Virginia might feel Big Three automakers’ pain

Trouble at GM, Ford, Chrysler could put jobs at risk across the state

The heads of General Motors Corp., Ford Motor Co. and Chrysler LLC left Capitol Hill this week without the taxpayer money they said is needed to rescue the distressed auto industry.

They have until Dec. 2 to devise a plan that makes their companies economically viable. Congress could then vote on a bailout package.

As many as 3 million jobs are at stake, the automakers said.

The industry here is not as big as in Michigan, Ohio or Tennessee, but Virginia would take a hit if the Big Three fail.

“We can’t say it’s going to have limited impact,“ said Michael Allen, spokesman for the Virginia Automobile Dealers Association.

More than 55,000 people in Virginia work at new-car dealerships, both domestic and foreign, or in the automotive manufacturing industry.

New-car dealers in Virginia recorded sales of $18.5 billion last year. Automotive manufacturing had $7.2 billion.

The biggest hit would come on the dealership side, said George E. Hoffer, an economics professor at Virginia Commonwealth University.

New-car dealers employed 33,094 people last year and had a total payroll of $1.55 billion.

Virginia has strict franchise laws making it impossible for manufacturers to close underperforming dealerships. But if any of the Big Three automakers file for bankruptcy, the laws would be null and void, Hoffer said. That could lead to closures.

“It will be like dying from a thousand cuts,“ he said. “If one dealership shuts down you could lose 100 jobs and that will happen all over the state.“

The same could be said for the manufacturing side.

GM has a powertrain plant in Fredericksburg that employs about 100 people. And there are more than 100 other plants in Virginia doing assembly work, molding tires and manufacturing electrical, engine, steering and other component parts.

More than 22,000 people in Virginia work in automotive manufacturing, which is 8 percent of the state’s total manufacturing employment. The industry payroll is $1.1 billion, Virginia Economic Development Partnership economist Brian Kroll said.

“A lot of the suppliers we have in Virginia do have significant business with GM, Ford and Chrysler, like any state,“ said Mike Lehmkuhler, transportation team leader in the partnership’s business development division. “If the Big Three were to go out of business, I would think the job loss would be in the thousands, spread out in Virginia, not just at one or two plants.“

Michael Martin of Dudley Martin Chevrolet said the American auto industry would be “crushed” if the Big Three automakers don’t get a loan from the feds and were allowed to go bankrupt.

Martin, whose grandfather started the Manassas Chevrolet dealership more than 65 years ago, bristles when people talk about “bailing out” Detroit.

“The constant reference to it as a bailout is not being fair to the automakers,“ Martin said. “They’re looking for a lower interest loan from the federal government…”

People wouldn’t want to buy a bankrupt company’s cars for fear that warranties wouldn’t be honored and parts wouldn’t be available, said Martin, who employs roughly 100 people at the Chevrolet dealership.

Martin said a filing for bankruptcy by any of the Big Three automakers would trickle down to local economies.

Emily C. Dooley is a staff writer at Media General’s Richmond Times-Dispatch. News & Messenger reporter Keith Walker contributed to this report.