Changes

Chrysler entered bankruptcy in April 2009, after losing $16.8 billion in 2008, and is expected to lose another $4.7 billion in 2009.  It hopes to emerge quickly, with the old owners wiped out. The new owners will be Fiat of Italy, the UAW and the U.S. government.  GM has until June 2009 to work out deals to escape bankruptcy.  Ford appears to be solvent.

Chrysler entered bankruptcy in April 2009, after losing $16.8 billion in 2008, and is expected to lose another $4.7 billion in 2009.  It hopes to emerge quickly, with the old owners wiped out. The new owners will be Fiat of Italy, the UAW and the U.S. government.  GM has until June 2009 to work out deals to escape bankruptcy.  Ford appears to be solvent.

Bankruptcy of the Big Three would be very expensive to the economy as a whole and the federal government. It would mean loss of 240,000 very high paying jobs at the Big Three, a loss of 980,000 high-paying jobs at the suppliers and local dealers, and 1.7 million jobs throughout the economy.  It would cause a decline in personal income of $151 billion the first year, and $398 billion over three years.  The federal, state and local governments would lose tax revenue and spend on welfare programs a total of $156 billion over three years.<ref> CAR Research Memorandum. "The Impact of the U.S. Economy of a Major Contraction of the Detroit Three Automakers" (Nov 2008) [http://www.cargroup.org/documents/FINALDetroitThreeContractionImpact_3__000.pdf online edition]</ref>

Bankruptcy in practice in 2009 means continued operation for Chrysler and GM. If it involves shutting down, then bankruptcy of the Big Three would be very expensive to the economy as a whole and the federal government. It would mean loss of 240,000 very high paying jobs at the Big Three, a loss of 980,000 high-paying jobs at the suppliers and local dealers, and 1.7 million jobs throughout the economy.  It would cause a decline in personal income of $151 billion the first year, and $398 billion over three years.  The federal, state and local governments would lose tax revenue and spend on welfare programs a total of $156 billion over three years.<ref> CAR Research Memorandum. "The Impact of the U.S. Economy of a Major Contraction of the Detroit Three Automakers" (Nov 2008) [http://www.cargroup.org/documents/FINALDetroitThreeContractionImpact_3__000.pdf online edition]</ref>

A bankruptcy of the Big Three would not quickly benefit foreign makers.  The transplants would be severely hurt by the closing of parts companies like American Axle, Delco and Visteon they share with the Big Three, and their output would fall. There would be far fewer new cars for sale for years, and prices would soar. Eventually imports would come from abroad, but they would be much more expensive than current autos.  It takes years to build new plants, and in the current financial crisis there is no funding available for risky multi-billion dollar manufacturing ventures.<ref> Louis Uchitelle, "If Detroit Falls, Foreign Makers Could Be Buffer," [http://www.nytimes.com/2008/11/17/business/economy/17impact.html?_r=1&hp&oref=slogin ''New York Times,'' Nov. 16. 2008] </ref>

A bankruptcy of the Big Three would not quickly benefit foreign makers.  The transplants would be severely hurt by the closing of parts companies like American Axle, Delco and Visteon they share with the Big Three, and their output would fall. There would be far fewer new cars for sale for years, and prices would soar. Eventually imports would come from abroad, but they would be much more expensive than current autos.  It takes years to build new plants, and in the current financial crisis there is no funding available for risky multi-billion dollar manufacturing ventures.<ref> Louis Uchitelle, "If Detroit Falls, Foreign Makers Could Be Buffer," [http://www.nytimes.com/2008/11/17/business/economy/17impact.html?_r=1&hp&oref=slogin ''New York Times,'' Nov. 16. 2008] </ref>