Detroit Feels Ripple Effects From GM’s Bankruptcy

JIM LEHRER:

Next, the many fallouts from the GM bankruptcy. NewsHour economics correspondent Paul Solman begins another of his reports from the series "Making Sense of Financial News."

PAUL SOLMAN:

Are you selling any cars? Nobody's in there.

While shooting a GM story in Detroit last week, we heard responses to the bankruptcy and a lot about collateral damage, especially to those GM stakeholders who don't have collateral.

VICTOR GEORGE, Chevrolet dealer: I've got to take care of my family.

PAUL SOLMAN:

In Lapeer, Mich., for instance, Victor George is losing his Chevy dealership.

Can you afford to retire?

VICTOR GEORGE:

Are you kidding? No. One in college, second one ready to enter college, and one in elementary school. So I've still got three good reasons to get up every morning and go to work.

PAUL SOLMAN:

But work where? What work will Victor George, a car dealer all his working life, find in a downsized economy? And what about those who work for him?

The nationwide average is around 50 employees per dealership. With GM alone closing 1,100 of them, that's at least 55,000 fewer jobs to vie for. And what about suppliers, who still employ some 300,000 workers?

SHELDON STONE, Amherst Partners:

In addition to the shrinkage of the sheer number of suppliers and the people employed, there's going to be mergers or acquisitions in the supply base of companies coming together.

PAUL SOLMAN:

Consultant Sheldon Stone.

SHELDON STONE:

For example, plastic injection molders, the sheer number of plastic injection molders in the supply base is — the capacity is far greater than not only GM, but the Detroit three needs at this point in time.