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Friday, August 28, 2009

Hertz, Macy’s, and Goodyear among Major Companies in Danger of Bankruptcy

In our tumultuous economy, more and more large corporations are facing bankruptcy. The American auto industry has already seen two of the big three corporations, General Motors and Chrysler, file Chapter 11 bankruptcy. It appears that many other industries face the same economic hardships as the auto industry, and many companies that have long been regarded as extremely strong are treading dangerously close to bankruptcy.

Rental car giant Hertz is struggling to stay afloat amidst a sizeable debt incurred in the financing of their rental fleet. This debt is compounded by a falling rental demand among the general population. It remains to be seen whether Hertz will be able to right the ship in a hostile economic climate.

Macy's, long regarded as one of the most powerful department store chains in the country, is also facing the potential of filing bankruptcy. The company faces $2.4 billion of maturing debt over the next five years. They have tried to cut costs, but the reality is that vastly fewer people shop at department stores than ever before. Even if the economy rebounds soon, it is unlikely that Macy's will see their sales return to the level needed to maintain financial solvency.

Goodyear has recently lost a sizeable portion of the tire market share as demand for their tires has dropped. They are also financially strapped with massive debt and pension obligations. To make matters worse, The United Steelworkers union prevents Goodyear from exercising cost control measures by forcing factories to stay open.

Hopefully, these corporations will be able to pull through the tough economic times we are facing. For now, they are all playing a waiting game, and only time will tell if they can survive without filing bankruptcy.

 
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