Fiat

Italian Automaker Brings about Chrysler Success after GOP Private Equity Failure

I’ve been a bit tardy in responding to Mitt’s latest cynical ploy, to pretend that rather than expanding production and jobs in both OH and MI, Chrysler is outsourcing production to China.

The Detroit News’ David Shepardson has a good fact check on Mitt’s latest ad here. Greg Sargent rounds of OH papers mocking Mitt’s claims here.

But there’s an angle on Mitt’s claims that has been missed. His ad says,

Obama … sold Chrysler to Italians who are going to build Jeeps, in China.

As Shepardson notes, Chrysler used to build Jeeps in China for the Chinese market. Ford builds cars in China for the Chinese market. GM builds cars in China for the Chinese market (GM also exports Chinese-built subcompacts to Latin America). Chrysler’s return to the world’s largest car market is smart business, something any viable global brand needs to do.

If it’s a moral failing for Presidents to preside over private car companies trying to compete in China, then Mitt has a problem with St. Reagan, during whose Administration Jeep first made groundbreaking entries into the Chinese market.

And if Mitt has a problem with Chrysler (or Ford or GM) building cars in China to sell in China, then he had better prepare to get far tougher with China than he has threatened to do so far. China still slaps huge tariffs on cars made outside of the country, so to be viable in the world’s largest automotive market, you have to build in China. That is the crux of the argument American car companies (and Midwestern politicians) have been making for decades: while the US allows imports from all countries, Japan and Korea and now China make it very difficult to export to those countries. This is not fair trade.

But I’m most offended by Mitt’s insinuation that selling Chrysler to an Italian company–he doesn’t mention Fiat by name–was disloyal.

Recall Chrysler’s recent history. Chrysler’s most recent strong point was the early 2000s, when it succeeded in developing nifty (albeit gimmicky) cars with shortened development cycles (think PT Cruiser). But as Daimler took more control over Chrysler, it invested less in the brand. GOP Private Equity firm Cerberus bought its first 80% of the company in 2007 and picked up the rest in 2009.

Cerberus had no intention of bringing Chrysler back to its former strength. Rather, it wanted to strip out the finance side of the company (it was investing in GMAC at the same time) and sell off the rest. But with the impending financial crisis, it never managed to pull off the trick (though it did get a bank bailout in the very last days of the Bush Administration). Meanwhile, it virtually put the Chrysler model development on autopilot while it tried to find a way to cut its losses.

Thus, when it came time for bailouts, there didn’t seem much to bail out at Chrysler. Unlike GM, which really had started making a turnaround, Chrysler had no product in the pipeline to suggest it would be worth bailing out (though it did have a few super efficient factories in the US).

Choosing to bailout Chrysler was the most difficult decision Obama made during the auto bailout. I’m not even sure I would have chosen to bail it out. And it was difficult precisely because a bunch of Republican vulture capitalist types–people like former VP Dan Quayle and former Treasury Secretary John Snow–had stripped the company.

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In came Fiat and its Steve Jobs-like CEO Sergio Marchionne. Continue reading

Emptywheel Twitterverse
emptywheel @ggreenwald Don't forget Otto Reich, who during Iran-Contra was funneling public money for private lobbying. @mattapuzzo
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emptywheel @tonybalogna I'm hearing of places closing in the Midwest, where population in decline. So that may explain difference.
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emptywheel @mattapuzzo & does Treasury have a probable cause standard below which records get dealt to UANI? Does it use same for banks (don't answer!)
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emptywheel @tonybalogna I've seen reports stores have been closing in any case--the Dollar market is down bc people don't even have money for that.
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emptywheel So now we have to worry 1) whether monopoly on Dollar sales will hurt consumers 2) whether neighborhoods will lose even Dollar stores?
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emptywheel RT @toddzwillich: $76 PER SHARE for Dollar Tree's acquisition of Family Dollar. So...happy shopping!
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bmaz @TyreJim @sarahjeong Smiting people on the beach will not help one learn the Rule of Perpetuities.
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bmaz @GrantWoods My 17 yr old daughter just watched Godfather with my wife two nights ago. She was stunned by it. Still holds up so well.
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bmaz @joshgerstein I will stand with you. 2 against 4!
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bmaz RT @JasonLeopold: .@MargotWilliams this is great rpting: Kuwait spent $745,960 in 2013 lobbying on behalf of two Guantanamo detainees http…
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bmaz RT @APDiploWriter: Frank&Dean stomped on the terra like few others. "@SamLDorn: @hiltzikm @jaketapper @BeschlossDC Another Sinatra gem: htt…
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bmaz @fordm But outrageous secrecy against the citizenry's interest never seems to catch on, unfortunately. Maybe theyll stick with it this time!
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