There has been much confusion lately over the issue of Chrysler moving Jeep production to China. Bloomberg issued a press release promoting this and Mitt Romney then used it in a political ad creating yet another firestorm over its inaccuracy. Is it inaccurate? Let’s examine.
Here is the statement that Romney made.
“I saw a story today that one of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China,” Romney said.
Romney is wrong. Jeep is not moving ALL production of Jeeps to China. Chrysler CEO Sergio Marchionne sent an e-mail to employees clarifying this.
“I feel obliged to unambiguously restate our position: Jeep production will not be moved from the United States to China.”
Forbes has the entire e-mail you can read here – http://www.forbes.com/sites/jimgorzelany/2012/10/30/marchionne-says-it-is-inaccurate-to-suggest-jeep-production-will-shift-to-china/
The Obama camp is jumping all over this story as a Romney lie. Egads! Imagine that! A campaign that lies? Not so fast.
Without question, Romney got it wrong when he said that all Jeep production would leave the country. However, some Jeep production is clearly leaving the country and that’s what the mainstream media and the Obama campaign won’t tell you. From the same e-mail.
“Together, we are working to establish a global enterprise and previously announced our intent to return Jeep production to China, the world’s largest auto market, in order to satisfy local market demand, which would not otherwise be accessible.”
Fiat, the parent company of Chrysler, also announced a new Jeep line for production in Europe – http://www.huffingtonpost.com/huff-wires/20121030/eu-italy-earns-fiat/
Fiat, which owns U.S. carmaker Chrysler, also will unveil a new smaller Jeep for production in Italy aimed primarily at Europe, and focus the Fiat brand on the 500 and Panda compact car ranges.
The UAW is also jumping on the anti-Romney bandwagon.
“Anyone with an ounce of knowledge about the auto industry and Chrysler’s production plans would know what Mitt Romney said wasn’t true,” UAW Vice President General Holiefield, who directs the union’s Chrysler Department, said in an Oct. 27 press release.
Ken Lortz, UAW director of the region that includes Ohio and Indiana, said in an Obama campaign conference call with reporters yesterday that the Romney ad represents “the lowest form of political tactics.” The spot features “clever word- smithing” to avoid outright falsehoods, he said, “but the intent of the ad is completely dishonest.”
Interesting that the UAW is so quick to jump on Romney for “clever word-smithing” yet doesn’t hold the Obama campaign to the same threshold.
Clearing through the mud we can see that the Romney statement was wrong but the tv ad was 100% correct. Fiat does indeed own Chrysler and Jeep. Jeeps will be built in China as well as in Europe. Yes UAW, production of your iconic Jeep is moving overseas, just not all of it. Make sure you don’t practice the “lowest form of political tactics” and mislead the American public.
To continue on with the theme from the conservative bloggers uniting post, let’s look at a favorite claim of the Obama administration, the success of the auto bailouts. As the walking gaffe machine, Joe Biden, likes to claim, “Bin Laden is dead and GM is alive”. In fact, Obama is just the tip of the iceberg. Many others side with the President on this issue. The general premise is that the auto industry would have failed without government intervention including the supply chain and various other support industries. Of course, we’ll never know now if that claim was true but we can examine the contentions and the results.
The assertion of rescuing an industry is to preserve jobs. American jobs. Obama, amongst others, claim the bailout saved over a million jobs. He also made this statement.
“I am convinced that we’re going to rebuild not only the auto industry but the economy better and stronger before,” Obama said. “And at it’s heart is going to be three powerful words: Made in America.”
Made in America. How did he fare? Did the American taxpayer get a good return on its investment? This video from GM CEO Dan Akerson is very telling.
70% of GM cars are made outside the United States. Those three powerful words Obama referenced seem hollow.
Let’s take a look at Chrysler. The Chrysler bailout cost taxpayers $1.3 billion dollars. Did we save an American icon? Depends upon your point of view. If you’re satisfied with your tax dollars going toward rescuing a foreign automaker, then call it a success. That’s right, Chrysler is now majority owned by Italian automaker Fiat. Of course, the intent wasn’t to save money but to save jobs.
We didn’t do this to maximize return. We did it to save jobs, Treasury Secretary Timothy Geithner said during a trip to Detroit in April
If Chrysler being foreign-owned doesn’t rankle you, perhaps the notion of Fiat building Chrsyler’s overseas and then exporting them to America will as reported by Bloomberg –http://www.businessweek.com/news/2012-10-28/marchionne-seen-missing-fiat-sales-target-by-19-billion#p1 . Fiat announced today that the iconic Jeep will see production in Europe – http://www.huffingtonpost.com/huff-wires/20121030/eu-italy-earns-fiat/. Fiat also lowered production forecasts from a lofty 6 million annually to the low-to-mid 4 million range.
So GM makes 7 out of 10 cars overseas and Chrysler is now owned by a foreign company, is lowering production goals and moving assembly overseas. Hardly a smashing success. Let’s look at another viewpoint as to whether or not our taxpayer dollars went toward saving American jobs and not just industry jobs as the above examples illustrate.
There is no definitive evidence showing that American jobs were saved. Nor that the entire industry would have simply liquidated. Take a look at this list compiled to show the 22 largest bankruptcies worldwide .What do they have in common? Generally, they are financial, automotive or airline industry companies. History shows that the financial and airline industries continued to exist despite major member bankruptcies.
Another claim is that liquidation was imminent because private capital was unavailable due to the seizing of the credit markets brought about by the global recession. You’ll note that number 18 on this list was LyondellBasell Industries. During the very same time frame as the GM and Chrysler bankruptcies, they secured over $8 billion in debtor-in-possession financing . This was the largest amount ever by nearly a factor of two and again, it occurred during the same time frame as GM and Chrysler.
Furthermore, as Mitt Romney pointed out, an auto industry managed bankruptcy would have had government backing. Meaning any risk would have been absorbed by the U.S. taxpayer and not the consortium of lenders that would have supplied the $85 billion dollar lifeline.
The debate as to whether there were really no other options other than government intervention will go on indefinitely. The results of the bailouts can be measured in many ways. The precedent has now been set and the auto industry is well aware it has carte blanche to continue on with risky investments as well as other unsound business practices with the implicit guarantee of a taxpayer rescue lifeline always at hand.
Case in point is the Chevy Volt. Every car that rolls off the lot is a loser, yet there is no accountability as to a return on investment as it falls under the Obama green energy initiative. It also provides an interesting quandary for the American taxpayer. Public sentiment runs high for punishing corporate welfare, excessive CEO salaries and bonuses and the like. Yet the Chevy Volt is purchased by an individual with an average annual income of around $170,000 dollars. We the taxpayer provide that well-to-do individual with a tax credit of $7,500 for purchasing a Volt. One would think an average Joe bringing home his $30K salary would not support their tax money going to subsidize a Volt buyer making much more money.
I never even mentioned the travesty of the bankruptcy process the Obama administration engaged in. Or the crony capitalism they promoted in doing so. Stakeholder relationships have been forever altered in knowing that standard bankruptcy practices can be so easily discarded.
Early repayment of the TARP loans was highly publicized, yet was just an accounting gimmick utilizing one capital credit line to pay off another. Even individuals who play that game at home by using one credit card to pay the minimum payment on another realize that eventually the clock runs out on that as well.
You simply can’t find a true positive outcome on the auto bailouts. The iconic American companies are gone. The billions in taxpayer revenue is forever lost. The claim of an entire industry simply liquidating just doesn’t pass the smell test.
The bottom line is that American taxpayer dollars were used to save American jobs. You failed, President Obama.
Researching the murky world of auto bailouts requires a few ground rules at the outset. Recipients of bailouts like to think of a bailout as a grant or giveaway program. In other words, any type of loan is not a bailout since the recipient was obligated to pay it back. On the other hand, absent a rescue loan, those same recipients claim that liquidation would be the result. A credit line, or loan, that would stave off liquidation would certainly seem to qualify as bailing someone out, wouldn’t it? With that in mind, we can look at the credit arms of the Big 3 (now the Big 2 since Fiat owns Chrysler).
As I’ll illustrate further along, Ford Motor Credit exercised multiple loan programs during the financial crisis. Ford Motor Co. likes to claim the company took no public bailout money and has leveraged that claim quite successfully in a public relations ad blitz into increased sales and a very visible division between them and their competitors. Ally Financial, formerly GMAC, is a private company and obtaining records is difficult. They have left a trail, however, and you can draw some viable conclusions accordingly.
In both cases, the public perception is strikingly different from reality. The amount of credit utilized, the sources, and the reasons behind it are not at all what you see on the nightly news. Nor what you hear from the rank and file if you live in the heart of the auto industry as I do. Let’s see if we can clear up some misconceptions.
Ford makes the claim that they didn’t receive any public bailout money at all. They did request a $9 billion dollar credit line from the Treasury.
A “stand-by” line of credit in the amount of up to $9 billion
at Government borrowing rates, for a 10 year term, with TARP conditions,
to support our restructuring, including the acceleration of products
that consumers want and value.
With the introduction of the 2013 Fiat, I mean, Dodge Dart, at the 2012 Detroit Auto Show, Fiat has now upped its ownership stake in Chrysler to 58.5%. This is the first model designed and built under Fiat control. Fiat has plans to continue to increase ownership to at least 70% in the next few years by purchasing shares of a union controlled health-care trust.
No doubt the White House will be quick to point this out as a success of the auto bailouts. Is it? That depends upon your point of view. We used taxpayer dollars to bail out what has become a foreign-owned automaker. Hey, whatever happened to the buy American campaign? Not a peep from the unions who received special treatment when Obama sidestepped existing bankruptcy law and crafted their own designed to repay the unions for his election support in 2008.
So maybe you say, what’s the big deal, didn’t we save American autoworker jobs? Actually no. Bankruptcy is merely an action to protect company investors while reorganizing under the protection of bankruptcy laws. Not an end to the company and all of the jobs as was threatened. Normally it is the bondholders who receive the most protection while stockholders lose out first, but not in our lawless world under the Obama regime.
Normally we would see the unions shouting from the rooftops about preserving American jobs, but not in this case. We effectively did the same thing as a bailout of Honda or Toyota. Yes, it’s American workers building the cars here at home, but the profits are going overseas. That’s always been the argument for GM. So what if a large percentage of the parts are foreign, they’re made here and the profits stay here. Sorry, not with Fiat.
What is interesting is the perspective of Americans on this issue. Corporate profits are the epitome of evil these days, yet using our tax dollars to ensure that a foreign corporation has the ability to make them doesn’t seem to matter. In fact, why is it that we have no problem bailing out a failed corporation, even disregarding the fact that it’s now foreign-owned, yet we despise a successful corporation utilizing a legal tax loophole? I mean, I really don’t get it. Handing out money for failure is OK, but if a company that doesn’t require saving doesn’t pay enough taxes, we somehow square that in our minds as acceptable.
Now, I really do get it. The unions stay silent because they got their reward. The White House is happy because they’re redistributing wealth while solidifying their voter base. And the average American citizen keeps whistling dixie while blissfully ignorant as to what just happened because we got to keep our precious jobs which we would have kept anyway, just under another brand name.
This is yet another example of how our liberty is not being stolen away, rather we are eagerly giving it away. We’ll gladly trade away opportunity for security. Thank the lucky stars that Obama came riding in on his white horse and saved us by saving the automakers. It’s not just the investors that got screwed in the automaker bankruptcies, it’s all of us when we accept the idea that we need government to be involved in the free market process.
So what do you think? Are you a buyer at $41,000 ($33,500 after rebate)? This is supposed to be the savior, at least for GM. It will be the 2011 Motor Trend car of the year. It will get an unprecedented advertising blitz. It will be subsidized by your fellow taxpayers to the tune of $7,500 per copy. I have to wonder, does that bother you at all if you’re a buyer? We all know how tough times are and the huge problem our debt and spending is causing. You could buy many different cars in the mid $30 grand range, either GM or not, so it’s not a buy American issue . For example, a Cadillac CTS starts at just over $35,000. They won’t put the taxpayers on the hook for your subsidy. I’m talking about someone who is already making a car purchase anyway. Does the feeling of being “green” offset the fact that you are increasing our debt to own this car?
Check out this smokin’ hot ride. It’s the first time ever that Shelby and Roush have collaborated on a project rather than competing. Via www.musclevehicles.com
Two automotive icons, legendary racer and manufacturer Carroll Shelby, and world-renowned racer, engineer and designer Jack Roush, have come together in their first vehicle collaboration project to join Ford in creating a one-off 2011 Mustang, the aviation-themed SR-71 “Blackbird.” The one-of-a-kind vehicle will be sold at the Gathering of Eagles July 29 during the Experimental Aircraft Association (EAA) 2010 AirVenture Oshkosh, the world’s greatest aviation celebration. Ford is the exclusive automotive partner of EAA AirVenture Oshkosh and all of the proceeds from the sale will benefit the EAA Young Eagles organization. EAA AirVenture Oshkosh will be held from July 26 to Aug. 1 at Wittman Regional Airport in Oshkosh, Wis.
The “SR-71″ designation holds a dual meaning for the one-of-a-kind, fully-customized Mustang. First, “SR-71″ refers to the car’s design and performance-inspired connection with the SR-71 Blackbird, the aircraft that holds all official airspeed and altitude records and is widely regarded as one of the most spectacular planes ever produced. Second, “SR” represents the first collaborative project between Shelby and Roush. Mustang Chief Designer Darrell Behmer led design for the project and Mustang Chief Nameplate Engineer Dave Pericak led the engineering effort. Ford Racing Performance Parts were also added to further enhance the exclusivity of the car. The sale of the SR-71 “Blackbird” will highlight an evening of festivities at the EAA Gathering of Eagles July 29 during AirVenture.
The group that will directly benefit from the auction proceeds is EAA’s Young Eagles, which has provided free introductory flights to more than 1.5 million young people since 1992, while also teaching the value of hard work, personal responsibility and enhanced math and science skills. “Ford Motor Company’s historic tie to aviation is no better represented than by the company’s commitment as a continued partner of EAA and AirVenture, a celebration of flight here in Oshkosh that is unmatched anywhere else in the world,” said Tom Poberezny, EAA chairman and president.
“Ford’s generosity in donating the Mustang SR-71 ‘Blackbird’ to the Gathering of Eagles further demonstrates a dedication to supporting aviation and inspiring aviation enthusiasts of all ages.”
In 2008, Ford’s inaugural vehicle specially-built in support of the Young Eagles, the one-of-a-kind Mustang AV8R, raised a record $500,000 for the charity. “The excitement around the 2008 AV8R, our first one-off Mustang ever produced, inspired us to push for another, first, the collaboration of Carroll Shelby and Jack Roush,” said Edsel B Ford II, a member of Ford’s Board of Directors. “This year’s SR-71 Blackbird is a special tribute to Ford’s lineage of performance vehicles, as well as to the promising innovators of EAA’s Young Eagles.” Ford vehicles sold at auction during past EAA AirVenture events have collectively raised more than $1 million to support the Young Eagles.
The Mustang SR-71 “Blackbird” is Build #1 of 1 and presents a truly unique opportunity for collectors. The vehicle is based on a 2011 Mustang GT 5.0 with the glass roof option. Ford Racing performance modifications (Supercharger, Handling Pack, tuned exhaust, and exhaust tips) generate 100 additional horsepower from the all-aluminum 5.0L 32-valve V8 engine. The special racing Handling Pack optimizes the performance experience and lowers the ride height by 1-inch.
From there, the car takes on a design personality similar to that of the original SR-71 Blackbird aircraft. The Mustang’s stunning design theme includes black and gray matte exterior paint with harmonious SR-71 themed graphic treatment, performance wheels, front and rear fascias and an integrated spoiler/wing to reflect the car’s connection with its namesake aircraft, which made its inaugural flight in 1964, the year the first Ford Mustang came off the line. The “Blackbird” nickname is reflected in the car’s exterior paint treatment, complete with markings from the liquids which leaked and streaked until the plane came up to speed. A unique screen print glass roof design and exterior artwork reflect the unbridled spirit of the Ford Design team.
The interior cockpit will seat only two and includes a roll-cage, racing seats and fire extinguisher, The signatures of Jack Roush and Carroll Shelby are embroidered into the seats, and special gauges and instrument cluster graphics have been added.
Enhancing the value and allure of the vehicle, the Mustang SR-71 “Blackbird” will feature an appliqué autograph area capturing Roush and Shelby’s signatures and badging to further reinforce the uniqueness of the car. The vehicle will be on display at the Ford Hangar at EAA AirVenture Oshkosh beginning July 26.