Chrysler Workers Await Bankruptcy Fallout

(CBS/AP)  Fears that a Chrysler LLC bankruptcy could devastate southeast Michigan and harm Chrysler workers and retirees nationwide were abating somewhat as details of the deal were released Thursday.

"It's the best deal we can come up with," said Mark Conner, who works on the production line that makes Jeep Wranglers at Chrysler's plant in Toledo, Ohio. "Anything else that could have happened would be worse."

President Barack Obama announced Thursday that Chrysler would head into bankruptcy with the aid of up to another $8 billion in taxpayer money, a last-resort attempt to quickly restructure the struggling automaker. He also blasted hedge-fund creditors whom he said held out for a richer deal.

Those holdouts drew anger from workers, who had agreed to more concessions to try to save the automaker.

"Everybody expects the autoworker to take a pay cut," said Conner, 51, who watched Mr. Obama's noon announcement at a bar near the Toledo assembly plant. "Nobody else wants to take a pay cut."

But he and other autoworkers - as well as politicians and community leaders - were glad to hear the deal will keep workers' pensions and health care benefits secure.

The president of the United Auto Workers also mustered up some optimism for the beleaguered industry.

"This is an opportunity," Ron Gettelfinger told CBS' The Early Show Friday. "We just want to keep the American auto industry going."

Indirectly, UAW will hold a majority stake in Chrysler, but Gettelfinger said the union will only have one, non-voting seat on the board of directors.

Michigan Gov. Jennifer Granholm said a bankruptcy filing "was everyone's last choice" and warned that the next 60 to 90 days while the company goes through bankruptcy are going to be "very, very tough."

But she also told reporters that the bankruptcy filing "gives us in Michigan certainty - certainty that Chrysler won't just survive, but thrive."

She said that's good news for the 21,000 Chrysler workers in Michigan and the 38,000 in the U.S. The governor vowed the state would fight for its share of the 5,000 U.S. jobs she says Italian automaker Fiat could eventually fill once a partnership with Chrysler is in place.

But Oakland County Executive L. Brooks Patterson, a Republican whose county is home to Chrysler's headquarters and many of its plants and suppliers, foresees a less rosy scenario.

"I just disagree strongly with the president that we can get in and out of bankruptcy in four to six weeks," said Patterson, a lawyer and former prosecutor. "Once you're in there, it's the judge that tells you when you get out. ... Basically, you lose control."

Following Mr. Obama's announcement, Chrysler said it will temporarily idle manufacturing starting Monday as part of the restructuring while it goes through bankruptcy. The move will help the automaker clear out inventories.

Steve Grabowski, a worker at Chrysler's Warren Stamping Plant for the past seven years, said managers told workers around 1:45 p.m. Thursday to go home.

Workers are being laid off indefinitely. They'll get unemployment and supplemental pay from Chrysler that will make up most of their wages during the furlough. But the bankruptcy announcement still was unsettling for many.

"A lot of us are scared," said Grabowski, 33, of Roseville. "We knew something like this was going to happen, but we didn't think it would be so soon."

Peter Brown of Automotive News told CBS News that Chrysler's bankruptcy - and a longer-than-usual summertime hiatus at GM - will definitely ripple through the economy:

"There's going to be very little automotive production in America for the next quarter or so, and that's going to be catastrophic for the automotive suppliers who make the parts for all of those cars."

In Twinsburg, Ohio, 47-year-old Phil Grainger of Hudson said he wasn't surprised by the bankruptcy filing. But the maintenance millwright and 19-year plant employee was concerned the filing would hurt Chrysler sales, and he wasn't comfortable with the extended furlough.

"I don't feel good about it," he said. "Hopefully, we'll all be back."

Many communities and companies that rely on Chrysler plants remained nervous that tax revenues will continue to shrink. Michigan already has the nation's highest unemployment rate, 12.6 percent, and state economists are estimating the current budget could face a $1.3 billion deficit. Granholm is expected Tuesday to release an executive order calling for hundreds of millions of dollars in tax cuts.

More than 500,000 Michigan workers already are collecting unemployment, and the Democratic governor said the temporary Chrysler layoffs will add to the jobless rolls and cost the financially strapped state more money.

But the pain won't stop there.

"It's not just workers," said Karen Boroff, dean of the Stillman School of Business at Seton Hall University in New Jersey. "There are dealerships, there are towns where these dealerships are in. ... There are school districts. There are going to be many people who are going to suffer here."

Chrysler is looking to substantially reduce its 3,200 auto dealerships, something it should be able to do through bankruptcy.

(AP Photo/Tony Dejak)

At the Aurora Chrysler-Dodge-Jeep Inc. dealership, 7 miles from the Chrysler stamping plant in Twinsburg in northeast Ohio, owner Jack Mencini (left) said he remained upbeat and that Chrysler buyers have nothing to fear from a bankruptcy filing.

"All Chapter 11 is, is a reorganization. It doesn't close anything," said Mencini, who has owned the dealership for 26 years and hasn't laid off any of his 45 employees despite a 10 percent drop in sales since last April. "I'll be here and the parts will be here and the president came out and spoke and said he's going to make sure the warranties are all covered."

Michigan Rep. Gary Peters, whose Oakland County congressional district includes Auburn Hills, said the key now will be to get the economy moving again so consumers feel confident enough to buy new vehicles.

"We're not selling as many cars as those that are wearing out and need to be replaced," he told reporters in a conference call. "We've got to get people in the show rooms."

Gregg Toles, 52, arrived for his afternoon shift at the Warren Stamping plant only to be told to go back home. The 11-year Chrysler veteran said he would use the time off to straighten out his finances, do yard work after a rough winter and visit relatives.

"I'm confident everything's going to work out," said Toles, of St. Clair County's East China Township. "This is the backbone of American industry."

[deeanna50]

I work for a auto supplier. I am now laid off too because of Chrysler. All I get to collect is my unemployment. There is no 90% of my paycheck.

[rhs648]

"We're not selling as many cars as those that are wearing out and need to be replaced," he told reporters in a conference call. "We've got to get people in the show rooms."


Laid off people don't buy cars.

People who are afraid that their jobs are the next to be cut don't buy cars.

Downsized workers don't buy cars.

People whose jobs are outsourced or whose jobs are handed out to cheaper illegal labor don't buy cars.

People whose 401Ks or pensions took huge hits in the market since 2008 don't buy cars.

They decrease eating out, going to the dentist or drs, vacationing and shopping too. Then people in those industries also lay off...and on it goes...


so.... just WHO is supposed to go to the showrooms and what do you think they will do, once they get there? Most people I know--who are car shopping are looking at used cars--NOT new cars--who wants to risk the debt?
Posted by toldyouso29

You are partly correct. I bought a new car on Thursday. Yes, my investments took a big hit with the recession, but I also loaded up on equities during the first three months of the year because prices are a bargain. Thirty-eight years I moved 800 miles for a job. My point is that there are places in America looking for workers. There will always be pockets in the United States that do better or worse than other parts of the country. In spite of the recession, roughly 90% of the working population still have jobs. There will always be people buying homes and new cars. As consumer confidence returns, more and more people will spend money and factories will increase production which leads to hiring more people.

[rhs648]

WORKERS FIRST MY FRIEND...NOT SOME CLOWN SITTING IN A CUBICLE PLAYING SCRABBLE ON THE COMPUTER!
Posted by whitemale08

Are you being a little harsh? My father was in charge of all printing for a large game manufacturer. Although he didn't do the printing, he had to make sure that each department got their printed material when they needed it for their assembly lines, order the equptment, paper, ink, and anything else needed to do the printing. He had to schedule both the jobs and workers strategically to meet deadlines. My father had to make certain that the equiptment was maintained properly. He arrived half an hour before his workers and left half an hour after them. This man spent no time playing games on computers. He worked harder than his employees and was under constant stress and pressure. This is true of many white collar workers.

[andylance1]

This Fiat dude, Sergio Marchionne, is going to be your savior. He the smartest dude in the world auto industry and has completely turned Fiat around since he took over in 2004.

With Chrysler and Opel in his pocket - he will become the dominant car manufacturer in the world in the not too distant future. With Fiat you will llive long and prosper.

[toldyouso29]

This is true, but we are not discussing purchasing a toaster oven from Target. As much as all of us would like to support the American economy and our fellow citizens, very few of us can afford to invest $30K in a vehicle which requires frequent reapirs and has a short lifespan compared to foreign vehicles. I have decied not to make an issue of the fact that many foreign companies build their vehicles in the US with American labor.
Posted by brianp55

Bought my dodge caravan in 1997 for 27K cash. so far--372K+ miles on it and still going, still original engine and transmission--but have had several prs of brakes, a water pump and the air cond repaired 3 times--other than that , it is great. Drive it across country a lot-- very reliable. the key is routine, diligent maintenance which most Americans don't do. My hubby checks my car's oil and other fluids weekly, changes oil and filters when he should and tests the batteries, etc--most people I know don't do near what he does--but then, most Americans can't own and drive the same car for 10 years without trulu major repairs either.

My hubby's car: Chevy Lumina: 330K and still running. Don't blame the car--alone---sometimes it is the 'seat of the pants care given by the drivers.

[toldyouso29]

"We're not selling as many cars as those that are wearing out and need to be replaced," he told reporters in a conference call. "We've got to get people in the show rooms."


Laid off people don't buy cars.

People who are afraid that their jobs are the next to be cut don't buy cars.

Downsized workers don't buy cars.

People whose jobs are outsourced or whose jobs are handed out to cheaper illegal labor don't buy cars.

People whose 401Ks or pensions took huge hits in the market since 2008 don't buy cars.

They decrease eating out, going to the dentist or drs, vacationing and shopping too. Then people in those industries also lay off...and on it goes...


so.... just WHO is supposed to go to the showrooms and what do you think they will do, once they get there? Most people I know--who are car shopping are looking at used cars--NOT new cars--who wants to risk the debt?

[whitemale08]

and have to work 40 hours to get overtime. I'm a white collar worker who has NEVER had a deal anywhere close to what these greedy a holes think they "deserve" while they bankrupt a company
Posted by hdc77494 at 9:31 AM : May 3, 2009 --

...that's because your stupid _ss is not doing anything worthwhile with your hands.

You're just shuffling papers around.

WORKERS FIRST MY FRIEND...NOT SOME CLOWN SITTING IN A CUBICLE PLAYING SCRABBLE ON THE COMPUTER!

[hdc77494]

The fallout they should be worried about is fallout from the outrageous labor contracts they foisted on the automakers, and the rediculous gift they are getting from Obama. The "layed off" employees of Chrysler are getting 90% of their pay. The salried people are getting 75%. The union is getting 55% ownership and a seat on the board in return for 3.6 billion and a 4.6 billion dollar note. The bankers with 6.9 billion in secured debt are getting 2 billion and zero equity. In bankruptcy, they are entitles to get the cash from the sale of all Chrysler's assets. Talk about a sweetheart deal. Chrysler retirees are giving up free dental and vision care, and have to pay a 100 deductable to go to the emergency room. They pay zero deductable and no co-pay for medical care. Union member car workers are giving up bonuses, two paid holidays, and have to work 40 hours to get overtime. I'm a white collar worker who has NEVER had a deal anywhere close to what these greedy a holes think they "deserve" while they bankrupt a company

[rhs648]

What idiot pays laid off workers 90 percent of their pay?

They should be paid for the amount of time they work and that is it!

No other UAW workers in America get paid that much!
Posted by didserve

It appears that it might be more profitable for workers to stay home if paid 90%. No more lunches at restaurants, no commuting expenses, no child care expenses, and less spent on clothing needed for work each day. This smacks of socialism. Now here is an idea. Socialism only for better paid workers. As mucch as $70 an hour including benefits is great pay for weilding a screwdriver. At that rate, many of us could become proficient with screwdrivers.

[rhs648]

"We live in a closed system...what you save money on in one place, you lose in another. The big picture here is that you can either buy American at a little greater price and have jobs, or buy foreign cheaply and drive your toyota to the unemployment office to get your $75.00/week. I myself look at where something is made and buy American...I like my family, friends, and neighbors to be able to feed their kids".....Posted by strangeworld

This is true, but we are not discussing purchasing a toaster oven from Target. As much as all of us would like to support the American economy and our fellow citizens, very few of us can afford to invest $30K in a vehicle which requires frequent reapirs and has a short lifespan compared to foreign vehicles. I have decied not to make an issue of the fact that many foreign companies build their vehicles in the US with American labor.
Posted by brianp55

Also, many Hondas and Toyotas are being built in plants in America. These plants, like GM and Chrysler, employ American engineers, analylists, secretaries, and workers. GM, for example, has plants in other countries. It employs Mexicans in plants in Mexico. The old buy American is now a misnomer. In 1977, I bought a Buick. The engine was made in Canada. Therefore, Canadian workers got paid for building the motor. On top of all of this, GM sells cars throughout Europe and Asia. America then benefits from all of these sales in foreighn countries.