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
bmaz @astepanovich Wee, now there's a shocker.
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bmaz @AntonioFrench @MattSebek Well, either a grand jury or a preliminary hearing is required to set a case for trial.
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bmaz @mattapuzzo Yes, and then next summer DOJ can give them all awards and medals for the wholesale destruction of due process in the case.
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bmaz Shanesha Taylor May Not Have Enough Donated Money to Comply With Her Diversion Plea Deal http://t.co/9WCD72Weef via @phoenixnewtimes
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bmaz @steve_vladeck Kind of stunning the government affirmatively admitted that.
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bmaz RT @ZoeTillman: Here are some of the issues the former Blackwater guards may bring up if they appeal yesterday's guilty verdicts: http://t.…
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bmaz @ggreenwald @andohehir Sure would be nice if you could get it to Phoenix.
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bmaz RT @OnIyHistory: Guinness planned to advertise in Nazi Germany during the 1936 Olympics ("It's time for a Guiness") http://t.co/D5AwTnTnmP
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bmaz @emptywheel @evanperez Also, statutes of limitation are blithely let run. So, while Holder's comment is nice, it is also total horseshit.
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bmaz @emptywheel @evanperez Making it easier would be fine. But there are already plenty of prosecution modalities; they are just being ignored.
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emptywheel .@RonWyden "ignorant abt...ways in which govt using EO 12333 to conduct overseas data collection w/o court oversight" http://t.co/0BIigEaMcD
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