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 @emptywheel also, you should get a load of the arm on this guy!
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bmaz .@emptywheel Don't Be ball busting my nutcrackers, dammit!
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emptywheel @bmaz No no, the stiff nutcracker plays for the Broncos, not the Cheese.
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emptywheel @ErikLoomis I mean, what percentage of DC-based journos regularly get Venezuela remotely correct?
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emptywheel @ErikLoomis While I don't recommend MTP either, is that a MTP thing, a @chucktodd thing, or a DC village practiced stupidity thing?
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bmaz This guy is going everywhere with me today. #Gopackgo #cheesenation http://t.co/0XgfUgaoM4
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emptywheel @TimothyS Doesn't "forget" presume "once knew"?
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emptywheel @ncweaver Will all those TRS-80 generation computers even be able to run a movie? @SteveBellovin
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emptywheel @ncweaver What percetage of North Koreans have their own computers?
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bmaz ESPN boys are talking up Ryan Lindley. Maybe NBC is paying them to hype tonight's game. Cause Lindley versus @DangeRussWilson is #SquawkTalk
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bmaz @JWGOP @Speedy_Noil Fair enough! Also how modern and up to date that is. The kid might have a bright future!
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bmaz @JWGOP If there is not a Number 2 jersey involved, you are totally slacking.
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