By K.O. JACKSON, Kokomo Tribune staff writer
kirven.jackson@kokomotribune.com
America's automotive industry could call June 1, 2009, the perfect, imperfect economic storm.
Monday, storm clouds rained down on America's biggest automaker, General Motors, as the company filed for Chapter 11 bankruptcy.
America's smallest automaker, Chrysler LLC, had some springtime-in-fall weather, as Judge Arthur Gonzalez approved Chrysler's bankruptcy plan to sell most of its assets to Italian automaker Fiat Group SpA.
The approval means Chrysler will not have to sell itself in pieces. With Fiat's support, a "new" Chrysler can begin producing smaller, more fuel-efficient cars.
And finally, after almost four years of living in bankruptcy limbo, clouds cleared for Delphi Corp.
Delphi gets a buyer
While President Barack Obama was explaining GM's demise, GM's largest supplier found a new buyer that could facilitate its emergence from bankruptcy: Parnassus Holdings II LLC, an affiliate of Platinum Equity.
The Los Angeles-based private equity firm will purchase Delphi - except for five plants - for $3.6 billion.
A Platinum official said the business invests in distressed businesses requiring "hands-on" operational functions, but he sees "a lot of potential" in Delphi.
End of an era
Call it a perfect, imperfect economic storm for the automotive industry, but an automotive analyst has other words to describe Monday, June 1, 2009.
"Turmoil. Chaos. Excitement. Change. Uncertainty. I can live with all of that," said Jim Hossack, analyst for AutoPacific.com, which specializes in marketing and product consulting for the automotive industry.
"It's not happy headlines for the newspapers today, but that's the news. It's a sad day in America with GM filing, but it was inevitable."
No matter how the three bankruptcies conclude, Hossack added the automotive industry and its workers have been changed forever.
"The golden times and the golden jobs are over. United Auto Workers' wages will be lower. The days of high wages and high benefits are over," said Hossack. "Now, they are all going to have to go out and compete with the rest of the world. The golden times are gone.
"It really is amazing that it went on for so long. For 50 years, they were all overpaid and no one stopped it. They screamed, 'pay me more or we'll go on strike.' They were greedy. The companies were greedy. And now we have lost so many jobs. Those that have jobs are now considered lucky. It's a sad day."
A return to work?
However, locally, the sun could be peeking through storm clouds for Kokomo's two largest employers. But don't put your umbrellas away yet.
"The rumor going around is we are supposed to be back in the plants by late June," said Rich Boruff, president of UAW Local 685, representing more than 4,000 Chrysler rank-and-file employees. "I can't wait until we get back in the plant and have people in their working."
Boruff's sunny disposition was clouded when discussing Indiana Treasurer Richard Mourdock.
As Chrysler was getting closer to a deal with Fiat, Mourdock - representing police, teachers and taxpayers - petitioned Gonzalez not to accept the deal. "... [O]ur Indiana State Police retirees, Hoosier taxpayers, and Hoosier teacher retirees will only be receiving $0.29 on the dollar for their position as secured creditors."
Boruff said when people called Mourdock's office to complain about his position against Chrysler, "they were hung up on when they said they were from Kokomo. That's crazy. We never had one conversation with him. We were the only state that said they had a problem, and we are one of Chrysler's largest locations in the country. It's a shame political games were being played. That makes no sense at all."
Neither does Delphi's immediate future.
Delphi's future in Kokomo
Although Platinum is buying most of Delphi, last week GM agreed to buy back Delphi's plants in Grand Rapids and Saginaw, Mich.; Lockport and Rochester, N.Y., and Kokomo. GM will spend $250 million in additional financing to Delphi.
Where does a bankrupt business get money to purchase businesses? Jeffrey A. Schreiber knows.
"GM doesn't have any money. The money they are using is from the billions the government loaned them from the taxpayers. It's called debtor-in-possession financing," said Schreiber, a bankruptcy attorney with offices in Marion, Kokomo and New England.
"GM's Marion plant is going to remain open and enhanced. That would mean an increased job force. I feel safe with what is going on with Delphi. These are good things."
But not knowing the future can bring cloudy days.
"I think we are back to the unknown," said Ginny McMillian, president of UAW Local 292, representing fewer than 1,000 rank-and-file Delphi employees.
"You hope it is a good thing what GM is doing. So far nothing has changed. From what I understand, we will be a GM subsidiary, and they will go by our contract.
"People need to understand that everyone gave up a lot, but the alternative could be a helluva lot worst. I am bothered how they treated our retirees; the ones who paved the way for us. But it could be so much worse.
"We will continue to fight, and we will fight together. Things seem positive right now. We survived this, and we will continue to fight."