US motor industry applies brakes

The slowdown in the US car market is personal matter for many workers and their families.

By the BBC's Jonty Bloom from Syracuse.

On Wednesday the US Federal Reserve will decide whether or not to cut interest rates again, following a surprise cut in rates earlier this month.

The cut was designed to prevent the US economy from slipping into recession.

Worrying figures from the massive American motor industry are thought to be one reason behind the Feds shock move.

The central bank decision on interest rates this week has been given added urgency by the announcement by Daimler Chrysler that it is to cut 26,000 jobs.

Love affair with the car

America's love affair with the motor car isn't over yet, but it is certainly cooling down, with sales and production are falling and jobs are already being lost.

The slump in car sales and production means workers at transmissions units supplier aren't safe.

That makes the slowdown in the US car market a personal matter for Joseph Burilla and his family. He has already lost his job with New Process Gear, the largest employer in Syracuse, which supplies transmission units for most major car makers including Diamler Chrsyler.

"You learn to adapt, you learn to do what you've got to do to survive, but it hasn't been easy for me or my wife and kids," expalins Joseph Burilla, former car worker.

And the bad news isn't over yet the slump in car sales and production means workers at Joseph's old employer aren't safe either.

For all the talk about the bursting of the dot.com bubble, e-commerce is still a realtively small part of the US economy. The motor industry is still one of the driving forces and at the moment it is slamming the brakes on. The announcement from Daimler Chrysler is just the latest bit of bad news

No consumer confidence

"Generally it is just a lack of consumer confidence," says Mike Bauer, VP New Venture Gear.

"We've got increasing fuel prices, really all energy prices, electricity, and gas, increasing interest rates which are starting to moderate and some tightening of the stock market just taking discretionary income out of the consumers pockets."

"As a net result of that, everybody is waiting to buy their next new vehicle, everybody is slowing down."

To understand why these factors are so important, you only have to take a look at how many car dealerships there are, indicating just how important the American car industry still is to the US economy.

So the motor industry may be slowing down a bit, but it isn't exactly grinding to a halt. It may have a knock-on effect through the American economy but the feeling is that the industry could do quite well later this year.