Obama Administration Finally Brags about Jobs Created in Auto Bailout
The Obama Administration was gung ho to brag about the GM IPO last year. But if I’m not mistaken, this is the first time the White House has bragged nationally about jobs created thanks to the auto bailout (Ron Bloom, who got promoted into an official Assistant to the President role at the beginning of the year, wrote this).
Today brings word of more good news for the American auto industry. GM announced that it would hire 4,200 workers at seventeen of its plants around the country.
President Obama took office amidst the worst recession in a generation and nowhere was this devastion [sic] felt harder than in the American auto industry and the communities it has supported for decades. In the year before GM and Chrysler filed for bankruptcy, the auto industry shed over 400,000 jobs.
Facing this situation head on, the President made a bold and, at the time, politically unpopular choice: Despite calls from critics to simply let these companies – and the entire American auto industry – crumble, he refused to allow these companies to fail. Had the Administration failed to intervene, conservative estimates suggest that it would have cost at least an additional one million jobs and devastated vast parts of our nation’s industrial heartland.
But at the same time, the President did not provide unconditional support. He insisted that the companies and their stakeholders make tough choices and undertake massive restructurings requiring huge sacrifices from all of their stakeholders.
Because of this “tough love,” the American auto industry is now positioned to grow and prosper as the economy recovers. Since GM and Chrysler emerged from bankruptcy in June 2009 the auto industry has added 115,000 jobs – the fastest pace of job growth in the auto industry since 1998. Last year, for the first time in 16 years, the Detroit Three actually gained market share compared to their foreign counterparts.
And these companies are not just making cars and trucks – they’re making the kind of fuel efficient cars and trucks that will power us to energy independence, protect consumers against rising gas prices, and ensure America wins the future.
Some of the workers GM is hiring and re-hiring in today’s announcement will be at work producing larger-than-initially-planned quantities of the widely acclaimed Chevy Volt. And just last month, Ford – which didn’t receive government assistance but which supported our aid to GM and Chrysler and has said publicly that it would not have survived if the rest of the American auto industry had been allowed to collapse – reported its best first-quarter profit in more than a decade thanks in large part to its new fuel-efficient vehicles.
In the wake of an historic recession, there is no doubt that much work remains. And we will not rest until every American who is looking for work can find a job. But today’s announcement is another positive sign – including more than 2 million private sector jobs created over the past 14 months – that we’re seeing across the country.
The comparative silence about the success of the bailout in the terms that really matter to actual people–jobs–not only confirms Main Street suspicions about the White House viewing the economy solely through the lens of the banksters, but it also leads beltway folks like John Dickerson to wonder out loud whether there is anything a President can do to fix the economy (Dickerson must have skipped those weeks when his American history class covered the New Deal).
The effects of the too-small stimulus, though real, are a lot harder to see. But aside from the decade-long Military Industrial Complex stimulus the DC area has enjoyed, the auto bailout and related energy investments was the biggest concentrated stimulus the Administration championed. And it has had an effect, both in hiring at GM and Chrysler, but also in hiring in MI more generally.
It’d be nice if the Administration not only bragged about that, but replicated it for places like Nevada.
Update: John Dickerson corrects me; this July 2010 briefing (a presser leading up to an Obama trip to visit several plants in the MidWest, bragged about jobs created). Thanks to Dickerson for the correction.
Or Florida. Or California. Or 47 other states.
Of course, even when there are attempts to help in other industries (like high speed rail), the Republican governors do their best to thwart any positive actions
Yeah. It’s not that I love NV more than the rest of the downtrodden states. It just astounds me to imagine what a state w/now much higher unemployment to MI would be like w/o the killer app that the auto industry has.
How many U.S. jobs? I notice that mention of where those jobs are is carefully avoided.
The phrase, “the auto industry”, masks who those employers are. It includes suppliers as well as car manufacturers. It includes not just the former big three, but hiring by the Koreans in Alabama, the Germans in the Carolinas, the Japanese in well-chosen congressional districts throughout the country, from LA to Columbus, OH. Nor is it likely that number includes only US hires.
Hence my comment. :)
Hence, my agreement with you.
Would you still have us understand that the IPO is a “pump and dump”?
I think the short term success of GM may have been built at the expense of long term strength. And I think one of the reasons that’s true is because of a desire to please Wall Street over pleasing consumers.
This, then, is what’s meant by the term “pump and dump” (I had a less exact understanding of the term, and I’m happy to have it corrected): the “success” of the offering is “over”, and those who bought into that offering learn, through the trial of its drop in value (thanks to the opportunistic sacrifice of “long term strength”), the error of their ways. The “success” of the stock is “short-term” because it doesn’t reflect the “long-term strength”, if any, of operation it funds (only its “long-term weakness”, so to speak). And, of course, we have prophetic insight into the inevitability of this, because we have diligently analyzed the intrinsic weakness of the thing offered.
What’s happening here? We take a term (“pump and dump”) conventionally applied to a quick and dirty operation, and apply it to a “long-term” investment that may hold its value in the marketplace long enough to encourage a second, later offering. According to this logic, selling stock in Apple Computers would be a “pump and dump”. Is this what you mean? One could say, with a touch of good humor, that you’re engaging in a rhetorical “pump and dump”–in which the term itself loses its “terminological value” of descriminatory precision). Or is a rhetorical “bait and switch”?
Of course I’m just kidding: there’s this thing called “evil”, and this other thing called “investment banking”, and the one is the instance of the other.
The knock-on effect from hiring by an automaker is tremendous. It reaches not just manufacturing, but suppliers and activities of all kinds, from R&D to sales, distribution and IT support, from glass to lights to plastics, from design and milling machinery to leathers, electronics, steel, wiring and assemblies of all kinds.
Few of those jobs and businesses, however, produce barbarians at the gate rates of return – because they are going concerns, not fire sales – and aren’t of much interest to Robber Barons.
I’m particularly mad at liberals today.
1. Congratulations, liberals. You’ve accomplished far less than the bare minimum while simultaneously not addressing the cause of this mess in any way. Why don’t you pat each other on the back some more? And then come ask me for reelect money so I can gleefully tell you to go fuck yourselves. You want money, ask your constituents. It sure as shit ain’t me or anyone I know. I work for a living.
2. We all know these created jobs are worse than the jobs that were destroyed by the sociopath class. Fewer benefits, lower wages, fewer protections.
At least before they had the good sense to brag about something like this, that only reflects what colossal failures they are. Apparently, failing only a little less than the other guys is the gold standard.
Um. A lot of these jobs–the ones at the Big 2.5–are at lower wages. But they do come w/union protection. But the vast majority of these jobs are at suppliers. And the vast majority of supplier jobs being created are being created on the same terms as before. Which is to say a great many of them are non-union, a great many of them don’t have great protection. But that’s not necessarily a big decline from what it was.
Let’s hear Obama brag about bailing out Chrysler! That was disgraceful, did anyone speak up against it? Obama is a disgrace & must be primaried.
Name me one person who can primary Obama and win. You can’t. And primarying a sitting Democratic president, I don’t think that it’s the sole reason why we got Nixon and Regan instead of second terms for Johnson and Carter, but it had to have played a role, in showing the Dems as disorganized and infighting.
Industrial recovery is not inconsistent with a pump and dump strategy. US manufacturers include more than just GM, though I think the odds are still good that GM’s new owners and managers have little appetite for running a cyclical company that considers an ROI of 8-10% a great year.
I take this to mean that yes, the IPO is a “pump-and-dump”, misleadingly oversold to its buyers, now stuck with a thing of far less value than they were lead to believe when they bought it, and that any success befalling GM’s next public offering will serve to prove the investor’s incompetence and/or negligence… This matters to me, because my pension fund is likely to invest in that offering, and there’s no escaping the damage that awaits me…
not real happy about the term “auto bailout”, that plays right into the right wing hands
what the auto industry got was a loan, the loan that was supposed to come from the bankers after they WERE given a “bailout”
a loan is not a bailout, the assets the government got in collateral was worth more then the monetary assets lent.
IF obama put the strings on the banksters bailout that insisted they give these loans in order to use OUR money, then the auto industry would NOT have needed government anything
Fair point. And while we’re at it, Toyota was borrowing at the Fed discount window while GM was begging.
I did not even know that, that is one depraved piece of fact right there marcy
From the “bragging” :
So Obama spent ~$60B and in only a few years “created” 4,200 lower-paying jobs of some kind.
I don’t think we can afford much more of this kind of “bragging.”
(sputtering laughter)
The news for the USA is good but for GM overseas it’s better —
Detroit News
May 10. 2011
GM to invest in foreign plants to respond to growth
David Shepardson
Washington — General Motors Co.’s chief economist said the automaker plans to make major investments in foreign plants — on top of $2 billion investments in 17 plants in the United States the company announced today.
“We’ll be announcing some outside the U.S. also,” G. Mustafa Mohatarem, chief economist for GM, said at a panel discussion before the U.S. Chamber of Commerce Tuesday. “The reality is that when you look at the auto industry and where the growth is, it is abroad, and so a lot of investment is going to go abroad to meet that growth requirement.”
http://www.detnews.com/article/20110510/AUTO01/105100416/1361/GM-to-invest-in-foreign-plants-to-respond-to-growth
— like with Buicks (seriously) in China.
General Motors sells twice as many Buicks in China than it sells in the United States. It took General Motors eight years to sell one million Buicks in China, but the second million came in only three.
General Motors outsells VW in China. GM sold more cars and trucks in China last year than it did in the U.S. GM has a five-year plan — it plans to double sales in China to 5 million vehicles by 2015.
That’s been true for a long time. When I was in China w/the auto industry, GM was making $2000 profit for each Buick Regal they sold in China, compared to $200 here. They got in at a good time, had a good partner, and have, with some notable hiccups, worked very well w/their partner (they have the same partner as one half of VW in China, but got the upscale side of that partner’s attention).
One of the things the IPO emphasized was GM’s position in China, which of course was in place when the DC folks were saying GM had nothing worthwhile. And GM folks–at least one on one–are quite honest that China had some significant influence on cars like the Lacrosse.
But not from the still-insolvent TBTF banks — to whom he provided trillions.
Yep. Nothing to brag about there.
Apparently QE3 will begin in June and the White House wants 3 free trade agreements (S. Korea, Panama, Columbia) ASAP.
Just in time for them to ship whatever job gains overseas with the administration’s NAFTA+.
I agree, actually. Whether the Admin gets it or not, I think S Korea crafted the “concessions” on KORUS to bump up Volt sales in Korea, and then bring production to Korea.
Giving the country w/the best battery technology an easy way to get everything GM has invested in the Volt.
Will American auto company sales go up due to the nuclear/earthquake issues in Japan?
They almost certainly already have. Japan won’t be back at normal production until November, I think. While Hyundai will pick up some of the slack, I thikn Ford and GM have picked up some as well (which plays into the market share issue alluded to in Ron Bloom’s email).
But remember that US manufacturers are affected too, though in lesser degree.
For example, a whole slew of suppliers rely on Renasas chips. And as this story lays out, their production was badly affected.
While it might seem easy to replace a Renasas chip w/some other manufacturers (though Japanese manufacturers have a disproportional share of auto business, I suspect), that’s not very easy to do. Code is written to the individual specs of individual computer chips; changing chips mid-development (much less mid-prodcution) may make the chip–and therefore the function the chip performs–subject to bugs.
I don’t know of US lines that have been halted as a result (remember, Renasas would halt the component production, which might halt the line production or at least some options on it), I do know manufacturers have had to scramble somewhat.
Lardy!
Well, my dad just sent me his Jetta. I think I really lucked out. Unless, some Jetta parts are made in Japan.
It’s not so much parts for existing cars as new production. But I’m not that familiar w/VW’s supply chain.
I’m curious. Did the Taiwanese pick up the supply chain when the disruptions occurred in Japan or is it distributed across China, Russia and Taiwan? Or another option behind door #3?
I actually don’t know–and it depends what you’re talking about. Some of the stuff that got knocked out is a lot less high tech (in the sense of chip plants), but nevertheless requires high-end manufacturing, if that’s not a contradiction of terms. My impression is that Taiwan doesn’t do much in auto, but I would bet they picked up a lot of other electronics business.
Sometimes I cruise Alibaba.com to get a rough idea of what’s where. My super rough guess is China and South Korea want to take up the auto industry-specific slack if the US can’t get it. What do you think?
Sure, in the long term they certainly will. But this is a short term issue, and the complexity of the manufacture of much–but not all–of this isn’t easy to move in a month. If the manufacture is still being done in Japan, if you think about it, it’s either a recipient of Japanese parochialism (their preference for Japanese suppliers) or there’s a tech reason that it’s in a high wage country like Japan.
Yes and I’d like to know more regarding this analysis. I am hoping the Japanese elite aren’t as big a bunch of sell outs as the US’s. It was interesting when they forged the CEPA with India.
My impression is that it’s not necessarily a question of selling out, it’s genuine parochialism. If I had to guess at their problems in recent years–and I assume you know I think it’s chip related, partly bc some Toyota dealer people told me they were having chip issues–is that they believe their suppliers, most of all Denso, must be better than others, so they don’t really competitively bid their parts. They don’t in any case. They’re REALLY hard ass about making suppliers work for almost free to get into their supplier chain. But it’s underscored by a belief that Japanese ways are still the best, no matter what.
The JapaneseG did not show enlightened self-interest with Fukushima unless that came about for other reasons not to do with the short sightedness that comes with greediness (I find that where there is greediness there is a sell out of some sort). Japan today is not the Japan it was only 10 years ago. Meanwhile, they have received a very, very harsh wake up call that their “parochialism” needs an upgrade so it can have a constructive, practical and more lasting benefit for everyone there.
Funny how we don’t hear much about the nuclear problem in Japan. Was it fixed or something?
Good question as to what’s the status. Check this out: “May 10 2011: Welcome to The Atomic Village.”
From “Lost in society: Tokyo’s homeless” (by Martijn Huisman, Feb. 6, 2011):
An older photo presentation (cliostraat in TOKYO, summer 2000).
related: a not so dirty-little-secret in H’wood is the one Sony factory in Japan that manufactures a particular HD Tape that everyone uses in recording tv and film was destroyed in the tsunami. the studios are almost out of tape, and have put out a call for people to turn in used tapes for “recycling” purposes. the bounty offered in exchange is rising daily.
People forget that not only did President Obama and Democrats in early 2009 save GM and Chrysler in Detroit, but also saved the over one thousand GM and Chrysler dealerships around the country. The dealership ownership benefited. The people working in the dealership’s service, sales, accounting and parts departments benefited.
But let’s get back to who owns these over-a-thousand GM and Chrysler dealerships: primarily white males who typically vote for Republicans and donate to Republican causes and candidates.
So, President Obama and Democrats essentially took over GM and Chrysler to make certain that bail-out conditions were met, all done on a temporary basis, with the goal of getting GM and Chrysler back on their feet, and even getting them to reimburse American taxpayers for saving them. Mission Accomplished.
But in saving all of these GM and Chrysler dealerships, President Obama and Democrats kept their hands off these privately-owned businesses, preserving capitalism, saving the financial asses of all the dealership owners (primarily white male Republicans), saving the jobs of all the dealerships’ employees, by keeping GM and Chrysler alive and Detroit humming.
And yet, hardcore Republicans keep accusing President Obama of being a “Marxist” or a “racist” or a “Communist,” even after he literally helped save the financial asses of all these dealership owners (and their families) across our country, dealership owners primarily white, primarily Republican-supporting, Republican-voting, to say nothing of all the white male asses on Wall Street that President Obama (and earlier President Bush) saved through massive infusions of U.S. taxpayer money (TARP 1 and TARP 2).
But, but…. Obama is black. White male republicans don’t like black men telling them what to do. Even if it means their jobs/businesses are saved.
On dealers, there were a lot of minority owned dealers. That said, those were often the dealers shut down in the restructuring–smaller inner-city dealers that weren’t up to current code on franchise standards.
But a lot of white Republican owned dealers got shut down too–it’s important to remember a lot of people lost their jobs and their life’s work here, as well, and not just people of color.
Your post is difficult to understand. There has been plenty of “bragging” from the Obama crew about the auto bailout, even though the the results are problematic at best.
And replicating this “success” in Nevada? What are you suggesting, a kazillion dollar bailout of the casino and brothel businesses?
when the bailout occurred I naively thought it was about saving middle class jobs…once again it was designed to make Wall Street a lot of money in the IPO. That jobs were actually saved was incidental to the process.