On June 18, the U.S. International Trade Commission ruled 4-2 that China was flooding the U.S. market with low-cost tires. The United Steelworkers Union filed the complaint, saying 5,100 U.S. workers have already lost their jobs and 3,000 more are in danger of losing theirs this year. The union also said the volume of Chinese imports rose 215 percent from 2004 to 2008, reaching 46 million tires valued at $1.7 billion in 2008.
Last week’s Chrysler-Fiat alliance cements a total federal commitment of $33.48 billion in federal loans and aid to the Chrysler Corporation, its suppliers, and Chrysler Financial. The billions were committed through last year’s TARP legislation and Barack Obama’s $787 billion stimulus bill passed in February of this year.
All you need to know about the dynamics behind the Chrysler-Fiat “Alliance” being pushed by the White House — and temporarily stayed by the U.S. Supreme Court on June 8 — is the following quote from a story on Bloomberg.com the same day: “Chrysler said the sale, which would transfer its Jeep, Chrysler and Dodge brands, would help save 38,500 jobs, plus those of workers at its suppliers.” Put simply, the White House is driving the bankruptcy deal in order to be able to claim it “saved jobs.”
The oft-repeated line that “I have good news, and I have bad news” applies to the U.S. Labor Department’s latest figures on unemployment and job losses, though the first part should perhaps be modified to “I have relatively good news.”
More information about GM’s Chapter 11 bankruptcy is beginning to emerge. The Kansas City Star reported on June 2 that this is “the biggest such filing by an industrial manufacturer and the fourth-biggest in U.S. history. It will also be one of the largest peacetime nationalizations of private enterprise.” In addition to the $20 billion the federal government has already pumped into the company, President Barack Obama has announced that another $30 billion in taxpayer money will be committed. This will bring the government’s ownership stake in GM to 60 percent.
After years of suspense, the bankruptcy that surprises nobody is finally official. One of America’s largest and proudest corporations, GM, has filed for Chapter 11 protection in what is being billed as the fourth-largest bankruptcy in American history and the largest ever for an industrial corporation. The failing auto company claims $82.29 billion in assets against almost $173 billion in debt — this, be it duly noted, after billions in federal government bailout monies were shoveled GM’s way.
In order to meet government out-of-court restructuring demands and to be eligible for more government financing, Chrysler agreed last week to a deal that gave the United Auto Workers union 55 percent ownership and a seat on the board of directors of the restructured company. The UAW stands to exercise major influence on the U.S. government during the impending bankruptcy proceedings.
The handwriting has been on the wall for Chrysler for many, many years, but it appears that the storied 84-year-old automotive corporation, almost three decades after its last government bailout under CEO Lee Iacocca, has reached the end of the line. After the swift breakdown of last-ditch negotiations yesterday, Chrysler Corporation and its creditors are in court today to begin proceedings for the first-ever bankruptcy filing by a major U.S. auto corporation. For the moment, the White House and Chrysler officials are still chirping about a well-ordered bankruptcy that would allow a leaner, retooled Chrysler to emerge from receivership in 30 days or so. But that won’t happen.