Auto Industry Says It Supports Detroit on Brink of Bankruptcy
Two of the biggest companies in the industry most closely associated with Detroit expressed support for the city, which announced plans to miss debt payments today that will make it the most populous U.S. city to default since Cleveland in 1978.
General Motors Co. (GM), based in Detroit, and Auburn Hills, Michigan-based Chrysler Group LLC, both of which went through U.S. government-backed bankruptcy reorganizations in 2009, expressed support for the city.
“Chrysler Group firmly believes in the City of Detroit and its people, as evidenced by our continued investment in the city and its residents,” the automaker, majority owned by Fiat SpA (F), said in an e-mailed statement. Last year, Chrysler moved about 70 employees to the former Dime Building in downtown Detroit after leasing the top two floors of the 23-story structure and renaming it Chrysler House.
Detroit Emergency Manager Kevyn Orr today said the city would suspend payments on $2 billion of unsecured debt, beginning with today’s $39.7 million obligations issued to fund pensions. He also announced a reorganization plan that would create a regional water agency to take the place of its municipally owned department, and active and retired workers would see their pensions reduced under the plan.
Detroit also would spend $1.25 billion over a decade to improve services, eliminate blight and create a more livable community.
“We hope all parties can come together and take action to build a stronger city,” Greg Martin, a GM spokesman, said today in an e-mail. “A healthy auto industry will play a part in Detroit’s comeback story and GM is doing its part.”
Ford Motor Co., based in Dearborn, Michigan, declined to comment on Detroit’s finances.
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