DURA Automotive Systems, Inc. today sent a letter to President Bush, Secretary Paulson and members of Congress in support of auto loans for General Motors Corp., Ford Motor Co., and Chrysler LLC.
"The U.S. auto industry is an integral part of the American economic fabric," said Tim Leuliette, president and CEO. "It has been aggressively and successfully restructuring but it has been caught in a perfect storm that caused an economic crisis over which the industry has no control. The crisis not only endangers that restructuring but the future of one of America's most important industries."
Citing Driving the Future: The New American Auto Industry by The Automotive Trade Policy Council the letter points out that the auto industry has invested $10 billion in this country in plants and equipment each year. In addition, the U.S.-based auto industry is second only to the semiconductor industry in R&D spending - $12 billion last year alone.
The auto industry is also one of the largest economic multipliers of any sector of the U.S. economy. Referring to a recent report by the Center for Automotive Research (CAR) the letter points out that the motor vehicle and parts industries employed 732,800 workers directly as of September, 2008, and the Detroit Three employed 239,341 hourly and salary workers in the United States at the end of 2007. The international producers employed roughly 113,000 people in the United States at that time.
There is more at stake. The U.S. also stands to lose any lead it might have in developing alternative energy sources, the letter said. If the auto industry fails the U.S. may well be forced to import critical technologies such as batteries, biofuel technology, advanced internal combustion engines and transmissions, hybrid systems, and fuel cells. That, in itself, has all the markings of a national security disaster, the letter further stated.
"As a nation we are in the midst of the greatest financial crisis since the Great Depression," Leuliette said. "It will deepen if the auto industry collapses. Without federal loans that is not a possibility; it is a certainty.
"Speed is of the essence. I urge you to set politics aside and work together to provide the funds the auto industry in this country needs to survive. Our national and economic security depends on it," he said.
Following is the full text letter from DURA Automotive to President Bush, Secretary Paulson and members of Congress in support of auto loans for General Motors Corp., Ford Motor Co., and Chrysler LLC.:
November 13, 2008
I am writing today in support of federal loans for General Motors Corporation, Ford Motor Company and Chrysler LLC. Their survival is essential to the national security and economic well being of the United States and its citizens.
The U.S. auto industry is an integral part of the American economic fabric. According to Driving the Future: The New American Auto Industry by The Automotive Trade Policy Council, the U.S. auto industry has invested $10 billion in this country in plants and equipment each year. In addition, the U.S.-based auto industry is second only to the semiconductor industry in R&D spending - $12 billion last year alone, the study said.
The auto industry has one of the largest economic multipliers of any sector of the U.S. economy. Its growth or contraction can be detected in changes In the U.S. Gross Domestic Product. In many states, employment in automotive and automotive parts manufacturing ranks among the top three manufacturing industries, according to a recent report by the Center for Automotive Research (CAR).
CAR says the motor vehicle and parts industries employed 732,800 workers directly as of September, 2008, and the Detroit Three employed 239,341 hourly and salary workers in the United States at the end of 2007. The international producers employed roughly 113,000 people in the United States at that time. Most jobs that are lost will be lost forever.
These jobs are all in jeopardy, along with funds the government needs to move the U.S. forward. At DURA we have been forced to permanently layoff more than 2,000 people since June due to this crisis. The bulk of those jobs are in the U.S.
If GM, Ford and Chrysler are forced into bankruptcy they may well be forced to cease all operations in the U.S. If that happens, nearly 3 million jobs would be lost in the U.S. in the first year - 239,341 jobs at the Detroit Three, 973,969 indirect/supplier jobs and over 1.7 million spin-off (expenditure-induced) jobs, according to the CAR study. In addition, direct, indirect and spinoff employment would drop by 2.95 million. Furthermore, personal income in the U.S. would fall by $150.7 billion. Government transfer payments would increase by $14.3 billion. Social security receipts would drop by $21.1 billion. Personal income tax paid would drop by $24.7 billion.
Other automakers would not go unscathed. A complete shutdown of the U.S.-based carmakers would also shut down the transplants for at least one year. CAR assumes that a 50 percent drop in production by U.S.-based carmakers would cause a 50 percent drop in production at the transplants due to supplier disruptions and bankruptcies.
Not only are the automakers and their suppliers facing a financial crisis in the U.S., credit availability for companies is also shutting down around the world as the risk associated with the U.S. auto industry spreads from bank to bank, continent to continent. U.S.-based suppliers are beginning to see the overseas operations, a critical source of cash, impacted by this evolving crisis as well. As a result they are rapidly becoming cash strapped and a plethora of bankruptcies is right around the corner.
The industry can absorb a few suppliers going into bankruptcy at any one time, as the remaining supply base rallies and moves tooling and production to keep the assembly lines rolling. But a larger number overwhelms the survivors and production is disrupted. Those disruptions will lead to further business failures as weakened suppliers, who survived the initial failure of the OEMs, cannot absorb further production stoppages and the spiral continues.
The U.S. also stands to lose any lead it might have in developing alternative energy sources. The U.S. auto industry plays a critical role in moving our nation away from oil and into new energy sources. If it fails the U.S. may well be forced to import critical technologies such as batteries, biofuel technology, advanced internal combustion engines and transmissions, hybrid systems, and fuel cells. That, in itself, has all the markings of a national security disaster.
The motor vehicle industry and its supply base are part of the "Arsenal of Democracy" as this country must still defend its freedom and the freedom of our allies. From ball bearings to engine components, to forging capability, the source of military vehicle components and civilian vehicle components is the same. When one fails, both fail. Our national security is at stake.
The failure of an auto manufacturer is not the just an economic data point, not just a news item on the business wire, but a collapse of an industry, a collapse of our manufacturing base and a collapse of our confidence.
As a nation we are in the midst of the greatest financial crisis since the Great Depression. It will deepen if the auto industry collapses. Without federal loans that is not a possibility; it is a certainty.
Speed is of the essence. I urge you to set politics aside and work together to provide the funds the auto industry in this country needs to survive. Our national and economic security depends on it.
Sincerely,
Timothy D. Leuliette |
President and CEO |
DURA Automotive Systems, Inc. |
About DURA Automotive Systems, Inc.
DURA Automotive Systems, Inc. is a leading independent designer and manufacturer of shifter systems, cable systems, seating control systems, engineered assemblies, structural and safety systems, modular glass systems and exterior trim systems for the global automotive industry. DURA's operating divisions supply Aston Martin, Audi, Bentley, BMW, Brilliance, Chevy, Chrysler, Daimler, Fiat, Ford, General Motors, Honda, Jaguar, Land Rover, Mahindra, NedCar, NUMMI, Porsche, PSA Peugeot Citroen, Renault-Nissan, SAIC, Ssangyong, Suzuki, Tata, Toyota, Volkswagen and many leading Tier 1 automotive suppliers. DURA is headquartered in Rochester Hills, Michigan, USA. Information about DURA and its products can be found on the Internet at www.duraauto.com.
Forward-looking Statements
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