By TIM THORNBERRY
Kentucky Correspondent FRANKFORT, Ky. — The slump in the economy has affected nearly everyone, perhaps none moreso than those in the auto industry.
Kentucky is home to Ford, Toyota and General Motors facilities and a host of companies that supply these plants; in fact, the state ranks third in the country behind Michigan and Ohio in the number of jobs related to the industry. It has felt the same roller-coaster ride as Detroit, as legislation concerning a bailout for automakers failed to make it through Congress, only to be taken up by President Bush.
Despite the more than 80,000 employees in the state connected to the industry, Kentucky’s Republican U.S. Sen. Mitch McConnell led the bailout on the bailout.
“The sticking point that we are left with is the question of whether the UAW (United Auto Workers union) is willing to agree to a parity pay structure with other manufacturers in this country by a date certain … It is upon that issue that we’ve reached an impasse,” said McConnell after the rescue measure failed last month.
“All Americans, including myself, are worried about the future of our nation’s automakers. These companies have a venerable place in the story of modern America … But many Americans are also worried about the prospect of the government intervening on behalf of some industries and not intervening on behalf of others, especially when there is no guarantee that the interventions will work. They wonder when the spending stops. If I were to vote in favor of this bill, I would not have a good answer for them.”
As it turned out, McConnell won’t have to provide answers, because of measures Bush took to move a portion of the $700 billion economic stimulus money to aid two of the big three ailing automakers. Chrysler and General Motors will get $17.4 billion to keep them running through March – but after that it becomes the problem of incoming President-elect Obama.
As one central Kentucky dealer put it, the problems may start in Detroit, but the repercussions are felt all over the world.
Jack Cain, who sits on the board of the National Automotive Dealers Assoc. (NADA) as past chairman and owns one of the largest Ford dealerships in the state, said in his 50-plus years in the business, he’s never seen a worse time – but he thinks things will get better.
“This has global effects and encompasses everybody buying. The thing that got us in trouble in Detroit is a supply and demand kind of thing. They, like other companies, were building what people were buying,” he said.
But all is not lost, according to Cain. He said he doesn’t think things are as bad as some would believe through negative reports, and that people need to get back to what they have always done and try to get past some of the perceived negativity of the industry.
“All we need to do is get back to what we normally did: doing our jobs, making our money and spending it, getting on with it,” he said.
Cain emphasized that right now interest rates are low, prices are good, gas prices are low and credit is easier to get, but the key is consumer confidence, which is the lowest it’s ever been.
Not just the factories While images of idle auto factories abound on news reports, the problems have made their way to rural America as well.
Cain is also a farmer and said he remembers a time when farmers, after selling their crop, came to the dealership to buy their vehicles. His business is located in Woodford County, one of the richest agricultural areas in the state – which hasn’t shielded him from the woes of the industry.
But, last month was the best his business had experienced in eight months, he said, and by mid-2009 Cain thinks the industry and economy will be a lot better.
“I feel like by June, while things will be not back on track, everyone will feel a lot better and I see that light at the end of the tunnel,” he said. “It won’t be a great year but I think it will be a profitable year and that’s something the car dealers haven’t had in a couple of years. We just need to realize if we all just stop, then nothing is going to happen.”
Cain also said he thinks the new administration coming to Washington will bring new hope to people across the country.
By the numbers While Kentucky is known more for horse racing rather than horsepower, the auto industry plays a major role in the state’s economy, to the tune of adding $5.6 billion to Kentucky’s gross domestic product in 2006, according to state government information.
In 2007, Kentucky produced more than one million cars and light trucks, accounting for nearly 10 percent of the U.S. market share. Vehicles produced here include the Toyota Camry, which is the number one-selling car in America, the Ford F-series truck, which has been the most popular truck series in the last 30 years, and the top-selling premium sports car, the Chevrolet Corvette.
The average weekly wage for motor vehicle manufacturing in 2007 was $1,770, compared to $702 for all industries in Kentucky.
The U.S. Bureau of Economic Analysis reported that in 2005, “2.2 percent of the state’s total employment is in motor vehicles, bodies and trailers and parts manufacturing. Moreover, in 2005, nearly 20 percent of the state’s workforce that is employed in manufacturing is employed in the motor vehicle parts, bodies and trailers manufacturing sector.”
Kentucky also ranks as the state with the lowest overall cost of doing business among the top automotive-producing states, according to Moody’s Economy.com |
