100,000 jobs may go as GM falls

US President Barack Obama stands accused of failing the millions of workers whose jobs he pledged to protect, as General Motors slides into history's biggest corporate bankruptcy.

The carmaker's board of directors met for a second day yesterday to make the final decision on whether it would complete its restructuring by filing for bankruptcy protection tomorrow.

Although the White House provided aid to the Detroit-based carmaker, GM is expected to emerge from bankruptcy in a radically slimmed-down form.

Dean Baker, director of US think-tank the Centre for Economic Policy Research, said this would mean up to 25,000 job losses at the firm and many more in its supply and distribution network.

"You could be looking at 90,000 to 100,000 jobs," he said. It will have repercussions around the world. In the UK, for instance, there are particular fears about the future of Vauxhall's van plant at Luton, where 1500 are employed by GM's European arm.

Baker warned the dismantling of GM and other carmakers would exacerbate the hollowing-out of America's manufacturing sector.

Analysts at the Michigan-based Centre for Automotive Research have estimated as much as 1 per cent of the US economy depends directly or indirectly on the firm.

During his election campaign President Obama addressed audiences of frustrated manufacturing workers in states such as Michigan and Ohio, who felt globalisation was threatening their livelihoods.

But Rob Scott, an economist at Washington-based thinktank the Economic Policy Institute, said by insisting on a radical downsizing of GM, and imposing strict new emissions targets without giving consumers incentives to buy the cleaner cars, the White House was safeguarding the "shell" of the company, but abandoning many of its workers.

"I think in this case, the Obama Administration seems to have put its personal preferences for fixing the climate change problem above all else," he said. "It's going to cost hundreds of thousands of jobs."

In recession-hit Detroit, city officials have offered to waive nearly all property, income and business taxes to ensure GM keeps its headquarters in a landmark downtown skyscraper. Tax breaks saving it between US$10 million ($15.6 million) and US$25 million could be enough to persuade GM to stay.

GM's chief executive, Fritz Henderson, has been studying the possibility of shifting the 4500 head office staff to its technology centre in Warren, north of Detroit.

- OBSERVER, AP