Page last updated at 15:29 GMT, Wednesday, 15 October 2008 16:29 UK

Motor City fearing recession

By Jonathan Beale
BBC News, Detroit

GM vehicles
Demand for larger vehicles in the US is on the wane.

Detroit used to be synonymous with motors and Motown. Now it has become more a symbol of US economic woes. Unemployment is creeping towards double digits.

Look beyond the gleaming tower of General Motors headquarters in downtown Detroit, and you'll find a car industry in crisis.

This week alone GM - the world's biggest auto company - shut down two factories with the loss of more than 2,000 jobs.

GM and Chrysler - the country's third largest car manufacturer - have been engaged in merger talks.

Shifts cut

There is a common consensus among the experts that the big three - GM, Ford and Chrysler - will not all be able to withstand the current downturn.

People are scared
Chrysler worker

GM's share of the market is down from 50% to 22%, and Chrysler's down from 15% to 11%.

At one of GM's truck assembly plants on the outskirts of Detroit, come 1430 and its workers rush to their cars and pickups to leave the factory gates.

This one plant has already lost more than 1,000 jobs. Three shifts have been cut down to just one, and there is talk of scaling down production further.

Those still left with a job are understandably anxious.


And there is a similar mood just down the road at Chrysler's headquarters.

One worker there says "people are scared". A nearby GM dealer says car sales are down by 50%.

A local bar that serves the factories is practically empty, despite the promise of a $5 lunch. Half of the shops in the nearest high street are empty, the pavements appear deserted. All this within a half mile radius.

It's not just Detroit's auto industry that's taken a hit. Property prices in the metropolitan region have plummeted too.

Estate agent Jim Taylor used to sell upmarket homes. Now he only deals in foreclosures. It was, he says, the only way to stay in the business.

During a tour of a neighbourhood near Dearborne Heights he shows off a home that two years ago sold for $106,000. Now it is on the market for just $4,000 - and he believes it could go for as little as $2,500.

Inside, anything of value has been stripped. The paint is fresh, but the fittings in the bathroom, including the toilet, have been ripped out. There's not even a kitchen sink.

Jim estimates that some 10,000 homes in Detroit are now up for sale and he says 95% of that number are repossessed homes.

'Upside down'

Thousands more are fighting to keep the roof over their heads. Sherard Cox has come to seek advice from a housing charity in Detroit.

He has fallen behind with his mortgage payments because he says of the slowdown in the auto industry.

He drives trucks that supply the car companies with raw materials but his takings have gone down by more than 20%. He describes his situation as "upside down" - he now owes the bank more than his house is worth.

If he survives the immediate crises he says he hopes to move out of the city because he believes it will only get worse.

Foreclosures and social help programmes are the only booming businesses in Detroit at the moment. At Gleaners community food bank there's been a 30% increase in demand.

More than one in nine of the city's residents now qualify for food stamps. Dwayne Wells, the president of Gleaners, says the situation is "humbling" because many of the people who once donated food are now asking for help.

The Federal Government's $700bn bailout has so far failed to lift the economic gloom in Motor City. In Detroit the dark clouds of what could be a long and painful recession are already closing in.

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