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In hindsight, U.S. investment in auto industry was brilliant



Published: Fri, May 27, 2011 @ 12:00 a.m.

Once again this week the nation saw an example of how right it was for President George W. Bush to launch and President Barack Obama to pursue efforts to save the domestic auto industry in late 2008 and 2009.

Chrysler Group LLC announced that it was repaying its government loans of $7.6 billion less than two years after emerging from an accelerated and modified bankruptcy.

Chrysler today is a dynamic competitor in the automotive market, as is General Motors Co., which has also repaid its loans and last year re-entered the stock market. Chrysler has yet to offer its stock for sale. The U.S. government still holds shares in both companies.

The third of the Detroit-based auto makers, Ford Motor Co., was in a stronger capital position when the recession hit and survived without government loans. But its ability to cope would have been hampered by the turmoil in the supply chain that would have followed a collapse of GM and Chrysler.

All three are registering strong sales, showing profits and working on future domestic and international products — ranging from their traditional trucks and SUVs to new smaller, more efficient and technologically innovative products.

There were those free marketers — aided by a cadre of self-serving senators from states hosting foreign manufacturing plants — who were willing to allow GM and Chrysler to fail spectacularly. Even President Bush said that at another time he would have been tempted to look the other way, but he knew that a seriously wounded economy could not have survived such a trauma.

Ripple effect

Hundreds of thousands of jobs in the basic auto industry would have been lost, and job losses among suppliers, and the suppliers to suppliers would have rippled outward into the millions. The ability of the U.S. companies to continue their offshore operations would have been damaged, and the resulting vacuum would have been filled by European and Asian companies.

It is impossible to estimate the long-term implications to the American auto industry, the American economy and American workers and families if the economic Darwinists had gotten their way.

We in Ohio can be especially thankful that it didn’t come to that. Surely Ohio would have been hurt as hard as any state except Michigan.

Instead, President Obama will be visiting a Chrysler plant in Toledo next week, where he will doubtless be greeted by workers happy to have good jobs in a recovering industry.

Meanwhile, General Motors recently announced it will invest $2 billion in 17 facilities in eight states, including Michigan, Ohio, Kentucky and Texas — a demonstration both red and blue states have reason to be thankful for the auto industry bailout. Since mid 2009, GM has added 9,000 U.S. jobs.

For a fraction of what the federal government provided for “too-big-to-fail” financial institutions, Washington saved an industry and kept a recession from turning into a depression. Now the investment is paying visible dividends.


Comments

1cambridge(3026 comments)posted 3 years, 4 months ago

Vindy....Thanks for finally pointing out the exact same points I made when I argued with the posers, I mean posters on this site.

Even when every dime is paid back and the stock is sold for profit the same haters will still say it was the wrong thing to do. I actually hope they stick to their crying about it. It just helps people when they decide who to vote for in the next election.

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2LtMacGowan(645 comments)posted 3 years, 4 months ago

kudos to the author.

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3rocky14(708 comments)posted 3 years, 4 months ago

Oh ya---we should have let both GM and Chrysler go down the drain so we would have millions of more people without jobs.
Spoken like real morons!

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4Armyguy28(26 comments)posted 3 years, 4 months ago

Ianacek, even if everything was run at GM with the best leadership their sales would be nowhere near where they we were 12 years ago. Theres more choices for buyers now that quite frankly are better cars. You ever see the difference in a domestic interior from lets say GM and one from Europe. I mean compare the interior of a Caddilac to a BMW. Last year i chose a 2011 3 series over the 2011 Caddy CTS. I wish i could help our own employment but Im not givin 40k away to something thats not as good.

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5Traveler(606 comments)posted 3 years, 4 months ago

The bailout of GM and Chrysler is one thing bush did right.

We should have did the same to the banks if you need money declare your bankrupt and the us we come in and clean up the mess.

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6howardinyoungstown(591 comments)posted 3 years, 4 months ago

The white elephant that no one is talking about is National Security. During World Wars 1 & 2 the automotive industry manufacturers ability to retool and build vehicles and munitions for the war effort were critical to the success of our military fighting overseas. The Pentagon would never allow for the closure of so many manufacturing facilities and the loss of so many skilled workers on US soil, it would effectively mean that after a decade or two if China wanted to invade the US they would be successful as we would no longer have the ability to make sufficient armaments to defend our shores.
Think about it, what would we do, ask the Chinese to sell us some tanks before they invaded so that it would be a fair fight?

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