Car restructuring picks up speed
Wherever the restructuring of Detroit is going, it is now going there faster.
News reports said Chrysler was about to go into Chapter 11. Chrysler said it was not so. Creditors of the car company said that they were presenting a counter proposal to the Treasury's offer.
Yesterday,the Canadian auto workers agreed to new contract concession to cut Chrysler's costs in that country.
Across town, where General Motors (GM) creditors and UAW retirees are fighting over who will get the larger pieces of the carcass, the number one car company in the U.S. drew down another $2 billion in government funds. According to Reuters, "The U.S. Treasury could lend another $3 billion to GM." The company may not need it. GM will cut most of its North American production over the summer to allow bloated inventories to sell off.
None of this matters much if domestic vehicles sales continue to fall. The Treasury will come under much greater pressure to conclude its stay in the Motor City if April sales are awful and show no sign of recovery. It may be that bankruptcies will be the only way to save the two firms, both of which may, despite cuts, prove to be too large.
Douglas A. McIntyre is an editor at 24/7 Wall St.