Automakers pitch in to help Detroit as state takeover begins

Reuters News
Posted: Mar 25, 2013 10:42 AM
Automakers pitch in to help Detroit as state takeover begins

By Steve Neavling and Bernie Woodall

DETROIT (Reuters) - U.S. automakers joined other Michigan businesses on Monday in donating $8 million for new ambulances and police cars to Detroit as state-appointed emergency manager Kevyn Orr took over running the destitute city.

Bankruptcy attorney Orr slipped into city hall early on Monday before protesters opposed to his appointment had arrived to try to block his entrance. He later assured Mayor Dave Bing and city council members that he wants to collaborate with them in digging out of the city's financial hole.

"I acknowledged to the mayor that this is somewhat of a unique situation, and that we are going to work together as best we can to move forward to do what we can for the city," Orr said at a joint press conference with Bing.

Once the thriving birthplace of the auto industry and Motown popular music, Detroit has been in a long slide. It is the poorest big city in the nation and most of the 700,000 residents live in neighborhoods riven with crime and lacking basic services such as lighting, police and fire protection.

Michigan's Republican Governor Rick Snyder recruited Orr to clean up the finances of the city but his assignment is expected to extend beyond money.

Two hours after Orr's arrival, Bing announced the donation from the U.S. automakers. General Motors Co, Ford Motor Co, and Chrysler Group LLC, which have their headquarters in the Detroit area, joined Blue Cross Blue Shield of Michigan, Quicken Loans and other area companies in the effort, Mayor Dave Bing announced.

"This is an unprecedented collaboration between the business community and the mayor's office," said Bing at a press conference with business leaders and public safety officials.

The effort to fund the ambulances and police cruisers was led by Roger Penske, chief executive of Penske Automotive Group Inc, who appeared with Bing at a press conference.

Getting help from companies and foundations is key because Orr, a Washington, D.C.-based bankruptcy lawyer who worked on the Chrysler bankruptcy and restructuring in 2009, is unlikely to receive large amounts of money from the federal or state governments to bail out Detroit.

The companies donated money to a tax-exempt nonprofit that will in turn lease the vehicles to the city, and well as pay for their upkeep.

Joe Hinrichs, Ford's head of North and South America, said each of the three companies will provide roughly the same amount of 100 police cruisers, which Penske said would be delivered in 60 to 90 days.

Penske said the 23 ambulances will be on the streets in 120 to 150 days.

Bing said the city's current fleet of 23 ambulances is aging and prone to mechanical failures. Some have 250,000 to 300,000 miles on them and of the 23, four or five are out of service on any given day.

City officials have said that over the past three months as few as 10 to 14 ambulances are available at times for the city of 700,000 people and 143 square miles.

Some of the older ambulances and police cruisers will be retired once the new leased ones arrive.

On January 29, two children, ages 4 and 6, were unconscious after a fire consumed their west-side Detroit home. As firefighters tried to resuscitate the children, paramedics failed to arrive. So firefighters rushed the two children in a fire rig to the hospital. The 6-year-old died, and his brother barely survived.

Orr has said improving public safety is a top priority but he did not outline any specific steps on his first day.

He has said that he wants to avoid Detroit filing for bankruptcy, which would be the largest municipal bankruptcy in U.S. history.

A few dozen protesters gathered in front of Detroit's city hall on Monday, objecting to an unelected manager. So far, protests over the state takeover of Detroit have been sparsely attended and peaceful.

(Reporting by Steve Neavling and Bernie Woodall in Detroit; Editing by Greg McCune, Steve Orlofsky and Tim Dobbyn)