Detroit Fears The Worst As GM Merger Talks Roll On

[Purveyor]

By Soyoung Kim

DETROIT (Reuters) - Detroit's economy has been beaten down for years by wave after wave of job losses in the U.S. auto industry, but locals fear the worst may be yet to come if General Motors Corp and Chrysler LLC merge.

"It's already been ripped apart," Tim Jones, 55, said when asked about the economy of the Detroit area.

"People are losing jobs. If you walk down any main street in this area, you see half of the businesses are closed," said Jones, who left the construction industry two years ago to start an online business selling cell-phone batteries.

"A combination of GM and Chrysler will only make things worse."

From its gritty downtown to its leafy suburbs, fears of massive layoffs loom large in Detroit, a city whose fortunes remain tied to the declining American automakers.

In the last eight years, Michigan has lost 300,000 manufacturing jobs, the bulk of them in the auto industry. The unemployment rate in Michigan hit 8.9 percent in August, well above the national average of 6.1 percent.

Detroit has also been ravaged by a declining population, failing schools and a housing market saddled with thousands of abandoned homes. It ranks as the poorest big city in the United States with over a third of its residents living below the poverty level.

In the latest threat, Chrysler, owned by private equity firm Cerberus Capital Management LP, remains in talks with GM about combining the two automakers at a time when both are struggling to survive a deep downturn in sales and shore up cash.

MORE...

REUTERS: http://www.reuters.com/article/newsOne/idUSTRE49J6AA20081020

[Barack_America]

1. *sigh*

What do you do? Michigan is clearly going to be in worse shape if GM goes bankrupt. I don't know what the solution is, other than getting some new industry in Michigan.