The Technician

Issue date: 5/13/09 Section: News

On Thursday, April 30 2009, Chrysler, the third largest American automaker, filed for federal bankruptcy protection to “pursue a lifesaving alliance with the Italian automaker Fiat” (Rutenburg). The United Automobile Workers (UAW) will take control of the company through their retirement plan. Fiat and the United States Federal Government will be junior partners, with the government providing approximately $8 billion more to Chrysler.

Chrysler is the first major American automaker to file for bankruptcy protection since Studebaker did in 1933. Chrysler Corporation could come out of bankruptcy as early as late June, but it could also take as long as 4 months from now or August 2009. During this time factories will be mostly idle, workers will receive eighty percent of their base pay, and there will be no jobs cut. The government will back all Chrysler car warranties that are bought while the company is under bankruptcy protection (Rutenberg).

General Motors Corporation is in a similar situation, but there are several big differences. They would have to cut jobs and close factories and dealerships. The latest restructuring plan from General Motors Corporation calls for cutting forty-seven thousand jobs, eliminating four brands, closing more than twelve plants, and shutting down twenty-six hundred dealerships. Filing for bankruptcy protection would call for deeper cuts in all areas. This would mean tens of thousands of more jobs lost, and even more factories and dealerships would close. 

One major difference between Chrysler and General Motors Corporation is that the United States Government would be the major shareholder in General Motors, unlike being a junior partner in the Chrysler plan. The government would hold approximately a fifty-five percent stake in the company and would forgive ten billion dollars in General Motor Corporation’s outstanding federal loans. The United Auto Workers’ retiree trust would hold an approximate forty percent stake. 

The biggest difference between General Motors Corporation’s and Chrysler’s situation is that General Motors Corporation does not have a private investor that is ready to bring them new technology and financial aid. Chrysler has Fiat to help them with money and new technology. General Motors Corporation, however, has no one waiting in the wings to help them (Sanger).

On February 18^th, 2009, Kettering students received a school wide email outlining General Motors Corporation’s plans to phase out the Co-op program with Kettering. The details of this email indicated that one hundred and three students would be separated from General Motors Corporation at the end of their next co-op term. This number represented six point one percent of all employed students and roughly five percent of the total current undergraduates attending Kettering University.

Kettering University has been directly impacted by the crisis that both General Motors Corporation and Chrysler are currently facing. This is made evident by the loss of co-op positions, downturn in the general job market and decrease in the number of employers at the last job fair. With many of Kettering University’s co-op positions being

 automotive based the current situation facing Chrysler and General Motors Corporation leaves many students wondering about what their futures have in store.

 

 

 

 

Rutenburg, Jim, and Bill Vlasic. "Chrysler Files to Seek Bankruptcy Protection." New York Times 30 Apr 2009. Web.2 May 2009. http://www.nytimes.com/2009/05/01/business/01auto.html?r=1

 

Sanger, David and Bill Vlasic. "Chrysler's Fall May Help Obama to Reshape G.M.." New York Times 2 May 2009 Web.3 May 2009. <http://www.nytimes.com/2009/05/03/business/03auto.html?scp=19&sq=chrysler%20bankuptcy&st=cse>.