Detroit hit as car firms beg for bail-out

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By Greg Wood North America business correspondent, BBC News, Detroit

The government should make sure that the carmakers change their way of doing business Walt Tutak, general manager of the Matthews Hargreaves Chevrolet dealership

They're scraping the first snows of winter off the windscreens at the Matthews Hargreaves Chevrolet dealership in the suburban sprawl that is greater Detroit.

But it's not just the weather that has suddenly turned nasty.

Sales of General Motors cars fell 45% last month.

"It's a little bit scary for me," says general manager of the Matthews Hargreaves Chevrolet dealership, Walt Tutak.

"I've been here for 34 years and I've never really seen it this bad".

Suppliers hit

Car dealerships employ more than one million people across the United States. Many of those jobs are now at risk.

This week is absolutely critical Neil de Koker, Original Equipment Suppliers Association

Mr Tutak has done better than many other dealers. His sales are down just 9%.

But he thinks the Big Three Detroit car makers - General Motors, Ford and Chrysler - should get a government bail-out - on certain conditions.

"I think the government should make sure that the carmakers change their way of doing business," he argues, "because they can't keep on doing what they have been doing and keep in business."

The companies that make parts for the Big Three are under threat too. They employ some 500,000 people.

It is feared that a bankruptcy filing by one of the Detroit carmakers would bring down some of the major suppliers too.

"This week is absolutely critical," says Neil de Koker, president of the Original Equipment Suppliers Association, which represents the parts makers.

"If we do not get the loan this week then I think we'll have to take some really drastic action to try to survive."

Never recover

Earl Fuller runs the union branch for skilled workers at the giant General Motors technology centre, which tests and develops new models.

It's over folks. Detroit as we know it is ceasing to exist Daniel Howes, business columnist at the Detroit News

Hundreds of his members have lost their jobs as projects have been cancelled.

He says a refusal to bail out the auto industry would have consequences far beyond Detroit.

"I believe we would no longer be an industrial power," he says.

"Our automobile industry would never recover. The cost to the United States of being a second class manufacturing country would be dear."

The end of Detroit

It is hard to find anyone in Detroit who opposes the bail-out.

But there are those who see the big three as the authors of their own demise because they were slow to innovate and develop more fuel-efficient vehicles.

It doesn't just hurt the auto industry, it hurts the businesses around them also Anton Lulgjuraj, Marko's Grecian Palace

Now they are suffering from the double whammy of higher petrol prices and the collapse in consumer confidence triggered by the credit crunch.

"Whether it's bankruptcy or bailout, these companies are going to be considerably smaller and they are going to look different," says Daniel Howes, business columnist at the Detroit News.

"That's just cold hard business. These companies are not managing growth, they are managing decline.

"It's over folks. Detroit as we know it is ceasing to exist."

Uncertain future

Anton Lulgjuraj knows about managing decline.

He runs Marko's Grecian Palace, a diner just across the road from the GM Tech Center. His business is down by 50% in the past year - since the lay offs began.

"The workers used to come in three times a day - breakfast, lunch and dinner," he says.

"Now I barely see a few for lunch. It's hurting my business tremendously. The trickle down effect. It doesn't just hurt the auto industry, it hurts the businesses around them also."

Mr Lulgjuraj has cut staff. He has had to let three cooks and five waitresses go, casualties of the downturn in the motor industry.

Outside, the shopping centre is empty and forlorn.

The Wal-Mart is long gone and five other stores, including a beauty salon and a gift shop, have closed.

Mr Lulgjuraj fears he may be next.