While politicians in Washington debated bailing out three U.S. automaking giants Tuesday, local dealers anxiously waited.
"It's a necessity that the bailout takes place whether people agree with it or not," said Joe Johnson of Dunlap-Johnson Chevrolet in York. "The automotive industry is the mainstay of the U.S. economy. ... It's not just somebody in Detroit. It's your local dealers."
Federal lawmakers are considering lending $25 billion to the country's three large automakers: General Motors, Ford and Chrysler.
But critics of the plan are opposed to drawing from the $700 billion designated for bailing out Wall Street.
If the bailout doesn't pass, Johnson -- the third generation of a family business dating back to 1930 and the employer of 24 people -- worries that he might have to close his doors.
"The dealers are basically out," he said.
Dunlap-Johnson is one of 15 franchise dealerships in York County. But dealers aren't the only local businesses tied to the auto industry.
"The automotive industry is a pretty broad-ranging business group that impacts a lot of different areas of our economy," said Mark Farris, York County's economic development director, "not the least of which would be some of the suppliers that we have."
Of the county's top 20 employers, five manufacture parts or accessories for the auto industry. Those companies account for more than 2,200 jobs.
"Most people don't think about it," said Pat Watson, executive vice president of the S.C. Automobile Dealers Association. "Most people think about: What will it mean to the price of a new vehicle? ... If one of the Big Three would file bankruptcy, more than likely that effect on these supplemental manufacturing plants could be critical."
Claude Burns III, owner of Burns Chevrolet Cadillac in Rock Hill, agrees.
"If it doesn't go through," he said, "then I think that life in the United States will cease as we currently know it."
York County dealerships provide hundreds of jobs. Burns, who employs about 70 people, said that if his business closes, then not only are his workers out of a job, but the government loses tax dollars from a business disappearing.
This means that newly unemployed people aren't pumping money into the local economy, he said. The effect would even be felt by the business that supplies his uniforms.
"It trickles down," he said. "That's what I'm afraid the politicians don't get -- just how big this problem is."
He also questions the wisdom of relying on foreign automakers to handle domestic needs.
"What are we going to do?" he asked. "We're going to trade our dependence on oil to be dependent upon Japan or Korea or Europe to supply our transportation needs, and they'll charge us whatever the heck they want to charge us. It's just ludicrous for us to go down that road."
Despite dealers' bleak visions of a failed bailout, it's unclear what impact that move would have on them, said Robert Stonebraker, an associate professor of economics at Winthrop University.
If one of the Big Three did file for bankruptcy, Stonebraker said, that company would not disappear.
"It would be like US Airways," he said. "US Airways still exists. But when it came out of bankruptcy, it came out as a smaller company and, hopefully, more efficient company than when it went in."
That kind of restructuring, he said, "is probably going to happen, whether it's a bailout or not."
"It is possible that some dealerships would be shut down, but there will be plenty of dealerships to satisfy the auto-buying public's demand for automobiles in this area," he said. "Only those dealerships which the market decides are not necessary are going to be lost."
Stonebraker said the recent bailout of Wall Street was needed because a stable financial market is critical to the entire economy.
But he questions bailing out specific industries.
"The government has a responsibility to ensure a stable financial system," he said, "but beyond that, it's a slippery slope to ask the government to choose which companies should be the winners and which companies should not because it becomes more political. It would make more sense to keep the financial system going and then let the lenders decide which companies are good risks in the long run and which companies are not."
| BY THE NUMBERS |
|---|
15 The number of franchise car dealerships in York County 5 The number of auto-related manufacturers among York County's top 20 employers 2,216 The number of people working at those five companies |
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