Editore"s Note
Tilting at Windmills

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October 28, 2010

IT'S A GOOD THING OBAMA SAVED THE AUTO INDUSTRY, CONT'D.... Remember, if we'd followed the Republican economic policy last year, this wouldn't happen.

Chrysler Group LLC will spend $600 million to upgrade production at its Illinois assembly plant, bringing the auto maker's total announced U.S. investment to $2.1 billion since its exit from bankruptcy court last year.

The company will use the funds to build a body shop and install new machines at the Belvidere assembly plant to support the production of future models in 2012. The plant is home to the Jeep Compass, Jeep Patriot and Dodge Caliber.

New production means more work means more jobs. In other words, it's good news. As a political matter, MSNBC's First Read noted in July, "We said it at the time: As the [auto industry] bailout goes, so goes the Obama presidency. It was the bailout everyone in America could understand, and it wasn't popular.... A year later, however, the Obama administration believes it has a good story to tell."

The administration's right. Republicans were prepared to let the American auto industry fail at the height of the Great Recession, but President Obama rescued it instead. If the auto bailout and Obama's presidency are inextricably tied, the White House has reason to boast.

It also reminds me of a point I've been meaning to get to. I mentioned the other day that Ford reported earnings of $1.7 billion in the third quarter, and now expects to have zero net debt by the end of the calendar year -- a year ahead of schedule. Despite the still-sluggish economy, Ford's third quarter was the best in more than 20 years, and I again emphasized how glad I am the president rescued the American automotive industry.

Torr Leonard suggested this was off-base, since Ford wasn't part of the GM/Chrysler rescue.

It's not an unreasonable point, but by all available evidence, it's mistaken. Ford may not have been bailed out, but the company, like its American competitors, was struggling badly. If GM and Chrysler had collapsed, there's absolutely no doubt that Ford wouldn't have had the suppliers it needed to survive. Ford's executives have already acknowledged this; it's not exactly a contentious point.

I realize the auto industry rescue wasn't popular; bailouts never are. But as industry production and profits keep improving, this definitely belongs in the political "win" category for the Obama White House. The president's approach is a success story, and we can all be very glad the decision was in his, not Republican, hands.

Steve Benen 4:50 PM Permalink | Trackbacks | Comments (23)

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Comments

Note also that Ford did benefit from the cash for clunkers program. As did foreign makes that nonetheless have plants in the US.

Posted by: cthulhu on October 28, 2010 at 4:56 PM | PERMALINK

Also note that Honda, Toyota, and the other companies with plants in the US didn't have to shut down because of a parts supplier collapse. Good news for the new South and a lot of politicians running against the auto company bailout.

The difference between the auto bail out and the bailout of the Banksters is the auto companies had to pay a price for their bailout. Lots of investers and auto executives took a hit. The banksters got a lot of money and passed out giant bonuses without lending a hand to anybody. I will never forgive Bush, Bernacke, Obama and Geithner for not requiring a price from the banksters. I don't care if they paid the money back ahead of time. They could have done something to help the world out of the great recession. At least they personally could have paid a price. Maybe a bankster CEO could have lost his job?

Posted by: Ron Byers on October 28, 2010 at 5:08 PM | PERMALINK

Thorn 1. I live in a city with lots of auto plants. Yep some jobs were lost, but many, many more were saved. You really ought to get the facts straight. Maybe a little less Glen Beck and a little more reading would help.

Posted by: Ron Byers on October 28, 2010 at 5:11 PM | PERMALINK

It would take a miracle for GM ever to pay off the government, but the proceeds from the UAW to the Democratic party have been substantial.

The strength of the American auto industry lies outside Chrysler and GM, and those competitors to Chrysler and GM will, on most reckonings, continue to drive Chrysler and GM out of the market.

(Except in China, where GM continues to grow and is profitable.)

Like the metaphorical "Bastiat's Window", the transfer of money to the failing Chrysler and GM hurt the expansion of the non-subsidized American economy.

Posted by: marketeer on October 28, 2010 at 5:11 PM | PERMALINK

Even though I'm a Michigander who has relatives who work for GM, I've never been big on the whole "Buy American" thing - till now, that is.

One of the obvious ways to rebuild the American economy is to buy American made products, whether it's cars or pants or paper clips. Maybe someone can come up with a "This Christmas make sure your presents are American made" campaign.

One antidote to globalism is rebuilding local economies - community economies - and refusing to buy goods from companies who've outsourced their labor.

Posted by: delNorte on October 28, 2010 at 5:17 PM | PERMALINK

Stick to your guns Steve. Torr Leonard is wrong. If the auto industry had crashed, many more suppliers would have gone with it. The bailout kept many suppliers in business including suppliers to Ford and the American-made foreign brands like Toyota and Nissan. Such a collapse, combined with the bankster's recklessless could have trigger a depression greater than 1929. The Bush-initiated, Obama-perpetuated rescue packages saved us from far more serious consequences. I am livid at the banksters lack of gratitude or any semblance of remorse or contrition. Worse, we are headed into exactly the same situation again and this time public sentiment is such that there will be no rescue, no defense and the banksters will drag us all down with them. Bastards.

Posted by: Russell Aboard M/V Sunshine on October 28, 2010 at 5:21 PM | PERMALINK

What town was that thorn 1?

Posted by: Ron Byers on October 28, 2010 at 5:23 PM | PERMALINK

"A good thing"? But Steven, that is how normal, considerate and intelligent people see it. To a certain right-wing mentality, it violates the feral, jungle rule of survival of the fittest (with no embarrassment at the hypocrisy that they would continue special favors for their favorites anyway ...) BTW it is widely acknowledged that the results of failure for any auto company would cascade, since many supplier companies would go under.

Posted by: neil b on October 28, 2010 at 5:25 PM | PERMALINK

Thorn 1, I must be special because I post real facts all the time.

Posted by: Ron Byers on October 28, 2010 at 6:02 PM | PERMALINK

"It's not an unreasonable point, but by all available evidence, it's mistaken. Ford may not have been bailed out, but the company, like its American competitors, was struggling badly. If GM and Chrysler had collapsed, there's absolutely no doubt that Ford wouldn't have had the suppliers it needed to survive. Ford's executives have already acknowledged this; it's not exactly a contentious point.

"I realize the auto industry rescue wasn't popular; bailouts never are. But as industry production and profits keep improving, this definitely belongs in the political "win" category for the Obama White House. The president's approach is a success story, and we can all be very glad the decision was in his, not Republican, hands."

Ford did not get bailed out. Why you would "admit" this fact and then go on to say "I realize the auto industry bailout wasn't popular", as if this is a point in your favor...

There would have been as many parts suppliers for Honda, Toyota, Nissan, BMW, name them, as they needed... The same goes for Ford.

With NO bailout.

It doesn't matter that I supported the bailout, it is the linking of Ford TO the bailout that is off putting, and frankly, wrong.

Posted by: Rick on October 28, 2010 at 6:30 PM | PERMALINK

I just hope it translates into solid votes from the rust belt.

Posted by: Daniel Kim on October 28, 2010 at 6:38 PM | PERMALINK

One of the obvious ways to rebuild the American economy is to buy American made products, whether it's cars or pants or paper clips. Maybe someone can come up with a "This Christmas make sure your presents are American made" campaign. -- delNorte, @17:17

Chances are, that would limit your Christmas gift selection to guns and cars. I like the idea of both: buying local and buying US-made, if I can afford to. But, finding US-made products, even irrespective of price, is getting harder and harder. Most of the time, when you see a US name and address on a product, it's just the *distributor*, not the maker. And, even if something bears the "made in USA" label... It might have been made in the Marianas (which are allowed to use that label but which have different labor laws than we do). Or, it could have been *assembled* in US, from Asian-made components.

Nothing is simple in the globalized world...

Posted by: exlibra on October 28, 2010 at 6:47 PM | PERMALINK

exlibra:

Buy a Ford.

It's (for the most part) American made, the money will stay here (and provide jobs)and the cost has to be equal to, or lower than, the alternatives...

Unless you want something that only one maker makes... And even then, most likely, Ford has it. Gas-Electric? Yes. (As much as Toyota. More than Honda, unless you want a two seat, gets fewer per passenger miles, type car.)

Posted by: Rick on October 28, 2010 at 7:18 PM | PERMALINK

Since people want to pile on me today - Here's my post from yesterday:

I agree with the basic sentiment since the stimulus probably saved my job last year. Ford undoubtedly benefited from cash-for-clunkers and other general stimulus measures Ford itself was But it wasn't 'bailed out. Ford weathered teh storm on its own.

Ford's management actually got relatively smart a few years ago (late 90s) and started making some very good moves. Ford has been the healthiest of the big three for about a decade now and was poised for serious gains before the Great Recession hit.

1 - I state up front that the stimulus saved my job. My company is part of Honda's North American supply chain (depending on product line we're either a tier 1 or tier 2 supplier). Without Cash-for-Clunkers and other stimulus measures I'm near certain our parent company would have consolidated North American operations to our Tijuana plant. As it was we lost close to half our workforce and alternated two weeks on two weeks off for six month last year. We're finally starting to come back now.

2 - I acknowledged that Ford also benefited from these programs.

3 - I supported the bailout. That should be clear when I said 'I agree with the sentiment'.

4 - My point, factually true, was that Ford did not recieve bailout funds from the government. Due to its own management decisions over the past decade they were in a far better position than either Chrysler or GM. Ford has been the healthiest of the big three auto companies for quite some time now.

5 - None of what I said discounts that Ford did not benefit from government action (as stated above). Steve's original post implied strongly that Ford recieved bailout funds. Factually incorrect. I and others corrected that percieved error.

6 - Glenn Beck is an evil little troll who should be banished back to whatever hell dimension he came from. Please don't ever imply that I agree in any way with that nutjob or his beliefs.

Posted by: thorin-1 on October 28, 2010 at 7:20 PM | PERMALINK

, it is the linking of Ford TO the bailout that is off putting, and frankly, wrong.
Posted by: Rick on October 28, 2010 at 6:30 PM

No Rick. Many of the auto suppliers supplied to several different manufacturers. If GM and Chrysler had gone down the losses to the suppliers were projected to be so great they would have gone down too. There would have been incredible dislocation, loss of production, and who knows how effectively production would have got back in place, given the banking system's unwillingness to extend capital.

Posted by: Johnny Canuck on October 28, 2010 at 7:23 PM | PERMALINK

My bet is that Republicans would have done it, too. That's just the nature of their hypocrisy. There would have been a "stimulus" too but much more weighted to tax cuts and, so, much less effective.

Posted by: digitusmedius on October 28, 2010 at 7:46 PM | PERMALINK

Never forget that "true progressives" wanted to let them fail too.

Basically, it's just people who can't stand Obama.

Posted by: sherifffruitfly on October 28, 2010 at 8:08 PM | PERMALINK

So would someone explain why I see shades of red and pink in the various maps of likely election outcomes for MI, OH, IN, etc ...??

Posted by: bigtuna on October 28, 2010 at 8:58 PM | PERMALINK

One thing that I think is rarely acknowledged (and thinking about it, I wonder why) is that the collapse of the auto industry was a direct result of the financial industry near-collapse in late 2008 - the one that was saved by TARP. Next to housing, the car is usually the most expensive thing that the consumer buys - and it usually relies on credit. Next to housing, the auto industry may be the industry that most depends upon financing and the financing industry. And they took huge hits when credit froze up in Fall 2008. Whether a company went belly-up had as little to do with quality or pension liability as it did exposure to the need for ready capital as a requirement of business. People were pretty amazed that Ford was able to scrape together funding and didn't need a bailout - but it was expected at the time that Ford would. I don't think there was any qualitive judgement about Ford vs GM at the time everything was in danger of going down the tubes. Republicans always minimize this. The fact that the foreign-owned plants managed to survice may very well likely have to do with the fact that they (or their parent companies) were tied into a different banking system and were insulated somewhat from the US banking system and had access to foreign capital more than any qualitative differences in the foreign vs US auto companies (or, more properly, the "virtues" of non-unionized labor.

The fact that Ford now is doing well is a sign that the auto industry as a whole recovered from the trauma of 2008 and, and I agree, we should be thankful that the Obama and his people enabled all the folks associated with bailed out companies the opportunity to take part in the recovery.

Posted by: sparky on October 28, 2010 at 9:26 PM | PERMALINK

Note also that Ford did benefit from the cash for clunkers program. As did foreign makes that nonetheless have plants in the US.

... and IIRC, The Dems wanted the cash for clunkers to be available ONLY for domestically produced vehicles, but the repigs insisted on including ALL cars, Domestic AND foreign, or as they viewed it Union and NON-Union. I suspect that if the repigs could've gotten it through for ONLY foreign/non-union cars, they would have.

Posted by: G.Kerby on October 28, 2010 at 11:44 PM | PERMALINK

"No Rick. Many of the auto suppliers supplied to several different manufacturers. If GM and Chrysler had gone down the losses to the suppliers were projected to be so great they would have gone down too. There would have been incredible dislocation, loss of production, and who knows how effectively production would have got back in place, given the banking system's unwillingness to extend capital."

We will have to disagree.

What Ford buys is EXACTLY what Honda, Toyota and the others (including Nissan and Mazda) buy.

I know exactly how effective they would have been.

Posted by: Rick on October 29, 2010 at 10:02 AM | PERMALINK

Big supposition claiming this was a net positive. First off, it premature to do so. Ford, didn't take a bailout and is kicking butt on both GM and Chrysler.

BTW.. GM DID NOT pay back its loan. I borrowed more Government money to pay back the first bailout!!

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