This week and next, President Obama is taking a victory lap. But is it too soon?
On Friday, the president was set to visit General Motors and Chrysler plants in Detroit. Next week, he’ll be in Chicago to visit the Ford Motor factory.
At the two Detroit plants, workers literally owe their livelihoods to the president, whose administration provided the carmakers with more than $60 billion to assure their survival. You can argue the Ford workers should be grateful as well, since Ford’s future would have been threatened had its two Detroit rivals gone into liquidation.
I talked about the automobile industry’s situation on NPR’s Morning Edition with my good friend Don Gonyea, who spent many years on the car beat when he was based in Detroit. This is a story of deep interest to the Changing Gears region, and its outcome will play a huge role in determining the future of the Manufacturing Belt.
Yet, the story is far from finished. To the president’s favor, it can be legitimately argued that he has done more to transform the Detroit automakers than any action they took themselves over the last quarter century.
Lately, the administration has maintained that the bailout preserved 1.1 million jobs. It has posted a detailed report about the industry’s future on its Web site.
But the administration also has complained that Americans simply aren’t aware of this accomplishment.
I disagree. News organizations from NPR to The New York Times and especially the Detroit newspapers covered the auto bailout and the G.M. and Chrysler bankruptcies in great detail, stretching from the carmakers’ first pleas to Congress to the moment when the companies emerged from court protection.
Pretty much anyone who owns a car knows the car companies got federal help, and the nickname Government Motors is surely one G.M. would like to lose.
No matter your feelings about whether the bailout was a good move or not, it did several important things. It took power over the industry away from lifelong executives, and gave it to outsiders, including those appointed by the administration and the executives that eventually took control.
The auto rescue plan also was a presidential endorsement of organized labor, which backed him strongly during the 2008 presidential campaign. And, it was a major show of support to the Midwest, including Mr. Obama’s home state, Illinois.
But make no mistake. Despite his declaration of victory, Mr. Obama has never gone easy on the auto companies. Right after his election, I analyzed his long interest in the industry for The New York Times. Even as he was reassuring G.M. and Chrysler that they would receive bailouts, Mr. Obama said, “The auto companies must not squander this chance to reform bad management practices.”
And while he undoubtedly can count on a warm welcome at any plant owned by a Detroit automaker, Mr. Obama also has reshaped the automotive landscape, beginning at the very top.
Ed Whitacre, the chief executive of General Motors, and Sergio Marchionne, the chief executive of Fiat, which now has management control of Chrysler, have no formal ties to Detroit, so protests that “it’s not the way we do things here” carry no weight with them.
While the president has long been allied with labor, he has never spared the United Automobile Workers union from criticism. Union members took deep cuts in benefits, though senior workers were spared wage cuts, as part of the conditions for the bailout. In his 2006 book, “The Audacity of Hope,” Mr. Obama wrote, “For years, U.S. automakers and the U.A.W. have resisted higher fuel-economy standards, because retooling costs money, and Detroit is already struggling under huge retiree health-care costs and still competition.”
Thanks to the government’s intervention, those health care burdens have been taken off the carmakers’ back. But short of protectionism, no government action can spare Detroit from competition.
The real story of whether the bailout was a long term solution is yet to be told. Only when auto sales rebound from their sluggish levels and back to some semblance of normalcy can G.M. and Chrysler’s future really be discerned. That may take years, and require much more hard work, realism and patience.
Daniel Howes, the veteran Detroit News business columnist, made that point today. “The biggest risk with declaring victory too soon is not actually knowing how everything will end,” he wrote.
At Changing Gears, we’ll be watching the carmakers, their employees, their communities, their states and the region to see what will happen next. What are your predictions for the future of the industry? What more needs to be done?