GM Shutdown

Some weeks ago, I spoke on how the fate of Detroit and the No-longer-so-big Three was important to us, as they are a key part of the international economy and North America’s employment community. While it appears our government is willing to donate a few billion to the cause if the Americans do, and they are mulling just that south of the border, the beginning of the unravelling of the North American auto industry has started to begin.

On Friday of last week, General Motors announced that they would be shutting down 21 plants in the US, and all 3 in Ontario, for a period of one month to six weeks starting in January. The CAW announced that it was likely Ford and Chrysler would be taking similar measures. Unfortunately, today Chrysler announced that they would be idling all of their North American plants for one month, starting tomorrow morning. This does not bode well for Southern Ontario. As I’ve already said, the auto industry employs a very large number of people, and a lot of people rely on North American cars to get around. While even the worst case scenario probably sees the big three being bought out or merging in some fashion, who knows how the new owners will treat existing customers.

But this shutdown has a far more human face, that of thousands of employees that have just been told that they are going to have a much leaner Christmas season. Six weeks on EI will not do much to ease debt-loads, even with the GM promise of topping this up so they will have 60% of their usual salaries. Also, this announcement is likely not going to do much to boost public confidence in the companies, which in turn will affect the stock prices, and probably in a continuing downward trend.

Finally, I really hate being doom and gloom better than half the time. Unfortunately, everything that seems to going on “out there” seems to be negative. Staggered shutdowns are often the sign of a company in its death throes. I really hope the Big Three can restructure their business model and bounce back from this as improved companies, I feel that their failure would have consequences that we can barely imagine.

By the way, I have a few things to talk about over the next few days, so stay tuned, then expect an absense other than wishing everyone a happy new years...