Filed under: Government/Legal, Earnings/Financials
Detroit. The Motor City. Motown. Hitsville, USA. Hockeytown. The largest municipality ever to file for bankruptcy in US history. You can add that last one to Detroit’s many titles, as Republican Governor Rick Snyder authorized emergency manager Kevyn Orr to file a petition for bankruptcy yesterday.
Detroit’s Chapter 9 bankruptcy bid is likely to be very bad news for city employees, retirees and their families, but what does it mean for the auto industry? Automotive News spoke with Wall Street financial guru Steven Rattner, the same man that acted as President Barack Obama’s so-called auto czar, ushering General Motors and Chrysler through bankruptcies of their own, to see what parallels there will be between the two situations.
According to Rattner, bankruptcy for the city was inevitable, just like it was for GM and Chrysler. “It’s analogous to the auto companies, in that you have too many stakeholders whose claims are too underwater to realistically ever worked this out with some kind of bankruptcy,” Rattner told AN. But, Rattner cautions, “This will be much messier.” The auto bankruptcies took a brief six weeks, while the city’s case will likely last at least a few months, if not a year or more.
While the automaker presence in the city isn’t what it once was, GM still employs roughly 3,000 people at its Renaissance Center headquarters, right in the heart of downtown. Chrysler’s Detroit workforce is mainly blue collar, at the Jefferson North factory, which builds the Jeep Grand Cherokee and Dodge Durango. Ford, the only automaker not to go through bankruptcy, has limited its presence within Detroit city limits.
In a statement, GM said its “is proud to call Detroit home and today’s bankruptcy declaration is a day that we and others hoped would not come. We believe, however, that today also can mark a clean start for the city.” Ford shared a similar sentiment, with a release stating “The city has a difficult job ahead, and we are optimistic that governmental leaders will be successful in strengthening the community.” Chrysler, meanwhile, reiterated its commitment to the city, “We not only continue to invest in the city and its residents by adding to our presence in Detroit, we also are committed to playing a positive role in its revitalization.”
Detroit pins hopes to bankruptcy as Motor City sags originally appeared on Autoblog on Fri, 19 Jul 2013 10:58:00 EST. Please see our terms for use of feeds.
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