HispanicBusiness

The automotive industry is dumping jobs faster than a NASCAR racer can accelerate. Car sales are reeling from tight credit and declining consumer confidence. As a consequence, the industry – from auto dealers to parts suppliers to the big three car manufacturers – have made major cuts in their workforce, reports the U.S. Bureau of Labor Statistics. Such layoffs especially affect minority workers, since car manufacturing has traditionally offered minorities an entry path to solid high-paying blue-collar jobs.

Car Sales Crash Up

In the final months of 2008, recession chills and fears over potential job losses began freezing consumer spending. In addition, the tightening of credit and bank loans have significantly hindered consumer car purchases. The result, declared General Motors, has been an "unprecedented swift and severe decline" in the auto market.

New vehicle sales dropped sharply in 2008. In the worst year since 1992, automotive dealers sold 3 million fewer new cars and trucks than the prior year -- 13.1 million in 2008 compared to 16.2 million in 2007 -- according to Edmunds.com. Edmunds, which specializes in providing automotive information to consumers, predicts that in 2009 new vehicle sales will slump by an additional 5 percent.

Trying to stave off the dire economic consequence that would result from a collapse of the big three automakers, the federal government has forked over $17.4 billion in bailout loans, to help assure the cash flow of Chrysler and GM.

The recession has jammed not just U.S. carmakers but also such leading Japanese powerhouses, such as Toyota. The number-two-selling carmaker in the United States, Toyota, saw sales fall by 15 percent for the year. Even in its home territory country of Japan Toyota's sales collapsed, as the recession went global. Auto sales in Japan fell by 5 percent reaching the lowest number of units sold since 1980.

Dealers Dealt Out

As a consequence, carmakers and their suppliers along with dealers are slashing jobs right and left. The automotive sector employed 2.88 million workers in November 2007. One year later, the Bureau of Labor Statistics reports, the sector employed 2.6 million as 271,000 employees lost their jobs, more than 9 percent.

A good share of those jobs came from car retailers. The nation's approximately 23,000 auto dealers chopped their employment by a sizeable 9.3 percent, or 115 thousand jobs eliminated out of 1.2 million.

In part, that job loss reflects the shutting down of 900 auto dealers during 2008. Of those 900 retail units, 200 were minority dealerships, said Damon Lester, head of the National Automotive Minority Auto Dealers. Each car retailer, he noted, employs on average 53 workers. So those 900 dealers added up to roughly 46,000 unemployed workers.

Mr. Lester predicts continued difficulties for the country's 2,000 minority dealers in 2009. In a letter to the Treasury Department, he wrote "Up to 75 percent of the minority dealer body could run out of cash and close their doors" by the end of 2009. He added, "Federal assistance is needed immediately to allow these dealers to survive."

In addition to job loss from dealer closure, auto retailers have tried to slim down their sales forces and increase productivity for the last few years. But 2008 saw additional, impressive cuts.

Carmakers in Crisis

U.S. automobile manufacturers cut 145,000 jobs from Nov. 2007 to Nov. 2008, about 15 percent of its workforce. Unfortunately, those cuts are predicted to continue in early 2009. General Motors announced a significant reduction of its planned production for the first quarter of 2009. Citing a 41 percent drop in its sales for 2008 (from 2007) GM said it would idle approximately 30 percent of the company's American assembly plants during the first quarter of 2009.

Plants shuttered or idled by the big three also struck hard the galaxy of parts manufacturers and service providers that surround Detroit and other centers of car production. Neil De Koker, president of the Original Equipment Suppliers Association, declared that when GM, Chrysler, and Ford start bleeding, suppliers hemorrhage. According to UPI reports, the $240-billion-a-year auto parts industry is facing drastically fluctuations in demand for its products and also severe liquidity problems.

Motor vehicle parts manufacturers dumped 73,000 jobs between October 2007 and October 2008, or 12.2 percent of its labor force, reported the Bureau of Labor Statistics.