EAST LANSING — No matter in what form Delphi Corp. emerges from Chapter 11 bankruptcy — whether successfully reorganized as a smaller company or as a partially liquidated and consolidated company — the news won’t be good for the state because Delphi fuels Mid-Michigan’s economy.
An economic impact study released Monday by Anderson Economic Group of
In that scenario — the least bleak of three possible outcomes — workers, retirees and suppliers would lose $10 billion in earnings in 2007 alone, and about 12,500 Delphi employees in the United States would no longer have jobs. AEG believes that is the most likely outcome of the three.
Delphi has 15,000 employees in
There has been talk of five plant closings across five states:
The study’s authors, Patrick Anderson, principal of Anderson Economic Group (AEG), Economist Ilhan Geckil, and Senior Analyst Caroline Sallee, believe that Delphi will likely take the “optimistic” direction; if so, the state would emerge with only one major plant closure, but a lot of
If
The third scenario — doomsday for the state — would unfold if Delphi were to shutter its plants in
The closure of any
“Thus, there is a real danger of a ‘domino effect’ in one or more states where
“They correctly make the point that not all the work to
Erickcek thinks the “optimistic” scenario is the most realistic and most likely. He said one thing the AEG team didn’t estimate — probably because it’s so difficult — is whether Michigan auto suppliers would be better able to pick up the slack than other states.
“I think we would,” he remarked, noting that the “pick up” might not be immediate and the sector might have some “tight” months.
“If we lose the two Delphi plants in the
As he sees it, if Delphi closes its
The only finding in the AEG analysis that Erickcek said he couldn’t duplicate was the drain
“I don’t have access to their methodology, but can’t, using standard assumptions, come up with what they come up with. That’s my only concern. The direction is correct:
The potential impact of Delphi’s bankruptcy really highlights the importance of the auto industry in this state, said Steven Szakaly, an economist with the Center for Automotive Research in
“We have diversified, and diversification of jobs is important, but we can’t forget about how important the automotive industry is to
Some of Delphi’s automotive components simply aren’t going to be made in
“Some of it is going to go to lower wage countries; some of it will stay in the states, but might not stay in
There are still many unknowns in
“All those elements really make this very difficult to estimate. No matter how you cut it, it’s not good news.”