Posts Tagged ‘jobs news’

Fritz Henderson, chief executive of General Motors (GM), has said that the company needs to get out of the bankruptcy court as soon as possible in order to prevent many of its suppliers from going out of business. “Many of GM’s suppliers are already in the midst of a severe liquidity crisis, which has only been exacerbated by the current shutdown of certain GM production facilities,” Henderson said.

At stake are thousands of jobs in supplier companies. GM has shut 11 of its plants for close to 3 weeks in order to cut production and slash inventory. GM filed for bankruptcy on June 1 and is awaiting court approval to sell its assets to a reorganized company. According to the Motor & Equipment Manufacturers Association, at least 15 auto parts suppliers including Visteon Corp, Metaldyne Corp and Noble International Ltd., have either filed for bankruptcy or had their assets seized by creditors in 2009. Henderson said the company’s plan to resume operations at some plants by July 13 could be hit if the court does not approve GM’s asset sale.

According to the Commerce Department, the nation’s gross domestic product contracted at a 5.5% annual rate in the first quarter of this year, as against 6.3% in the fourth quarter of last year. Economists believe that the economy is contracting at about 2% this quarter. “The economic data we’ve seen so far for the second quarter suggest the preliminary number for the second quarter will show a modest decline, maybe half the rate we saw in the first quarter,” said Gary Thayer, senior economist with Wells Fargo Advisors.

Despite the good news, economists are worried about unemployment not showing any signs of sustained reduction. This week, the Labor Department said jobless claims for last week jumped unexpectedly by 15,000 to a seasonally-adjusted total of 627,000. Continued claims, which denote the number of workers still on jobless rolls after an initial week of claims, rose 29,000 to 6.738 million in the week ended June 13, the latest period for which the data was published. “We still firmly believe that the underlying trends in claims is downwards, but it is slow and uneven,” says Ian Shepherdson, chief U.S. economist for High Frequency Economics.