The Big Three effect

At press time, Detroit’s General Motors, Ford Motor Co. and Chrysler Corp. were fighting for their financial lives, petitioning Congress for $34 billion in emergency loans.

GM, in particular, seemed to be on the brink of financial collapse. In the manufacturer’s third-quarter financial release, officials noted “GM's estimated liquidity during the remainder of 2008 [would] approach the minimum amount necessary to operate its business.”

“A bankruptcy filing would be catastrophic for the nation: would have massive and far-reaching systemic economic and social costs,” said GM officials in their November 2008 “Case for Federal Support for GM and the Automotive Industry.” Even a 50 percent collapse of the Big Three in 2009 would result in a loss of 239,341 jobs for those directly employed by the auto manufacturers; 795,371 jobs at companies that sell commodities, products or services directly or indirectly to the Big Three, including automotive glass manufacturers; and 1,427,663 jobs as a result of the effects such a collapse would have on the general economy, GM reps claimed in their case.

Even with financial assistance, the Big Three project a number of dealerships will cease operation in 2009. Richard Wagoner, GM chairman and chief executive officer, told Congress Dec. 4 that a key element of the manufacturer’s plan was to “make significant changes to our market and retail operations, including a reduction in brands, models and retail outlets.”

Similarly, Ford officials told Congress the company would reduce the number of U.S. dealerships to 3,790 by year-end, “a reduction of 606 dealers overall—or 14 percent from year-end 2005—including a reduction of 16 percent in large markets.”

Such closures could significantly affect the retail auto glass replacement industry if AGR providers lose business to dealerships closing their doors.