Pain of GM closures felt beyond factories
Businesses supported by workers expect to see decrease in profits
Gamil Aljohaim knows the workers at the Detroit-Hamtramck Assembly plant by the vehicles many of them drive, mostly pickups.
In the days after General Motors announced what has been interpreted as a looming shutdown at the plant and four others in North America, Aljohaim said he saw fewer of those trucks at his service station, and some of those who did come were choosing to put less gas in the tank.
“After they heard this news, they started holding on to their money,” Aljohaim said. “I feel bad for them.”
Aljohaim, whose service station sits across a highway overpass from the sprawling plant, is also concerned about his own shop, which he said gets as much as 40 percent of its business from the more than 1,540 workers at the factory. While it’s not clear in the short term whether the people who drive to and from the plant would be able to continue limiting their fuel purchases, the almost immediate reaction Aljohaim noticed demonstrates that even the threat of potential auto job losses can ripple across the economy.
GM has said it plans to cut 14,000 jobs as part of a restructuring, affecting plants in Michigan, Ohio, Maryland and Ontario, along with 8,000 whitecollar workers. The Detroit automaker, however, said it is still hiring for areas focused on electrification and autonomous vehicle development.
While some experts say the specific impact in the Detroit area of these particular potential job losses could be limited in scope, the drop in business at a local service station shows how auto jobs in particular affect many other industries.
Massive multiplier effect
More than 7 million private sector jobs are supported by automakers, suppliers and dealers in the United States, and the industry is responsible for $500 billion in annual compensation to the workers it supports, according to the Center for Automotive Research (CAR).
“It’s estimated by various authorities that for every job there is in the automotive industry there are ripple effects that impact seven to nine jobs … so if you have an industry that is employing 1,500, you can multiply that by 7 to 9” to see what could come from a loss of the Detroit-Hamtramck plant, said Marick Masters, a professor of business at Wayne State University.
Masters said that the potential direct loss of 1,500 jobs represents a frac-
tion of overall economic activity in the state, but it is significant for a variety of reasons.
“When you’re talking about perhaps 10,000 people being adversely affected, that’s a significant number, and there are human stories behind each of those numbers,” Masters said.
“(An) automotive assembly job has one of the highest multipliers of any job in the industry,” affecting everything from steel to logistics to cafeteria work, said Kristin Dziczek, vice president of Industry, Labor and Economics at CAR. “Anything that GM buys is tied to that employment as well ... and these jobs pay better than a lot of other jobs in the economy.”
The money that workers earn also supports lots of other businesses not directly tied to the auto industry, those that provide everything from groceries to child care to boats.
Down the street from Aljohaim’s service station, Joseph Gojanaj stopped to chat during a break from frying omelettes and hash browns at the Legends Grill he owns.
“Our lunches will probably be a lot slower,” Gojanaj said of the impact from a potential shutdown at the Detroit-Hamtramck plant.
Gojanaj predicted the restaurant would be able to survive, but he said a shutdown would still have a big effect on his business.
‘We built that’
He noted that he’d be sad to see the workers no longer stop by. Many of them, he said, will say, “We built that,” when his father drives his Cadillac CT6 to the restaurant.
Glenn Stevens, executive director of MICHAuto and vice president of automotive and mobility initiatives for the Detroit Regional Chamber, said nobody wants to hear about job losses or plant closings, but he noted that there are other opportunities in the industry because there’s a “tremendous need across the (automakers) and supply chain for talent.”
He said GM, along with the rest of the industry, has been reactive in the past, but GM is no longer being run as it was.
“I really see this as a move to make sure this company is here for a long time, (which) is very important for this area,” Stevens said, noting it’s too early to tell what will happen with DetroitHamtramck or the other locations.
Both Stevens and Dzizcek of CAR said that while it’s never good having to deal with a plant closing or a loss of workers, GM’s employees would have options as well as better protections than other types of workers in similar situations, with some having the ability to transfer to other plants.
If the worst does come to pass and GM opts to shutter Detroit-Hamtramck, Dzizcek said it might still have a future. She noted that a “whole bevy of automakers” in China and elsewhere would love to be in the United States, so that desire offers possibilities, too.