Obama heralds U.S. auto turnaround

David Shepardson
Detroit News Washington Bureau

Washington — President Barack Obama says the U.S. auto industry has helped spur a resurgence in American manufacturing — and he says his decision to rescue Detroit's automakers helped the industry "get back in the game."

Obama will return to Michigan on Wednesday — just three weeks after the government exited the final part of the $85 billion auto bailout when it shed its final 11.4 percent stake in auto lender Ally Financial Inc. — to herald the auto industry turnaround.

He will take a victory lap to highlight what was one of his toughest decisions made in the early months of his presidency when he visits Ford Motor Co.'s Michigan Assembly plant in Wayne.

"The auto industry has led a resurgence of manufacturing in America. The quality of the cars has gotten so much better that we are competitive — not just in SUVs — but up and down the line. The branding of American cars is back to where it should be. Michigan's unemployment rate has fallen faster than the overall unemployment rate," Obama said in a 15-minute Detroit News telephone interview late Tuesday.

The auto industry — including manufacturers, dealers and suppliers — have added more than 400,000 jobs since the industry hit bottom in June 2009 and auto sales in 2014 hit 16.5 million — their highest level since 2006.

In the interview, Obama disclosed details of his decision to rescue Chrysler LLC in March 2009 over the objections of some advisers. He said the decision that saved thousands of jobs was due in large part to the workers at the company.

Previously published reports have disclosed the administration was divided about whether to save Chrysler as part of a tie-up with Italian automaker Fiat SpA. But Obama has never discussed the debate in significant detail. Obama said despite concerns from advisers, he was convinced by Fiat's plan and American workers.

"The Fiat proposal was plausible enough and the game plan they had for rebuilding Chrysler was sound enough and the workers in those Chrysler plants were hungry enough and dedicated enough that it was worth taking a bet on them and I'm glad we did," Obama said.

Many economic advisers thought it would never work: hand control of Chrysler to Fiat CEO Sergio Marchionne — two companies with significant differences in culture and products. Obama "made all the right decisions, stood behind us and I think he deserves credit for it," former auto czar Steve Rattner said in a 2011 Detroit News interview.

Obama noted Chrysler was the "sickest" of the Detroit Three in early 2009 and said while his advisers had all recommended a restructuring of General Motors Corp. was viable, some suggested that by letting Chrysler die, a remaining "Big Two" automakers — GM and Ford Motor Co. — would have been healthier.

"Part of it just had to do with the numbers and the weakness of the company at that time," Obama said referring to Chrysler. The administration gave Fiat control of Chrysler as part of the restructuring in 2009 and Fiat acquired the remainder of Chrysler last year.

Today, Chrysler is part of Fiat Chrysler Automobiles NV. It has added back thousands of jobs. In December, Chrysler said sales were up 20 percent and 2014 sales were up 16 percent — among the strongest in the industry. Chrysler has had 57 consecutive months of year-over-year U.S. sales gains.

"The question was not, 'Do we intervene?' The question was, 'Do we intervene in a way that actually spurs the sort of restructuring that gives American automakers the chance to get back in the game,' " Obama said.

Obama said his administration was worried that if the auto industry collapsed "right at a time when we're teetering on the brink of a Depression — that we might not be able to control the fallout."

The auto bailout ultimately became a cornerstone of his re-election campaign and helped him defeat Republican Mitt Romney as he and Democrats pounded Romney for his opposition to bailouts for GM and Chrysler before requiring bankruptcy filings. Vice President Joe Biden said the campaign theme was: "Osama bin Laden is dead and General Motors is alive."

Obama has talked about the auto bailout in hundreds of speeches — reminding Americans of the dire economic problems the country faced in 2009 — and difficult decisions necessary to turn them around.

In a Detroit News interview in October, Romney declined to say if he thought controversy surrounding the auto bailout and comments he made about Chrysler's Jeep brand made the difference. "That's the nature of politics. Things will be distorted from reality and sometimes those things can be used against you and you have to live with that and recognize that's part of the political process and (if) you can't handle the heat, you can't be in the kitchen," Romney said.

Rep. Sander Levin, D-Royal Oak, said in a Detroit News interview Tuesday the auto bailout would be one of the major parts of Obama's legacy. "The domestic industry has rebounded," Levin said. "It was a real struggle. It did not come easily and it did not come automatically. When good things happen people forget the origins."

Sen. Gary Peters, D-Bloomfield Township, who will join Obama on Air Force One for the trip to Michigan, said it "was absolutely critical" to Michigan that Obama supported the auto industry. "It would have been catastrophic to the state of Michigan," Peters told The News. "The government needed to be the lender of last resort and it turned out to be a huge success."

Peters noted that Ford — which didn't seek a government bailout — could have been brought down by the collapse of GM and Chrysler. Ford won $5.9 billion from a Energy Department retooling program that helped it make more fuel efficient vehicles at the Michigan assembly plant and 12 other plants. Nissan Motor Co. and Tesla Motors Inc. also won loans from the program.

Obama noted the government recovered all but $9.3 billion of the auto bailout, but said his administration had recovered $70 billion — more than tthe $57 billion his administration invested. Obama's tally didn't include the initial $25 billion the Bush administration gave automakers and their suppliers in the final weeks of George W. Bush's administration.

"It's been a good deal for autoworkers. It's been a good deal for autoworkers. It's been a good deal for America and it saved about a million jobs," Obama said.

Asked if Bush's administration was to blame for the losses, Obama declined to "second guess" the actions of the Bush officials. Obama's team put a plan together "that was not just writing a check but insisting on collaboration between management and workers and suppliers and dealers and shareholders, where everybody had to make some sacrifices. ...

"There was clear-eyed recognition that we couldn't sustain business as usual. That's what made this successful. If it had been just about putting more money in without restructuring these companies, we would have seen perhaps some of the bleeding slowed but we wouldn't have cured the patient."

Obama also recounted that the auto bailout — which is now credited with saving 1 million jobs and helping to spur auto sales to their highest level since 2006 — wasn't seen as a slam dunk in 2009 and came at a "scary time."

"It's important to recall that the auto bailout was wildly unpopular — even in Michigan — and it was coming on the heels of already several infusions of cash into GM and Chrysler," Obama said. "If the auto industry collapsed, right at a time when we're teetering on the brink of a Depression ... we might not be able to control the fallout. The question was not, 'Do we intervene?' " The question was, 'How do we intervene in a way that actually spurs the sort of restructuring that gives American automakers the chance to get back in the game?' "

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