"The auto industry also is one of the largest advertisers in African-American media," he says. "And if you're a business dependent on the auto industry, such as supplier, you're facing the same problems the auto companies are. Banks won't finance us, and in many cases, they're withdrawing lines of credit."
Detroit's struggles are reverberating among the nation's 60 or so African-American automotive suppliers, which have annual sales of about $4 billion and employ some 8,000 people, about 70% of them black, says Leon Richardson, chairman of the National Association of Black Automotive Suppliers. "This is going to be a very difficult time for African-American automotive suppliers," he says. "We have probably lost close to five (in the past 18 months) but are braced for many more."
Access to capital an issue
The picture is also bleak for black auto dealers. According to Damon Lester, president of the National Association of Minority Automobile Dealers, 150 to 200 minority dealers were among the about 800 U.S. auto stores that closed last year, and 300 more could shutter their doors this year.
Lester says most minority dealers are first-generation owners, with more limited access to capital than more established dealers. He says the federal bailout of General Motors and Chrysler won't help black dealers — or any dealers. "It gives another survival line to the manufacturers, but it does not assist the dealers in gaining access to capital," he says.
Baranco, 60, opened his General Motors dealership in Atlanta on April 4, 1978, with his wife, Juanita. By 1989, he was listed as the fourth-largest black auto dealer in the nation by Fortune magazine.
He has cut his staff from 83 to 30 in the past year and a half, and says the Buick-Pontiac-GMC facility is likely to close this year. "I'm trying to hold on while GM is going through really challenging times," he says. "They're trying to figure out what their future is going to look like and whether Baranco is going to be part of it.
"There has been nothing of this magnitude in my years in the business, because it encompasses not only the increased (foreign) competition but the credit issue," Baranco says. "I've got customers that I could have gotten financed a year and a half ago that I can't get financed now.
"I don't really think I'm going to make it," Baranco says of his GM dealership.
He'll still be selling cars — for a foreign automaker. Five years ago, he opened a Mercedes-Benz dealership. Though Mercedes' sales have been hit by the recession, too, parent Daimler has the financial resources to survive it. But it can't replace what the Detroit companies have meant to the U.S. economy and society.
It's difficult to overstate the importance of the domestic auto industry in creating the nation's black middle class, says Thomas Sugrue, professor of history and sociology at the University of Pennsylvania. "The auto industry became a magnet for African-American migrants from the South because it offered relatively well-paying, relatively secure jobs with excellent benefits," he says.
"Ford began recruiting black workers in the South in the 1920s, and became known as one of the more generous employers for African Americans. Black workers got equal pay for equal work, although they were confined mostly to unskilled jobs. Ford was well ahead of the curve in providing employment for black workers."