NEW YORK (Reuters) - New York state could lose 230,000 auto jobs while its cash-starved financial companies could suffer billions more dollars of losses on bad loans if the nation does not rescue Detroit’s flailing car-makers, the state comptroller said on Wednesday.
“A collapse of one or more automakers would hurt upstate communities that are desperately fighting for every job, and hurt the already reeling financial services sector even more,” Democratic Comptroller Thomas DiNapoli said in a new study.
On Wednesday, signs that a U.S. government rescue of Detroit’s “Big Three” faced head winds caused shares of Ford Motors Corp and General Motors Corp to turn negative. Senator Richard Shelby of Alabama said he would slow the bailout bill down.
While most attention has been focused on Michigan, the epicenter of car production in the United States, a number of other states, notably southern states like Alabama and North Carolina, have significant auto industries due to their success in winning foreign carmakers.
The New York study is one of the first to put a number on the potential economic pain that might lie ahead for states that are not automobile industry capitals.
Estimating carmakers owe at least $100 billion to financial companies, DiNapoli added: “If automakers default on these loans, New York-based financial institutions could be hit hard.”
Wall Street’s near-capsizing already has cost New York dearly in jobs and tax revenues, and the state has been through previous contractions at carmakers, which led to the closing of plants in Tarrytown, for example.
About 30,000 New Yorkers are directly employed in the auto industry, and another 200,000 work for related companies, including parts suppliers, the new study said.
These statistics suggest the widespread impact shutting any one of the Big Three, a list that includes Cerberus’ Chrysler LLC, might have on New York and other states.
The total U.S. employment in just the motor-vehicle and parts manufacturing industries for years has fallen, hitting just under 823,000 in November from 1.3 million 10 years ago, according to the Bureau of Labor Statistics.
Labor statisticians did not have a state breakdown immediately available.
Jobs at manufacturers are prized because they often pay more than the service sector, and all of New York’s auto workers reap $12 billion a year in wages and benefits, and represent 3.2 percent of the state’s work force. Many of jobs are found in the upstate region, whose economy has been locked in a protracted decline.
Editing by Andrea Ricci
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