Think automaker collapse and you probably think a huge hit for jobs in states like Michigan and Ohio but a report out yesterday showed just how much wider the effect could be.
The state comptroller said New York could lose 230,000 auto-related jobs while struggling financial firms could lose billions more dollars on bad loans if the government doesn’t aid Detroit’s automakers, according to Reuters.
“A collapse of one or more automakers would hurt upstate communities that are desperately fighting for every job, and hurt the already reeling financial services sector even more,” Thomas DiNapoli said in a study.
The news agency said a number of other states, notably Alabama and North Carolina in the south, have significant auto industries due to their success in luring foreign firms.
The New York study was one of the first to quantify potential economic pain for states that are not auto industry capitals.
DiNapoli estimated carmakers owe at least $100bn to financial companies and said: “If automakers default on these loans, New York-based financial institutions could be hit hard.”
Reuters noted that the near meltdown on Wall Street had already cost New York jobs and tax revenues while the state has been through previous auto industry contractions with plants closing in cities such as Tarrytown.
It said about 30,000 New Yorkers are directly employed in the auto industry while 200,000 more work for related companies such as suppliers.
Auto assembly and parts making employment in the US has fallen steadily from 1.3m to under 823,000 in November, Bureau of Labour Statistics show, Reuters added.