Congress under pressure as GM bankruptcy possible

By John Crawley

WASHINGTON (Reuters) - With General Motors Corp planning to end production of Saturns and Pontiacs at its Delaware plant which employs more than 1,000 people, state leaders are scrambling to win new work at the facility or persuade the company to move other operations to the region.

"This would appear on the surface to leave us in bleak circumstances," U.S. Sen. Thomas Carper, a Democrat and former governor who helped save the 62-year-old Wilmington plant from closure in the early 1990s, said.

"We're encouraging them not to close the plant. At some point, GM will need more capacity," Carper told Reuters in an interview.

Carper's interview and other recent interviews with government officials, lobbyists and economists precede a June 1 deadline for GM to show a White House/Treasury task force overseeing industry restructuring that it can be viable on its own.

Failure to satisfy the task force would trigger bankruptcy where GM could try to finalize concessions. It is seeking givebacks from debtholders and the United Auto Workers and wants to slash its network of 6,000 dealers. GM plans to cut 21,000 factory jobs.

Lawmakers deferred to the task force as smaller Chrysler spiraled into bankruptcy. But there has been a broader political response to GM in the past week since a second bankruptcy would compound Detroit's uncertainty and likely radiate economic anxiety beyond the industry's Midwest core.

GM A BELLWETHER

Autos has one of the heaviest economic multipliers of any U.S. industry. For every job loss in auto assembly, another nine disappear elsewhere, Mark Zandi, chief economist and co-founder of Moody's Economy.com, has told Congress.