Friday, June 03, 2011
June 3, 2011 6:42 a.m.
By Dan O'BrienYOUNGSTOWN, Ohio -- U.S. Sen. Sherrod Brown, D-Ohio, says that the auto industry bailouts orchestrated by the Obama administration two years ago helped save thousands of manufacturing jobs in the Buckeye State and likely averted a depression.
And, the senator said, new vehicles such as General Motors Co.'s Chevrolet Cruze deserves some of the credit for putting the industry in Ohio back to work.
"Our efforts were aimed at far more than saving two of the Big 3," Browne said. "They were about the livelihoods of independent auto suppliers and thousands of workers in the state."
The senator made his remarks Thursday during a conference call with reporters in advance of President Obama's visit today to a Chrysler plant in Toledo.
While the bailouts of GM and Chrysler helped keep open large-scale auto manufacturing operations such as GM's Lordstown Complex, they also secured a future for workers and companies in Ohio that supply the industry, Brown said.
Two models in particular -- the Chevrolet Cruze, built in Lordstown, and the Jeep Wrangler, built at the plant in Toledo Obama visits today -- are manufactured in Ohio and rely heavily on parts suppliers and producers within the state, the senior senator from Ohio said.
The Cruze, Brown noted, is as close to an all-Ohio manufactured automobile as a vehicle can get. Components manufactured by 32 companies in 28 communities across the state go into the Cruze, one of GM's best-selling vehicles.
"The Cruze's engine is built in Defiance. Its tires are manufactured in Akron. Its aluminum wheels are built in Cleveland, its seats in Warren, its transmission in Toledo, its metal in Cleveland, its stamped parts in Parma, and its speakers in Springboro," Brown noted.
He pointed out that before the bailouts, Lordstown placed 1,000 of its workers on layoff. Since the restructuring, the plant in Lordstown has added a third shift and employs nearly 5,000.
Brown cited a 2010 study conducted by the Center for Automotive Research that showed more than 792,000 Ohio jobs depend on the auto industry. These include 120,285 directly employed in the industry, 276,330 indirect jobs, and another 395,981 spinoff jobs created as a result of employees pumping money back into the economy.
This year, the center found, 164,654 jobs in the state would have been lost were it not for the auto rescue.
"In 2009, President Obama took a tough and unpopular stance, took leadership, and placed the auto industry and the country on the road to recovery," Brown declared.
GM and Chrysler received billions of dollars in loans from the Troubled Asset Relief Program, or TARP, initiated by former President George W. Bush. The Obama administration continued the aid and then took both companies through a swift, government-backed bankruptcy to restructure the domestic auto industry.
Last week, Chrysler repaid its remaining loan obligations -- $10.6 billion -- to the U.S. Treasury. Chrysler's parent company, Fiat, is in negotiations to purchase the equity stake the government still holds.
"It's better than anyone thought was possible at the time," observed Brian Deese, deputy director of the National Economic Council, who sat in on Brown's conference call. "There's still a long way to go, but you see reason for optimism in a way we haven't seen in a long time."
Since the bailouts, Deese said, the domestic auto industry has created 115,000 jobs, the best job growth the industry has seen since the late 1990s.
"The decisions that Sen. Brown and the president made in support of the industry were difficult, but the right ones for the industry, workers and communities," Deese said.
Still, critics of the bailouts reiterated Thursday that GM, Chrysler and the Obama administration have been less than truthful with the public about the extent of loan paybacks.
Last year, the Competitive Enterprise Institute filed a Freedom of Information Act request, and last week it received documents related to a GM public relations campaign. These documents indicate the U.S. Treasury was aware of the GM ads that fraudulently boasted that the auto giant had repaid all of its government loans.
"Now the Treasury Department is re-enacting this smoke-and-mirrors routine on behalf of Chrysler," said Sam Katzman, general counsel. "Whatever the bailouts may be credited with creating, honesty isn't one of them."
Copyright 2011 The Business Journal, Youngstown, Ohio.
