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Chrysler works it out with auto workers

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Bill Radke: Now this morning’s other big story is in Detroit. General Motors just announced it will cut 21,000 U.S. factory jobs by next year and phase out the Pontiac brand. All part of GM’s efforts to restructure and get more government help. Meanwhile, Chrysler still faces a real threat of bankruptcy, but yesterday, it took a big step towards survival.

Tracy Samilton is auto industry reporter for Michigan Radio. Tracy, what did Chrysler pull off this weekend?

Tracy Samilton: Chrysler accomplished what some folks were not certain they could do: they got additional concessions from the Canadian auto workers and the United auto workers. These are gonna be fairly significant cuts to benefits and supplemental pay.

Radke: And the big judge presiding over this, so to speak, is the government. How is going to react to the deal?

Samilton: I can’t imagine that they’re anything but very relieved. What this does is just puts all the pressure on the one stakeholder right now that hasn’t cut a deal with Chrysler. Now, all the attention is going to focus on the investors, the banks, and the hedge funds that hold most of Chrysler’s secure debt.

Radke: This is a huge obstacle, Tracy. What do you expect to happen with the creditors?

Samilton: Well it is a huge obstacle, because they’ve very far apart at this point in terms of the deals they’ve been swapping back and forth. The government wants the hedge funds and the investors to write off more than two-thirds of their debt, they do not want to do anything near that. And there already is a huge amount of political pressure on these banks, these investors groups, to deal, to keep Chrysler out of bankruptcy. We had Michigan governor Jennifer Granholm on Saturday saying, who knew these banks would take that bailout money for themselves and then kill this great industry? So you’re going to see some really strong rhetoric to try to pressure these groups to deal with Chrysler.

Radke: Tracy Samilton is Michigan Radio’s automotive industry reporter. Tracy, thank you.

Samilton: You’re welcome.

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