Bankrupt GM Owes Goodwill Thousands

July 15, 2009       Mark Hrywna      

Add Goodwill Industries of Greater Detroit to the list of creditors owed money by General Motors (GM).

The iconic American auto company filed for bankruptcy June 1 and owes the Goodwill affiliate more than $40,000 for work done by trainees and employees, including packaging safety kits for cars that are shipped throughout the world.

The nonprofit agency has been a supplier to GM and Chrysler for decades, according to Russ Russell, vice president of development and public relations at Goodwill Industries of Greater Detroit. While he expects GM will eventually pony up the money it owes, Russell said Chrysler has made all of its payments to date.

The auto industry represents about 40 percent of the nonprofit’s $22-million annual budget but it used to comprise as much as half. The hard times for the industry have forced Goodwill to diversify its revenue streams and add new areas for employees and trainees to contribute.

Among the new workforce development programs started to make up for the auto industry losses are landscaping and maintenance for the Detroit Zoo and the Downtown Detroit Partnership’s efforts to keep downtown clean. Goodwill provides more than 100 workers on an annual basis for cleaning and landscaping downtown. The cleanup effort continues to expand, since the city hosted the Super Bowl in early 2007, Russell said, though not as much as hoped. Goodwill trainees and employees provide building maintenance at the zoo.

At any one time, Goodwill has from 300 to 500 trainees, Russell said, while also running some of the one-stop centers for Michigan Works. Through May, the agency already had reached the 15,000 that it expected to seek assistance for the entire year, he added. “That can tell you a little about the market we’re in,” Russell said. The unemployment rate in Michigan is the highest in the nation, at approximately 14 percent, compared to the national rate of almost 9.5 percent, through May.

Goodwill of Greater Detroit covers a five-county area, with about 250 employees within the metropolitan area. Already this year the agency has had to lay off about 20 percent of its staff due to the weakening auto industry, according to Russell.

Although the Goodwill affiliate has expanded into new areas, Russell said, “we just haven’t diversified enough to meet the new demand. We’re working toward it, we’re hopeful.”

Revenues from the deal with automakers were anticipated to be about $7 million to $8 million, according to Russell, but that will depend on what happens this year. “It could easily get out of control. We’re still waiting to see how Chrysler and GM come out of bankruptcy,” he said, adding that Goodwill continues to look at its balance sheets on a weekly basis “so we can react.”

In addition to seeking new programs for revenue and training, Russell said Goodwill is actively pursuing federal stimulus dollars to help get citizens back to work.

Russell expects Goodwill to get the funds owed by GM but the bigger issue remains whether the company will re-establish car manufacturing. “If that work continues to go down, that’s less work for us, and less revenues we can pump back into the organization,” he said. NPT