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The American auto industry has a real problem: it's doing so well, it's struggling to make enough cars.
Automakers are pushing factories and workers to the limit to try to meet burgeoning demand for new vehicles.
Some plants are adding third work shifts. Others are piling on worker overtime and six-day weeks. And Ford Motor and Chrysler Group are cutting out or reducing the annual two-week July shutdown at several plants this summer to add thousands of vehicles to their output.
"We have many plants working at maximum capacity now," says Ford spokeswoman Marcey Evans.
Manufacturers are adding working hours and hiring new workers.
There is, of course, a political angle to all of this. It was, after all, just two weeks ago that Mitt Romney boasted, "I'll take a lot of credit for the fact that this industry's come back."
It's credit he doesn't deserve, but President Obama does.
Just to recap, Romney has said, publicly and repeatedly, that he opposed Obama's industry rescue plan -- the one he now wants credit for. The former governor has said repeatedly that GM and Chrysler should rely on private funding to restructure and get back on their feet.
Of course, in early 2009, the credit markets were frozen and there was no private funding available. (When a company called Bain Capital was approached, it refused to invest.) How does Romney reconcile his demands with reality? For the last three years, he hasn't even tried to explain the contradiction. In fact, he'd prefer if we just overlook the details altogether.
We can say a couple of things with certainty. First, when President Obama launched his ambitious policy in 2009, he was taking a major gamble -- not only with the backbone of American manufacturing, but with his presidency and its ability to use the power of government to repair a private industry facing collapse. As First Read noted at the time, "As the GM bailout goes, so goes the Obama presidency."
We now know the gamble paid off. GM and Chrysler are making money, expanding American facilities, and operating at capacity. It's a remarkable success story and one of Obama's most important domestic accomplishments. Republicans were absolutely certain the White House's policy would fail, and they were wrong.
Second, we also know that if policymakers had followed Romney's advice, and waited for private financing, the American auto industry likely would have collapsed while waiting for capital that simply wasn't available. An economy that was already on the brink would have been forced to absorb hundreds of thousands of unemployed auto workers, crushing already-struggling communities in the Midwest.
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there you go telling a half truth once again, He said, referring to GM, that they should go through bankruptcy. Then he took credit for being right on that fact, GM did file bankruptcy but if they could have done it the way that Mitt favored the American people wouldn't have been ripped off for billions in tax money given to GM before they filed. Do you really think the American public is that stupid?
Its funny that you bring up this article too and you quote Ford, the one company that didn't take a bail out. You are awesome at using misleading facts.
The taxpayers did not get ripped off; the auto companies are paying back the loans and taxpayers made a profit. Try again.
@chemdmd - it continues to stun me that people will come on this board with completely misinformed statements uttered as though they're the God's honest truth, and then accuse everyone else of not knowing what they're talking about.
Mitt Romney's plan depended on the bankruptcy being financed by private capital. There was no private capital available. Bain Capital itself even declined to participate. But that's all that Mitt Romney knows how to do based on his "businessman" experience. His approach was a FAIL from the word "go" because it depended on magical thinking.
How is it you're completely unaware that the industry has long paid back its loans:
GM:
http://money.cnn.com/2010/04/21/autos/gm_loan_repayment/index.htm
Chysler:
http://www.bloomberg.com/news/2011-05-24/chrysler-repays-u-s-canadian-loans-as-fiat-increases-ownership-to-46-.html
chemdmd: ...the American people wouldn't have been ripped off for billions in tax money given to GM before they filed.
NB: should read "ripped off for billions in tax money given to GM, UNDER GEORGE BUSH" (Announced Dec. 19, 2008. Obama inaugurated Jan 20, 2009). Misleading enough for ya?
chemmd:
....Chem you do realize that any time a company files the type of bankruptcy that GM filed it is automatically taken over by the federal government, yes? That would mean that instead of advocating one kind of bailout Romney was advocating for another kind of bailout....
Additionally do you not remember the guy from Ford testifying before the US Congress that if GM didn't get bailed out their company would likely die? You're aware that GM's success also includes Ford even if Ford did not directly take money. That simply means that Ford is benefiting indirectly from government investment. As a medical doctor chemist you too are benefiting indirectly from government investment. The interns and medical professionals who work w/ you went to school on the government dime (in all likelihood you did too assuming you're actually a medical doctor chemist). All of you take roads to work, rely on police and firefighters, rely on EMTs, rely on utilities, and rely on medicine in order to treat your patients. All of those industries are subsidized by the government.
@June
GM and Chrysler haven't repaid anything out of business operations, just other bailout money and added capital. In short, it's still other people's money.
http://www.examiner.com/article/alert-gm-lies-new-ad-on-its-repayment-of-bailout-money
http://www.foxnews.com/politics/2010/04/22/grassley-slams-gm-administration-loans-repaid-bailout-money/
and your own cite re Fiat.
http://www.bloomberg.com/news/2011-05-24/chrysler-repays-u-s-canadian-loans-as-fiat-increases-ownership-to-46-.html
Since you clearly don't understand the difference between Obama and Romney's plans, watch this short, if academic video, of Wilbur Ross, a bankruptcy expert and investor who happens to be a Romney supporter, explain exactly why Obama did the right thing and Mitt's plan would've failed.
http://youtu.be/qyteDwUcE8c
@Shooter
The US government has sold off most of the GM stock which means that the loans were repaid with interest and taxpayers made money. Your sources are 2010 articles. You need to read more current news.
Second:
Anyone who did not support the auto industry bailout is UNPATRIOTIC. This country has created the car industry and other than baseball, I can't think of anything that say "US" more than cars.
I wish you guys would quit getting your back up when I agree with you. Oops my bad that was a thread or so ago... so once again. As Ross says, the Feds had to handle the DIP/debtor-in-possession financing. Other than that it was a bankruptcy exactly like the private guys do.
Oh, there is one other difference. Obama took over as bankruptcy judge, threatened bondholders and handed over a very large ownership stake to the UAW. Here's a post from the time that I believe is describing the ultimate settlement. And note how badly the bondholders are treated.
http://www.bizzyblog.com/2009/05/22/here-we-go-again-this-time-govt-is-trying-to-shaft-unsecured-gm-creditors/
NB. Obama used the current 'demonize Republican contributors' strategy to great effect on the private bondholders. Rule of law? Not so much.
http://www.businessinsider.com/new-allegations-of-white-house-threats-over-chysler-2009-5
In a regular bankruptcy, the bondholders lose along with the shareholders while certain debts, like pensions get priority for payments. If the company was liquidated, the end result would have been far worse for bondholders and shareholders who would have lost everything. The only salable assets are the land, equipment, some inventory and parts. Most of the equipment and inventory would have little value since the machines are made to specs so other auto makers would have no use unless the machine was totally retooled and rebuilt.
What part of "Yes I agree Govt had to handle the financing", am I not getting across?
And no, the bondholders do not get wiped out like the common stock holders. There is a protocol for which bondholders get what... who is first in line for the leftovers. Unless you're Obama and decide to abrogate bondholder rights in favor of his union buddies.
Read the bankruptcy code priorities. There are certain unsecured debts that get priority including pensions, wages, etc. This means certain debts get paid and those wage and pension benefits that are owed get paid before bondholders and then shareholders. Future benefits are not a priority and in fact can be set aside. Obama reorganized the debts and did not hand the UAW anything except a renegotiation of their union contract which reduced benefits and wages as part of the reorganization.
Mitt wanted them to go thru a bankruptcy from which they ~ the weak ones ~ would not be able to recover but which would lie open a very opportune field for private investors to swarm!
The US taxpayers bought into the company and were paid back in full .....(@chemdmd) please refer to Econ 101 for details
The point is that eap would have preferred it went through traditional bankruptcy means which would've ended up leaving the worker's benefits lacking. This is the way that bankruptcies are usually handled by large corporations like GM. When the airline industry had to declare bankruptcy the first thing that happened was workers were laid off w/o any obligation on behalf of the companies who declared bankruptcy to meet the prior agreed to payments. In fact it's a common thing that businesses wishing to get out of contract deals they made w/ employees will declare bankruptcy in order to avoid those debts. In the case of the auto bailout the auto industry was not allowed to do this. Eap is stating that he believes the auto industry should've been able to forgo already promised benefits in order to maximize profits for shareholder (the largest chunk of which, interestingly enough, are also workers for the very same company). The argument being that the workers would've made more money that way (I just finished reading an article about this on Townhall....sighs at the conservative echo chamber, but that's another discussion for another day). It's a short-sighted and dishonest way of attempting to make it sound like more people got screwed than actually did. Doing it the way eap is proposing would actually have hurt more people in the long run. Doing it the way we did it wasn't necessarily ideal, but it was far less damaging in the long run.
The auto bailout resulted in a new union contract with lesser benefits so the UAW got less just like the bondholders and other creditors. Union contracts can be set aside in bankruptcy, but it does not void the obligations that are due and owing to the date of the bankruptcy. Those pension contributions get priority. If a straight bankruptcy was done, the assets would have to be sold to pay creditors in the order of priority, but I already talked about those assets. It is probable that the sale of assets would have left the bondholders with less than what they got in the bailout. Possibly nothing at all.
Here is what the CEO of Ford, Alan Mulally, said about it: “The government’s intervention was absolutely key to helping create a chance for GM and Chrysler going forward. That’s why I testified on behalf of GM and Chrysler, as you know. The reason we did was that we believed—like two presidents [Bush and Obama]—that if GM and Chrysler would have gone into freefall bankruptcy, they would have taken the supply base down and taken the industry down plus maybe turned the U.S. recession into a depression. So I think we did the right thing by testifying on their behalf and I think that the government did the right thing for that critical industry at that time to step in and help.” (http://tinyurl.com/7pmxtc7 )
I often wonder, how does Romney look his kids in the eye, knowing he's a pathological liar, and a weasel to boot. Does he tell them it's "just politics"?
Every time he takes credit for the auto industry rescue as his idea, I'd like to hear whatever journo is within earshot ask him something along the lines of, "Are you saying you then, that you called your own idea "tragic" and that it would "make GM the living dead" if the administration implemented it? Or do you stand by your op-ed which was against the Obama administration's approach to rescuing the auto industry - which is it?" Cue deer-in-headlights look.
What the heck did Rmoney have to do with this? He said let it just die, seems that is the philosophy. Let it die… just what we need… maybe he saw an opportunity for his buddies to feed on the auto industry. Yuck!
How can he possibly take any credit? That alone should tell people what a liar he he is!
What Obama did was to stop the digging. It wasn't some magic wand to fix everything that Bush gave Obama that crashed the economy. It was simply a shovel that Obama decided to put down and instead loaned some cash to some companies to fill the holes - job creation. Had Romney been president, he'd still be digging with the sink hole widening, consuming our homes and our cars.
Clink, i'll have another, bartender.
nobody will let you forget, Willard.
the title of your op-ed was..
LET.DETROIT.GO.BANKRUPT.
He (Mitt) would also like to take credit for the size of the trees in MI, God has kindly stepped aside to allow Mitt to proceed ....
As a non active member of the LDS faith, I beg people to consider Mr. Romney's practice regarding morality, especially honesty, and to please know that his conduct is his own and is not mirrored by the vast majority of LDS people, who value honesty very highly! I am in no way the mouthpiece of the Mormon faith, and am speaking only as an individual, based on my interaction with fellow Mormons. I think the authorities would most certainly agree with me, though..
What those citing GM and Chrysler having paid back their loans are leaving out is that the bailouts for these two companies were structured much differently. Chrysler's bailout was primarily based on high-interest loans. Chrysler paid back its government loans last year by getting new loans with much lower interest rates in the private sector after demonstrating that it can be a viable and profitable business since exiting bankruptcy. GM's bailout, on the other hand, was based primarily on equity sold to the government and a much smaller proportion in loans. Yes, the loans have been repaid, but the U.S. Treasury only sold half of its shares in GM's IPO. For the government to even break even, it would have to sell the remaining shares at $54 per share. GM stock is currently trading at $22 per share, so that is unlikely anytime soon.
So while taxpayers recouped much of their investment in Chrysler, that is not likely to be the case with GM.