By K.O. Jackson, Kokomo Tribune business writer
kirven.jackson@kokomotribune.com
In his union office, Rich Boruff watched President Barack Obama say Chrysler LLC would file Chapter 11 bankruptcy.
The U.S. president said he was confident in Chrysler. The UAW Local 685 is confident in the president.
"I feel confident in him. He has a plan," said Boruff, Local 685 president. "He is looking out for Chrysler, the communities and the workers."
Filing under Section 363(b) of Chapter 11 of the bankruptcy code could mean Chrysler might be out of bankruptcy in a short period of time.
And the shorter the better, said Jerry Conover, adding Chrysler wouldn't want to overstay its welcome because the company's visit could make others who depend upon Chrysler feel unwelcome.
"I think they can get through this quickly and come back a smaller company with fewer brands and be profitable," said Conover, director of the Indiana Business Research Center at Indiana University's Kelley School of Business.
"The concern would have to be on the suppliers. The longer they stay in bankruptcy and make fewer cars, they are going to feel a pinch. If the demand for cars is lower than it used to be, that means fewer car parts to make.
"The other significant impact could be on the dealers and the communities they are in. Usually they are a city's biggest taxpayer and advertiser. That means less revenue circulating in a city. It's not an easy time. Everyone is going to have to give a little to get through it."
However, one Kokomo auto dealership manager doesn't see the negativity of filing for bankruptcy: It's all in how you perceive it.
"The way it's been displayed, the public may perceive bankruptcy that way," said Aaron Arriaga, a member of a Chrysler focus group and new car manager at Button Dodge Chrysler and Jeep.
"There was not an agreement because the banks know Chrysler's value. They know Chrysler is worth more than 33 cents on a dollar. We now have GMAC financing. That's a really good thing because they are aggressive. I don't think this [bankruptcy] will affect consumers. They will still want to buy a car. This [bankruptcy] will be in the news for the next few days, but in a week or two, it will be forgotten and we'll see what happens to GM next month."
UAW Local 1166 representative Shawn Fain didn't want a bankruptcy to occur at the company at all, nevertheless, he thinks it's better it happened now.
"[Obama] cares about the families and the thousands of people this affects," said Fain, who was also a member of the UAW Chrysler National Negotiating Committee. "If this was eight years ago, we wouldn't be having this conversation at all. We would have been liquidated.
"We hoped to avoid bankruptcy, but it's here. We are not out of work and we have our jobs. Now, we need to get this [bankruptcy] done as fast as we can so we can get back to work."