Car makers optimistic in light of Detroit bankruptcy

Michigan Governor Rick Snyder last night authorised the city, which is more than US$18 billion ($19.6 billion) in debt, to file for Chapter 9 bankruptcy protection.

The city’s emergency manager, Kevyn Orr, said Detroit would be “unable to break the cycle of damaging cutbacks in municipal services and investments [without] significant restructuring of its debt”.

General Motors, which was forced into and emerged from Chapter 11 bankruptcy along with Chrysler in 2009, says it is hopeful Detroit can rebound and come back a stronger city.

“GM is proud to call Detroit home and today's bankruptcy declaration is a day that we and others hoped would not come,” the car maker said in a statement.

“We believe, however, that today also can mark a clean start for the city.”

GM employs approximately 4000 people at its Detroit-Hamtramck assembly plant and Renaissance Centre in downtown Detroit, but says it does not expect the bankruptcy to impact its operations or future outlook.

Chrysler, which employs close to 6000 people across the city, says it too is committed to standing by Detroit.

“We not only continue to invest in the city and its residents by adding to our presence in Detroit, we also are committed to playing a positive role in its revitalisation," the car maker said in a statement.

Ford, which was founded in nearby Dearborn and has never been based in Detroit and avoided bankruptcy following the global financial crisis, is hopeful the restructuring can help re-energise the city.

“We believe a strong Detroit is critical for a strong Michigan and our industry,” Ford said in a statement.

“The city has a difficult job ahead, and we are optimistic that governmental leaders will be successful in strengthening the community.”

US census data reveals Detroit’s population has fallen seven per cent since 2010, and as of 2011 more than one third of the city’s residents were living in poverty.