Ky. "Government help is not the only option. It's not even the best option. Long-term viability is still possible. But it's only possible if these companies are forced to make the tough choices necessary for their survival."

Though New York no longer has any automotive assembly plants - the General Motors plant in North Tarrytown, now Sleepy Hollow, closed in 1996 - the state is home to parts plants such as the GM engine factory in Tonawanda, a Ford stamping plant in Buffalo and BorgWarner facilities that build transmissions in Ithaca, said Arthur Wheaton of the Cornell School of Industrial and Labor Relations.

"There are still a significant number of auto jobs in New York," Wheaton said.

GM employs 400 high-tech workers at a facility in the Monroe County community of Honeoye Falls who are working on applications for fuel cells in the next generation of autos.
In 2007 - before the current recession - the state had 75,600 auto industry jobs, with 22,200 in manufacturing and 53,400 at auto dealerships, the Labor Department reports.
State Comptroller Thomas DiNapoli estimated the industry has a much bigger impact - 230,000 jobs statewide - using other sources of data that include indirect jobs at places such as auto parts stores and car insurance agencies.
DiNapoli's estimate is based on 2006 data and calculations by the Center for Automotive Research in Michigan, an industry-supported think tank.
Kajal Lahiri, an economics professor at the State University of New York at Albany, estimates the auto industry directly and indirectly employs about 250,000 New Yorkers, or about 3.5 percent of the state's 7.2 million workers.
But a bankruptcy filing by one or more of Detroit's Big Three would have a bigger impact in New York than in most states for a different reason - a default on the $100 billion in loans the automakers owe on Wall Street, Lahiri said.
"To me, that's a big one," he said. "If they go into bankruptcy, they have no obligation to those loans."
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