Automaker failure could hit 2.5 mln jobs: study
DETROIT (Reuters) - The potential failure of one or more of the three U.S.-based automakers would cut up to 2.5 million jobs in the first year as production ground to a halt throughout the industry, according to an auto industry consultant group on Wednesday.
The impact on carmakers, suppliers and the operations of transplant automakers in the United States would reduce personal income by more than $125 billion in the first year, the Center for Automotive Research said in a study.
U.S. automakers already had been struggling amid a three-year domestic downturn in auto sales before the financial crisis increasing investor concerns that the companies would not be able to hold out until the market recovers.
General Motors Corp GM.N and Cerberus Capital Management CBS.UL have been in talks about a potential merger of GM and Cerberus-owned Chrysler. Ford Motor Co (F.N) is thought to be in better shape than its rivals, but also has been burning through cash at a swift rate.
The center studied the potential impact if all three U.S. automakers failed, or if one or more failed, and said either scenario is possible, and "indeed one or the other is probable, within the next 12 months."
The study was not commissioned by a third party organization or a company, said Ann Arbor, Michigan-based CAR. However, the center has worked with automakers and auto parts suppliers on various projects.
The center expected "short-term shocks" for all automakers, followed by gradual increases in domestic production by international automakers and surviving Detroit automakers and a "high likelihood of many U.S. supplier company insolvencies."
After the first-year impact of job losses, a rebound in domestic production at the surviving Detroit-based automakers and at the transplant automakers would pare those job losses to about 1 million by 2011, the center found.
The study did not take into account the impact on the interdependent Canada or Mexico auto industries that rely on U.S.-produced parts and components.
(Reporting by David Bailey, editing by Richard Chang)
