On December 11, 2008, Greg Goodnight, Mayor of Kokomo, Indiana, looked out his window at the holiday preparations taking place in his metro area of 50,000 and wondered whether 2009 would bring hope or despair to the citizens of his city. He had just received the news that congressional leaders had failed to agree on terms for emergency federal financial assistance for the U.S. “Big Three” automakers. Without some sort of substantial government intervention, at least one of the three – General Motors – seemed headed for almost certain and fairly immediate bankruptcy and possible cessation of operations. The entire country was focused on this issue, but Mayor Goodnight had particular cause for concern: nearly one quarter of the Kokomo area’s workforce was employed directly in the auto industry. The two biggest employers in Kokomo were the local factories of automaker Chrysler and Delphi Automotive, a parts supplier already mired in unresolved bankruptcy.
Mayor Goodnight had been working long hours for months, in tandem with other like-minded elected officials and labor and industry leaders, to help secure government bridge loans to the auto industry. But regardless of efforts by elected officials from auto industry-dependent communities across the nation, the 110th Congress had not passed a “bailout” package. In the absence of specific legislative authority to help the automakers, President George W. Bush had stepped in with up to $17 billion in loans to the auto industry. He utilized funds authorized for the Troubled Assets Relief Program (TARP) by the Emergency Economic Stabilization Act of 2008. This money would allow GM and Chrysler, the two most troubled “Big Three” U.S. automakers, to continue operations through March 2009.
It was unclear what would happen next, after the incoming Obama Administration and the 111th Congress took office. The employment of up to 3.3 million Americans who worked in (or were dependent upon) the auto industry and the fate of heavily auto industry-dependent communities, like Kokomo, hung in the balance.
Mayor Goodnight sat in the quiet of his office developing his options. He planned to continue lobbying for the support needed to allow the U.S. automakers and their suppliers to remain in business, providing jobs. But he knew that he had to prepare for the worst, and so he reviewed his administration’s plans to address the fallout if Kokomo’s core employers shut down their operations and laid off their workers in 2009. At the same time, he committed himself to redoubling Kokomo’s efforts to develop new directions for the city’s economic future.
Published Date: 16/02/2009
Suggested Citation: Lisa Tepper Bates and Constance E. Bagley, "Mayor Greg Goodnight," Yale SOM Case 09-011, February 16, 2009.
Keywords: Automobile, United States