Using NewsHour Extra Feature Stories

Overview: NewsHour Extra features stories can help students identify and interpret key issues in current events. This activity anticipates one class period, but the follow-up essay might be assigned as homework, or in another period.

Warm Up: Use initiating questions to introduce the topic and find out how much your students know.

Main Activity: Have students read NewsHour Extra's feature story and answer the questions on the reading comprehension handout.

Discussion: Use discussion questions to encourage students to think about how the issues outlined in the story affect their lives and express and debate different opinions.

Follow-up: Students can write an 500-word editorial on the topic expressing their views and send it to NewsHour Extra [extra@newshour.org] for possible publication.

Evaluation: Students are graded on their answers to reading comprehension questions and/or their editorial.

Story: Chrysler Sold to Private Investment Firm, 05/16/07
http://www.pbs.org/newshour/extra/features/jan-june07/chrysler_5-16.html

Initiating Questions:

1. What are the differences and similarities between American-made and foreign-made cars?

2. Why does it cost more to make cars in the United States?

Reading Comprehension Questions: (click here for printout)

1. Why is American car company Chrysler in the news this week?

German automaker Daimler announced this week that it plans to sell its controlling stake in the American car manufacturer Chrysler to a private group of investors called Cerberus Capital Management.

2. What setbacks have Chrysler and other American car companies suffered recently?

In recent years, however, the American automaker has experienced a series of setbacks. Rising gas prices have made its minivans, SUVs, trucks and large sedans less attractive than cars that get better gas mileage made by rivals Toyota and Honda. Chrysler also has been saddled with growing cost of health care and pension benefits for its thousands of American employees.

Last year the Detroit-based company reported a $1.5 billion loss and, in February, announced that it would cut 13,000 jobs.

3. Why does Cerberus think it can improve Chrysler when other companies have failed?

Cerberus, which already owns 50 companies with combined revenues of more than $60 billion and more than 175,000 employees, thinks it can succeed where public companies have not.

In an interview, Cerberus Chairman John Snow told the Wall Street Journal that a turnaround for Chrysler would take patience.

"It might take a couple of years to really show the results. And public companies don't have two or three years," Snow told the Journal, referring to the fact that public companies have to report profits and losses regularly to investors. Those results often affect investor confidence in a company and, in turn, business decisions.

4. How much will Cerberus pay for Chrysler? What is going to be one of their biggest expenses moving forward?

Under the deal, Daimler, which spent $36 billion on the merger in 1998, will effectively pay Cerberus $677 million in cash to take over Chrysler.

In return, Cerberus has agreed to invest some $7 billion in the American carmaker and take on the projected $18 billion that Chrysler will have to spend on employee health care and retirement benefits going forward.

5. How have some workers at Chrysler reacted to the buyout?

With many details of workers' health care and pension packages still unclear, not all Chrysler workers are convinced that the deal will be in their best interest.

Tim Preston, a tradesman at the automaker's Jefferson Avenue North assembly plant in Detroit, told the New York Times that "they're going to want us to give something up."

Other workers are unsure what to think.

In an interview with National Public Radio, Mike Lawler, an employee at a Chrysler stamping plant in Warren, Mich., said, "There's not really much you can do ... just hope for the best. ... Only time will tell what's going to become of it."

Discussion Activity (more research might be needed):

1. What are the advantages or disadvantages of making cars in the United States? Explain how these impact the car business. What role does the cost of health insurance and pensions play in this business?

2. If you could buy a car today what are the factors that you would take into account when making that decision? How important is it to you to consider where a car is made when buying it? Do you consider things like the cost of fuel and fuel efficiency?

3. Research the impact that closing car factories or laying off hundreds or thousands of workers have on the communities where they are located. Where have communities been successful after a big closure? How were they able to succeed? What happens in communities where they are not successful?

4. What are the differences between publicly and privately owned companies?

Write a 300-500 word essay on any of these topics providing clear examples. Send your completed editorial to NewsHour Extra (extra@newshour.org). Exceptional essays might be published on our Web site.