Culver: Auto bailout impacts 34,000 Iowa jobs - KWWL - Eastern Iowa Breaking News, Weather, Closings

Culver: Auto bailout impacts 34,000 Iowa jobs

IOWA CITY (KWWL) - Governor Chet Culver wants full support from Iowa lawmakers, when it comes to a proposed $14 billion rescue plan for the three major U.S. automotive companies, which passed the House of Representatives Wednesday.

Critics argue the plan is wasteful, but Culver says nearly 34,000 Iowa jobs hang in the balance.

In a letter to Iowa's Congressional delegation, Governor Culver said a bankruptcy of Ford, General Motor Company or Chrysler could impact parts suppliers and dealerships across the state. Citing a report by the Center for Automotive Research, Culver says those jobs account for more than 2% of the state's workforce.

"We manufacture a lot of the products these auto makers rely on, either directly or indirectly," Culver said Wednesday.

Community Motors' general manager Ray Warson agrees. He says failure to approve a rescue would have dire, far-reaching consequences.

"[The] biggest things you're going to see is employment affected all the way through, not only for the car manufacturers," he told us. "Then you work your way down to the dealers, then down to the parts suppliers."

Jon Bell, managing partner at Chezik-Bell Ford, says the domino effect could be larger than the ongoing Wall Street crisis.

"We're talking about jobs of working people, middle class people, who have families and are paying bills."

Bell wants the government and U.S. auto makers to unite, rather than point fingers and lay blame.

In the meantime, dealerships are trying to whittle down expenses, offer new incentives, and try to get the most out of their existing customer base.

In his letter to lawmakers, Governor Culver says an auto industry collapse could also cut tax revenue, making already tight state budgets even tighter.

Click here to view the report Culver cites for supporting the bailout.

Culver's letter to lawmakers:

Last week, respected economists came together to announce what many already know: that the United States has been in a recession since the beginning of 2008.  We have all seen the signs for months - spiking foreclosures, the highest unemployment in 15 years, bank failures, and unprecedented declines in the stock market.  And now at risk is the viability of the American automobile industry.  I urge you to support immediate federal bridge loans to the three domestic auto manufacturers, whose survival is critical to prevent further economic collapse.

As you know, General Motors, Ford, and Chrysler account for one in ten jobs nationwide, including 34,000 jobs in our state.  This includes those who work in vehicle assembly plants, for their suppliers and in their dealerships, as well as other jobs that depend on the presence of the American automobile industry.  Earlier this month, the Center for Automotive Research reported that up to three million jobs nationwide could be lost in the first year alone if these companies fall into bankruptcy.  This would result a loss in $150 billion in personal income in the first year, as well as a significant increase in transfer payments and large losses in personal income tax receipts, which would add to the budget problems for both states and the federal government. 

To avoid the consequences described above, I urge you and your colleagues in Congress to act immediately to provide an emergency bridge loan to the domestic auto manufacturers.  It is imperative that consensus is reached to prevent the collapse of this industry, just as it was with respect to financial institutions.  The ripple effects of the industry's collapse would certainly have negative effects for all Americans.   

I appreciate your attention to this important matter.  


Chester J. Governor

Governor of Iowa

Online Reporter - Brady Smith

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