Detroit's mood grim as automakers face the brink
DETROIT (Reuters) - After three decades at work in a GM factory, John Martinez has reached a crossroads.
Martinez, 50, must choose between retiring and making a long and expensive commute across state lines to stay with General Motors Corp. Any future he can imagine is going to be costly and tough.
"My whole family is under stress," he said.
The same can be said of the embattled U.S. auto industry and its recession-hardened hometown, Detroit. GM, once an emblem of U.S. post-war economic might, is being driven to the brink by dwindling sales that are expected to test cash reserves and the nerves of investors in the months ahead.
Crosstown rivals Ford Motor Co and privately held Chrysler LLC face similar pressures. As the automakers weigh their options to ride out the industry's most-trying slump in 25 years, thousands of Detroit families are doing the same.
For many, the choices line up from bad to worse.
With four kids, retirement is not an option for Martinez. But driving more than 100 miles daily between home in the Detroit suburb of Lincoln Park and Toledo, Ohio -- where GM has a job for him -- is going to hurt with gas over $4 a gallon.
Moving from Detroit, one of the markets hit hardest by the ongoing housing slump, could prove impossible.
"I can't probably sell my home for what it's worth," said Martinez. "I will owe more than I sell it for."
When Martinez joined GM in the late 1970s, it controlled 46 percent of the U.S. vehicle market. A union job in the U.S. auto industry was seen as steady work with good wages and rock-solid benefits -- for life.
But last week, GM shares skidded to their lowest level since 1955. The stock had its worst week since trading in the wake of the September 11, 2001 attacks, with Wall Street analysts handicapping when and how it will raise new capital.
GM's sales have dropped 15 percent so far this year, and its share of the U.S. market is down to just 21 percent.
When major automakers report sales for June on Tuesday, there is a chance that GM will be overtaken by Toyota Motor Co as the monthly sales leader, a reversal that points to the popularity of small cars like the Yaris and the abandonment of SUVs and trucks like the Yukon and Silverado.
CUTS, CUTS, AND THEN MORE CUTS
GM has responded by slashing costs, cutting truck production and slashing its factory work force to less than half of the 118,000 it employed four years ago. Continued...
