U.S. carmakers key for North American economy: CAW

DETROIT (Reuters) - U.S. automakers are "incredibly important" to the North American economy and a failure of even the smallest Detroit automaker would result in the loss of as many as 70,000 jobs in Canada alone, Canadian Auto Workers union Ken Lewenza said on Tuesday.

Lewenza, in a telephone interview, said he hopes the U.S. Congress understands that General Motors Corp, Ford Motor Co and Chrysler LLC are a key part of the economies in both United States and Canada.

"I am hopeful that Washington politicians will recognize the importance of the auto industry to the economy, and that's not just the U.S. economy, but the North American economy," he said. "It's incredibly important and I hope there is a recognition of that in the Congress."

Detroit automakers have sought emergency assistance to help them survive a steep and worsening drop in sales they blame on the global credit crisis and slumping economy.

Lewenza comments come as U.S. auto executives were gearing up on Tuesday to testify at a congressional hearing, a day after Senate Democrats proposed to bail out the ailing industry with $25 billion in loans.

GM Chief Executive Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli, along with Ron Gettelfinger, head of the United Auto Workers union, were expected to detail the woes surrounding the U.S. auto industry.

Lewenza said the ripple effect from the failure of any of the automakers would be devastating.

Chrysler, for example, is the No.1 employer and the No.1 taxpayer in the border city of Windsor, Canada, he said, adding that a failure of the automaker would be "horrible."

"Suppliers would start crumbling. It is almost not imaginable what would happen," he said. "It would be a disaster."

U.S. automakers have been hammered by the slow U.S. economy, tight credit markets and a decline in consumer confidence.

GM, Ford and Chrysler are burning through cash amid a global credit crunch that has accelerated the decline in U.S. auto sales to near 25-year lows and placed severe limits on corporate and consumer borrowing.

Chrysler is seen as the weakest among the three Detroit carmakers, but its financial health is difficult to assess as it is a privately-held company.

Sources have told Reuters Chrysler has seen a substantial decline in cash reserves and executives have raised concern about its ability to finance operations beyond the first half of 2009.

GM, on the other hand, has said publicly it may run short of cash early in 2009.

The CAW has called on the Canadian government to provide loan guarantees, short-term credit, and other emergency assistance to automakers, saying the North American auto industry is being seriously affected by the credit crunch.

"All three companies are facing the crisis with equal pain," he said.

United Auto Workers union chief Ron Gettelfinger also warned on Saturday of dire consequences for the auto industry if one of Detroit's Big Three carmakers had to file for bankruptcy.

(Editing by Andre Grenon)