Quarter Million Jobs at Risk as GM and Chrysler Navigate Bankruptcies

Strategic Insights -

The bankruptcies of General Motors (GM) and Chrysler, two of the world's largest automakers, could have a devastating impact on the US workforce, with up to a quarter million people potentially losing their jobs over the next year and a half. As the companies reorganize and downsize, they will employ fewer workers, operate fewer plants, and produce fewer cars, even in the best-case scenario.

Key Takeaways:

  • Up to a quarter million people may lose their jobs as a result of GM's bankruptcy, with the number of jobs lost potentially surpassing the daily average of 156,000 jobs lost over the past three months.
  • GM's US workforce has fallen from a high of 620,000 in 1979 to about 120,000 now, a decline of over 80% in three decades.
  • The company's bankruptcy could lead to temporary layoffs of most or all of its 61,000 production workers, with 25,000 GM workers and a comparable number of suppliers at risk.
  • Chrysler's bankruptcy, which included shuttering plants and furloughing 27,000 hourly production workers, may not have the same level of impact, with workers likely to be called back later in the summer.
  • The lost production at GM and Chrysler will reduce the US gross domestic product by about 0.7 percentage points in the second quarter.

Statistics:

  • Up to 250,000 jobs may be lost as a result of GM's bankruptcy over the next year and a half (MarketWatch, Dow Jones & Company).
  • GM's US workforce has fallen from 620,000 in 1979 to 120,000 now, a decline of 80% in three decades (MarketWatch, Dow Jones & Company).
  • 25,000 GM workers and a comparable number of suppliers are at risk of temporary layoffs due to the company's bankruptcy plans (MarketWatch, Dow Jones & Company).
  • Chrysler's bankruptcy led to the furloughing of 27,000 hourly production workers, but they may be called back later in the summer (MarketWatch, Dow Jones & Company).
  • The lost production at GM and Chrysler will reduce the US gross domestic product by about 0.7 percentage points in the second quarter (Abiel Reinhart, JPMorgan Chase Bank).
  • Falling auto production cut 1.4 percentage points in the first quarter (Abiel Reinhart, JPMorgan Chase Bank).

Sources:

  • MarketWatch.Com, Dow Jones & Company
  • Abiel Reinhart, economist, JPMorgan Chase Bank
  • The Wall Street Digital Network (WSJ.Com, Barrons.Com, AllThingsD.Com, BigCharts.Com, VirtualStockExchange.Com)