Columbus, Ohio: Ohio and Michigan senators teamed up Thursday to announce a bi-partisan plan that would provide a $25 billion bridge loan to Detroit car makers if they present a plan with their application that shows they can achieve financial viability if Congress lends them the money they say the need to stay out of bankruptcy and keep millions of workers employed.

Ohio Senators Republican George V. Voinovich and Democrat Sherrod Brown joined Michigan Democratic Sen. Carl Levin in Washington, where they announced a path to funding they say is necessary to prevent the disastrous results that would happen if one or more of Detroit's Big Three car makers folds and disappears, as Americans, fearful of job losses and shrinking retirements funds, stop spending and hunker down for the gloomy times that lie ahead.

In contrast to what congressional leaders like Harry Reid (D-NV) and Nancy Pelosi (D-CA) say they want, namely congressional approval of any plan from Detroit, Levin said the plan uses $25 billion set aside by Congress in September for retooling auto plants over the next several years that automakers could use immediately. The small group of senators want the US Dept. of Commerce to approve and oversee the plans roll out. Levin said the Big Three will make plan presentations in December, when congress comes back in session. Levin said making Congress responsible for the call on whether the automakers are funded or not both delays the plan and puts them on the hook for their decision.

The stakes are high for Ohio where 25,600 workers -- 1 of 6 jobs in the state -- are now employed by the Big Three. For the industry and its three million auto-related jobs -- 240 thousand American car workers and 2.3 million related jobs -- any decision is an important one in light of the economic meltdown that is spreading from coast to coast. But the pain will be really felt in heartland states like Ohio and Michigan, where manufacturing is intense and important. The states whose Big Ten Conference football teams will play each other this Saturday are already reeling from unemployment rates not seen for decades. Industry sources say more than 100,000 auto jobs have disappeared already since January. But even though gas is at a four year low -- Ohio is among the mostly mid-central states that can boast the nation's lowest gas prices -- one of the strings attached to Levin's announcement is that automakers will have to increase the gas mileage of future cars.

Ohio junior sen, Sherrod Brown said the cost of inaction is too great, but he added the loan would lead to needed structural changes, like redoing labor costs and executive compensation and maybe a wholesale change in company managers and board members. Brown argued that allowing one or more of the Big Three to descend into bankruptcy would "cripple them" because no one would want to buy a car from a bankrupt company. Brown, who was elected on a populist economic agenda in 2006, emphasized helping Detroit would be a lone not a grant.

Today's announcement in Washington follows yesterday's appeal by letter by Ohio Gov. Ted Strickland and governors of other Midwestern states who called for Washington to come to the aid of automakers to prevent even more jobs from going under. In their letter, as reported by the Dayton Daily News, the chief executives said they have "...already struggled to manage state economies that have seen the loss of more than 1.2 million jobs in the first ten months of 2008. Further losses wold continue to depress an already fragile national economy, and would create an emergency situation in already struggling state economies.”

The White House and Republicans like Arizona Sen. John Kyle argue that while the problem in Detroit may be big, it wont' be solved with money from Washington. He says the money will be used to pay current bills, but won't lead to fundamental changes like lowering labor costs among other challenges. He thinks bankruptcy is the perfect place for Detroit to shed expenses and reorganize to be leaner and more competitive. Kyle says bankruptcy status won't be a reason why people won't buy a car from Ford, Chrysler or General Motors.

His concerns may be justified given comments by GM CEO Richard Wagner, who believes the industry is a victim of circumstances including high gasoline prices and legacy costs for health costs for retirees that have little room for change.  Reid and Pelosi may impose other conditions on any loans to Detroit like seeking a partial ownership of the companies or limiting salaries of top executives or prohibiting the use of the funds for any lobbying. GM stock fell today to lowest level since 1950, as the Dow Jones Industrial Average dropped over 400 points again today. GM's low price is significant because mutual funds cannot hold shares below $5 a share

In Ohio there are 44 counties reporting 500 or more employees directly related to motor vehicle assembly or parts production. (SOURCE: County Business Patterns - U.S. Bureau of the Census 2006). Total automotive employment in Ohio is 127,000 (2006) and of those 28,000 are auto assembly and the remainder, 99,000, are in various parts supply, the governor's reported.

About the author

John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. He now serves as the OhioNews Bureau Chief for ePluribus Media Journal. Find ONB archives here.