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“Fantasy And Fear Based”: Why Mitt Romney’s Bogus Jeep Claims Matter

Mitt Romney campaigned in Defiance, Ohio, last night, and rolled out a new argument. “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,” he said. “I will fight for every good job in America, I’m going to fight to make sure trade is fair, and if it’s fair, America will win.”

There are a few problems with this line of attack, starting with the simple fact that Romney wasn’t telling the truth. As Chrysler itself explained, the company intends to build Jeeps in China to be sold in China, but isn’t moving American jobs abroad.

On Oct. 22, 2012, at 11:10 a.m. ET, the Bloomberg News report “Fiat Says Jeep® Output May Return to China as Demand Rises” stated “Chrysler currently builds all Jeep SUV models at plants in Michigan, Illinois and Ohio. Manley (President and CEO of the Jeep brand) referred to adding Jeep production sites rather than shifting output from North America to China.”

Despite clear and accurate reporting, the take has given birth to a number of stories making readers believe that Chrysler plans to shift all Jeep production to China from North America, and therefore idle assembly lines and U.S. workforce. It is a leap that would be difficult even for professional circus acrobats.

Let’s set the record straight: Jeep has no intention of shifting production of its Jeep models out of North America to China. It’s simply reviewing the opportunities to return Jeep output to China for the world’s largest auto market. U.S. Jeep assembly lines will continue to stay in operation. A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments. [emphasis in the original]

All of this, incidentally, is rather ironic given the successful efforts of the Obama administration when it comes to China and Jeeps, specifically.

Greg Sargent explained well why this matters: “Romney may very well be the next president. That’s a position of some responsibility. Yet he and his campaign rushed to tell voters a story designed to stoke their fears for their livelihoods without bothering to vet it for basic accuracy. This is not a small thing. It reveals the depth of Romney’s blithe lack of concern for the truth — and the subservience of it to his own political ambitions.”

Indeed, we can take this a step further.

Romney specifically urged business leaders to give their employees voting instructions — many took Romney’s suggestion seriously — and as a consequence, workers in a growing number of businesses are being told their jobs may be dependent on the outcome of the election.

Romney’s comments in Defiance are part of the same kind of fear-based argument: vote the right way or you’ll be unemployed. Your livelihood is at stake, so support the candidate who opposed President Obama’s successful rescue of the auto industry and got rich laying off American workers.

For additional context, it’s worth noting that the Detroit News reports today that Chrysler is adding an additional 1,100 new jobs. Why? To build more Jeeps right here in the United States.

By: Steve Benen, The Maddow Blog, October 26, 2012

October 28, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

“A Detroiter In His Own Mind”: Mitt Romney And The Automobile Industry

One of Mitt Romney’s problems is that he lays it on too thick. He’s not just a conservative, he’s a “severe conservative”. He feels your pain because he too is “unemployed”. And he understands America’s car industry because he’s a Tigers-cheering motorhead, a true “son of Detroit”.

That last assertion comes in an op-ed Mr Romney wrote for the Detroit News today. And it’s not untrue, per se. The candidate was born in Detroit, though he grew up in Bloomfield Hills, one of  America’s wealthiest cities. He probably cheered for the Tigers as a kid, but his position has since evolved.  And cars may really be “in my bones”, as he claims, but he advocated letting Detroit go bankrupt in 2008.

The purpose of Mr Romney’s op-ed is to clarify his position on the auto bail-out ahead of   Michigan’s primary on February 28th. And the piece rivals Cirque du Soleil in its display of  contortions. Mr Romney seems loth to gush about the success of the bail-out, noting only the good news that “Chrysler and General Motors are still in business”. He certainly doesn’t mention that 2011 was the best year for America’s carmakers since the financial crisis, with each of the big three turning a solid profit. But he does imply that this achievement is a result of his own advice. “The course I recommended was eventually followed”, Mr Romney writes.

As with much of Mr Romney’s excessive rhetoric, there is some truth to this statement. Following the bail-outs, the president eventually forced Chrysler and GM into bankruptcy, a step Mr Romney thought should occur naturally. And the government oversaw painful restructurings at both companies, which were largely in line with Mr Romney’s broad suggestions. But the course Mr Romney recommended in 2008 began with the government stepping back, and it is unlikely things would’ve turned out so well had this happened.

Free-marketeers that we are, The Economist agreed with Mr Romney at the time. But we later apologised for that position. “Had the government not stepped in, GM might have restructured under normal bankruptcy procedures, without putting public money at risk”, we said. But “given the panic that gripped private purse-strings…it is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended.” Even Ford, which avoided bankruptcy, feared the industry would collapse if GM went down. At the time that seemed like a real possibility. The credit markets were bone-dry, making the privately financed bankruptcy that Mr Romney favoured improbable. He conveniently ignores this bit of history in claiming to have been right all along.

In other areas of his op-ed Mr Romney is more accurate. Unions did win some special favours in the bail-out deals, though they are not as egregious as the candidate claims. For example, a health fund for retired workers was unfairly favoured over secured bondholders at Chrysler. But an issue like that is unlikely to resonate in Detroit. So Mr Romney must find a way to re-write history, lest he fall further behind Rick Santorum in his state of birth. Mr Santorum didn’t support the auto bail-out either, but he evinces a genuine compassion for blue-collar workers. And he didn’t pen an op-ed predicting, “If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye.” That’s a difficult statement to walk back.

By: The Economist, Democracy in America, February 14, 2012

February 16, 2012 Posted by | Automobile Industry | , , , , , , , , | Leave a comment

“Half-Time In America”: It Isn’t Political, It’s American

Many Republicans want President Obama to fail. That’s  completely understandable and defensible, if one is talking about success or  failure in his re-election campaign. It’s stunning when that’s extended to the  performance of the economy as a whole or any of the nation’s job-supplying  industries.

Thus we have uber-political operative Karl Rove  complaining about how offended he was by a Super Bowl TV ad, sponsored by  Chrysler, which  extolled the recent resurrection of the nation’s auto industry.  The ad  featured tough-guy actor Clint Eastwood talking about the remarkable   comeback of the auto industry, and underscoring the qualities which  truly  characterize the best of America—resilience, optimism, sacrifice,  and hard  work. The script of the commercial, “Halftime in America,” is  as inspiring as  any speech made by an actor in a movie or a political  candidate in a campaign:

It’s halftime in America, too. People are out of  work and they’re  hurting. And they’re all wondering what they’re going to do to  make a  comeback. And we’re all scared, because this isn’t a game.

The people of Detroit know a little something about this. They  almost  lost everything. But we all pulled together, now Motor City is fighting   again.

I’ve seen a lot of tough eras, a lot of downturns in my life. And,   times when we didn’t understand each other. It seems like we’ve lost our  heart  at times. When the fog of division, discord, and blame made it  hard to see what  lies ahead.

But after those trials, we all rallied around what was right, and   acted as one. Because that’s what we do. We find a way through tough  times, and  if we can’t find a way, then we’ll make one.

All that matters now is what’s ahead. How do we come from behind?  How do we come together? And, how do we win?

Detroit’s showing us it can be done. And, what’s true about them  is true about all of us.

This country can’t be knocked out with one punch. We get right  back  up again and when we do the world is going to hear the roar of our  engines.

Yeah, it’s halftime America. And, our second half is about to  begin.

Really, could anyone have a problem with that ad? It featured   scenes of Detroit, and of middle-class people, working hard in a  struggling  economy and trying to make their city and their lives  better.

Yes, Rove had a problem with it. He said he was “offended” by  the spot, adding on Fox News:

I’m a huge fan of Clint Eastwood, I thought it was an  extremely  well-done ad, but it is a sign of what happens when you have   Chicago-style politics, and the president of the United States and his   political minions are, in essence, using our tax dollars to buy  corporate  advertising.

Rove seems to be referring to President Obama’s bailout of the  auto  industry, and suggesting that somehow that money was used to pay for a   thinly-disguised campaign ad for the Obama re-election campaign. A lot  of  Republicans were opposed to the bailout, saying the companies should  be subject  to the rules of capitalism. GOP presidential contender Mitt  Romney famously  penned a New York Times op-ed  entitled “Let Detroit Go Bankrupt.”

What is it about Detroit that so many conservatives despise? That   it’s a still-breathing example of the “old economy?” Is it Motown music  they  hate, or the fact that it’s full of labor union members? Is the  distaste for  struggling Detroit so pronounced that people actually want  the city to fail?

Had the auto companies indeed failed despite the bailout, Rove and   Romney would have looked brilliant. But the companies are recovering  nicely,  paying back their loans (with interest), and making profits, in  part because of  concessions made by the labor unions so despised by  conservatives.

There is surely a legitimate philosophical argument to be made  that  the government should not bailout out big businesses (an argument not   often extended to include huge tax breaks for profitable industries).  Pure  capitalism indeed stipulates that businesses should succeed or  fail on their  own. Critics can legitimately argue that government  should not prop up any  industry, no matter what the implications for  employment. They can be angry  that the auto bailouts happened, but it’s  unconscionable to be angry that the  bailouts worked. Comebacks—as the  New York Giants proved, winning the Super  Bowl after an uneven  season—are about as American as it gets.

 

By: Susan Milligan, U. S. News and World Report, February 7, 2012

February 7, 2012 Posted by | Auto Industry | , , , , , , , , | Leave a comment

“Let Detroit Go Bankrupt”: Mitt Romney In His Own Words

If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will  stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president  suddenly died. The company itself was  on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad  work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have  several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements  to align pay and benefits to match those of workers at competitors like BMWHonda,  Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers  is not higher than that of foreign producers.

That extra burden is  estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has  done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate  the destructive labor relations  of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

The need for  collaboration  will mean accepting sanity in salaries  and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending  to $20 billion a year, from the $4 billion that is spent today.  The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

The American auto industry is vital to our national interest  as an employer and as a  hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

By: This article originally appeared in The New York Times on November 18, 2008, written by none other than Op-Ed Contributor, Willard Mitt Romney, a current candidate for the GOP Republican Presidential Nomination

February 3, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

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