Biden Praises Revamped American Auto Industry

WASHINGTON -- Vice President Joe Biden on Saturday credited the Obama administration's intervention for the American auto industry's recovery from "the brink of extinction" and pointed to Chrysler's early repayment of the federal loan that saved it from disaster.

"This announcement came six years ahead of schedule – and just two years after Chrysler Corp. emerged from bankruptcy," Biden said in the administration's weekly radio and Internet address. "It's a sign of what's happening throughout the American automobile industry."

Biden also said that General Motors, which went through bankruptcy and has come back strong, announced in the past week that its Detroit Hamtramck factory in Michigan will run three shifts for the first time in its 26-year history.

"You know, that's 2,500 more good, paying jobs," he said.

Biden, who provided the weekly address because President Barack Obama was traveling in Europe, credited the efforts of the Obama administration for the resurgence of the auto industry through its assistance.

"Because of what we did, the auto industry is rising again," Biden said. "Manufacturing is coming back. And our economy is recovering and it's gaining traction."

Obama will visit a Chrysler plant in Toledo, Ohio, next Friday to discuss the carmaker's recovery.

Chrysler announced Tuesday the repayment of $5.9 billion in U.S. loans and $1.7 billion in loans from the governments of Canada and Ontario. It covers most of the federal bailout money that saved the company after it nearly ran out of cash in 2009 and went through a government-led bankruptcy.

GM and Chrysler were on the verge of collapse in the final days of the Bush administration after Congress failed to approve an emergency loan package. The Bush administration gave the companies $17.4 billion in loans and required them to develop a restructuring plan by mid-February 2009.

Obama's administration pumped billions more into the carmakers later that spring but won concessions from industry stakeholders, allowing them to push GM and Chrysler through bankruptcy court in the summer of 2009.

The Republicans' weekly address focused on the party's plan to create jobs. House Majority Leader Eric Cantor, R-Va., said boosting employment requires cutting taxes, reducing regulations, completing bogged-down trade agreements with several countries and expanding energy exploration in the United States.

"All of these elements will help encourage growth and long-term economic stability," Cantor said. "By putting in place policies that encourage businesses to expand, innovators to innovate and allows leaders to lead, we will not only begin to put our budget on a path to balance, but we'll get Americans working again."

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Comments

[msblynne]

01:28 AM on 05/30/2011

Hey all you ideologues who put party before country in hoping that this massive industry fails, with all that means, rather than see Obama get credit for a gutsy, smart call...good article in NYT today on how the industry has been able, with those loans and large union concessions, to revamp their product lines to feature new, smaller, more gas efficient but high quality, high tech vehicles that are selling. Good job Obama, all GOP wailed and gnashed their teeth over this, claiming it was Armageddon- sorry to burst you ("country last") Baggerz' bubbles.

[bsherman]

06:16 PM on 05/29/2011

Republicans wanted to throw the auto industry under the bus. I hope midwesterners realize which party really stands for jobs.

[Joel Smithis]

02:21 PM on 05/29/2011

All european and japanese carmakers are unionized and doing very well. However their retirement obligations are guaranteed by the government. So if the carmaker is in trouble the costs of retired workers is not the problem. Unions are not the problem. What Detroit carmakers were responsible for was they did not negotiate contracts well, instead on setting their obligations as a separate funds, they financed them from the operating costs, which obviously draged them down when sales, and revenues, dropped.

[Hunter3203]

02:36 PM on 05/29/2011

Don't forget health care costs which are estimated at $1500/car in the US. In Europe and Japan those costs are paid by the government.

Also, defined benefit plans place ALL of the risk on the employer and aren't economically viable anymore. It is simply unsupportable to be able to work 20-30 years right out of High School and then receive a pension at 50-75% of your final wages for the rest of your life which might be another 35 years.

But the UAW was absolutely an impediment to competitiveness. Beyond paying uncompetitive wages the automakers had to negotiate virtually every operation of how a plant actually works. If the UAW wants to run a car company, let them buy one.

[Viper]

03:48 PM on 05/29/2011

THere wages are lower by 30% then in the rest of the western world.

Unions since the mid 1980s have not been the problem. Same unions are in Canada...Its helathcare and pensions, that are not in the cost of goods made anywhere else in the world.

Did the autoworkers cause the loss of ship building, garment industry, consummer electronics, appliances, high tech/computers..NOPE.

The south was non union, low regulation( and is highly polluted), paid for socialist country assembly plants and at the end of 50 years plus of being FED welfare states are still the poorest states in the country and at the bottom of education and healthcare...

Racing to the bottom with low wage does not result in prosperity.


Regards

[Joel Smithis]

02:05 PM on 05/29/2011

Letting the industry go bust just because I do not believe in government intevention,

is as dumb, irresponsible and as juvenile as it gets!

[dhinds]

07:19 PM on 05/29/2011

Governments are created to intervene, to establish limits and provide needed infrastructure and services. (Some things are private and others are public by nature - while still others can be either).

The question is how and when.

[cathyjs]

01:48 PM on 05/29/2011

American taxpayers still own a 6.6 percent stake in Chrysler, which cost them nearly $2 billion. Chrysler would have to be worth six times its current value ($5 billion) for the government to break even. (And Chrysler is borrowing the money to pay off the government).

General Motors just posted its biggest profit in a decade this quarter. But GM did not make that money selling cars, it came from the one-time sale of a subsidiary company. GM had bought Delphi, one of its troubled suppliers, for $2.5 billion in 2009. Then Delphi dumped $6.25 billion worth of its pension obligations onto the federal government's Pension Benefit Guaranty Corp. With those debts gone, GM sold Delphi for $3.8 billion this quarter.

U.S. taxpayers have spent $49.5 billion bailing out GM. They will likely never recoup the full $27 billion still tied up in the deal, considering that the entire company is only worth $46 billion. And the Chrysler situation is far worse: The government has spent $12.5 billion so far to bail out a $5 billion company.

Data edited from a Washington Examiner article.

[Viper]

03:58 PM on 05/29/2011

Yes, but most of what we will not get back is the MOney repugs loaned which went directly to Bond speculators on Wallstreet and was unsecured.

We did not get back the 350 Billion on the F22 that cant fly nor the 3 trillion ultimate cost of the iraqi war. Does the south get back the 30 billion in subsidies it paid building the plants for socialist countries...??/

What would have been the cost of another 3 million people on food stamps, unemployment, medicaid and 3 million more foreclosures ... and increasing trade deficits, another 500 billion per year ultimately.


Nissan and Mazada were bailed out by the Japanase 7 years ago. The rest of the world gives mFGs zero interest loans and all MFGs get 18% rebates on their exports so they can sell here at no profit...

As if GM is the only company not to undo pension plans. ERISA was created in the 1970s because so many companies were walking from pension plans. And its why in the rest of the world, pensions have moved to a government job, just as helath isnurance is becuase of insurance companies not paying for treatments and declaring bankruptcy and etc...... here we had to subsize the private pension of companies/insure them, because they were so often raided by the owners...

Some repug governors have done a good job of robbing the public employees pension funds to balance the budgets also.


Regards

[Viper]

01:27 PM on 05/29/2011

Find out how much of the Reagan 550 Billion S

[Hunter3203]

12:53 PM on 05/29/2011

There are 3 different stories with the domestic automakers.

Ford's management was prescient and obtained a $26 Billion loan just before the credit markets froze. That money allowed them to whether the downturn without seeking a bailout. Ford has also been improving their quality over the last several years and they spun off several brands that weren't core to their operations. Alan Mullaly and his team deserve the credit for keeping Ford out of bankruptcy.

GM has also made dramatic progress in quality and the competitiveness of their cars. But they got caught short when they weren't able to borrow money. GM also had too many brands and too many plants.

Chrysler was in the worst position. They have a poor reputation for quality and old and uncompetitive cars. Chrysler has made it so far and fortunately have introduced some competitive new products. Their quality in improving but the real challenge will be introducing a competitive small and midsize car. The jury's still out but at least they have a chance.

All three of the Big 3 suffered from uncompetitive wages and benefit costs. The bankruptcies allowed that to change and also to restructure the operations so all of the automakers can make money at much more realistic volumes. I hope the UAW has learned some hard lessons as well. We'll have to see if their demands in the upcoming contract negotiations reflect that or not.

[Joel Smithis]

02:10 PM on 05/29/2011

Ford undergone re-structuring that pretty much paralled the workers contracts as negotiated by GM with government. So it is not true that Ford completely on it's own.

[Hunter3203]

02:21 PM on 05/29/2011

Ford restructured their operations including divesting brands, laying off employees and renegotiating labor agreements just like all kinds of other businesses do. I don't know how you can say they didn't do that on their own. It's true that the entire auto industry was restructuring simultaneously, but Ford was able to restructure without the considerable power that comes with bankruptcy.

Also, Ford's workers rejected some of the provisions that were granted to both GM and Chrysler including a no-strike clause.

[Viper]

12:53 PM on 05/29/2011

yes GM cars are so bad that they are the largest seller of Automobiles in the world now...

Repugs and facts, oil and water.

Regards

[jugglefire]

12:30 PM on 05/29/2011

Darn it, when I saw the headline on the front page, "'From The Brink Of Extinction'", I was hoping this was going to be another article about bigfoot. Oh well, cant win them all.

Congratulations all around are in order for Chrysler, GM and the Obama administration for saving the US auto industry. Now start making more electric cars you guys.

[Viper]

12:29 PM on 05/29/2011

Oh yes the true patriots , the repugs.. Only repugs could hate America so much that a success story of any kind to them is BAD News.

And this is GREAT News. just on eproblem, they said it wouold never happen and the Clinton Tax increases when kill jobs and the Country and the Bush tax cuts would create jobs and pay for them selves and we would have no debt by 2010. They are never right.

They complain about welfare, but red states are welfare queen states, getting more tax money than they pay in.. welfare from the Blue states. .

They complain about handouts to GM or Chrysler that pay us back, but not about FREE handouts to big oil.

They pay for the assemply plants of socalled socialist countries, buit dont call thats socialism. And these MFGs get 18% rebates from ther socialist governments, sell at cost here and pay no taxes... and are 100% unio0nized in their home country, with higher wages, national helathcare at half the cots and its better, 5 week vacations, 7 year earlier retirement, paid for college. They get interest free loand and they have anti outsourcing reg and national industrialization plans and trade surpluses...
HYPOCRITs

Regards

[Viper]

12:03 PM on 05/29/2011

Republican's plans for creating jobs include tax cuts, regulation cuts, and some how drilling more when every drilling rig for the next 5 years is spoken for, when production is at all time high as is oil inventory, while demand is down 7% and production has been cut worldwide becuasse there is no whele left to store... Nothing about reregulating commodities and reducing the speculation that increased 400% as did prices when repugs deregulated in 2001.And they want to block the reregulation of the finance industry that led to their second greatest finanical disaster.

But is any of this new, Its what they did under reagan... a Failure, he had to raise taxes 4 times as deficits soared and job plummented, ending in stock market crash, followed by a fianical bailout and a major recession.

They did it again under Bush and got the same results, even worse...

And our taxes now are the lowest since under Hoover, our distribution of wealth is the worse since Hoover..and that gave us the great depression..

More of the same and lets double down on it with even lower tax cuts and a further decrease in the middleclass and a even greater inequality of welath. Heck we are now only second to Uganda....

Trade agreements when you have outsourced 80% of your industry and make nothing to trade (well 50% is weapons), is not much of help.

Regards

[theidel]

11:32 AM on 05/29/2011

Accounting tricks and huge losses of the taxpayer investment to create a hand-out for the Unions....What a success!!!!

Ford Motors really deserves the praise for doing it on their own, but a tool/fool like Biden could never realize that.

[Viper]

12:08 PM on 05/29/2011

FORD got a credit line from the government in order to secure its private loans. If GM and Chrysler had gone, the auto parts supplier would have failed and that would have killed FORD.. as FORDs president testified to.

Funny, was reagan a marxist when he bailed out Chrysler in the 80s.. or are you just a racist.


The 30 Billion southern states have spent building planst for soiclist countries auto maker such as Toyato.. is that not socialism...?

We are getting all our money back, millions of jobs saved and thats more than we can say of the S

[wsdave]

12:51 PM on 05/29/2011

GM is still on the hook for $30 billion, plus about $15 billion more in tax breaks. We will probably NEVER see that back.

HuffPost even said so before the IIPO.

[UpNorthGuyWI]

11:26 AM on 05/29/2011

As long as the unions are happy and the taxpayers keep bailing them out, the Democrats will get their campaign cash.

[Viper]

12:12 PM on 05/29/2011

There are a lot of dealers that are happy all over the country and a lot of Americans who unlike you dont hate America...There are a lot of non union workers in those compaies who are happy. And unemployment in Michigan is now lower than in Florida!

So buying cars from those so called socialist countries of the EU and Japan, and Canada that are 100% unionized, with national healthcare, paid for college, Cap and trade and unlike us trade surpluses...and national Industrialization plans is some how better?


Regards

[Digeeedad]

12:25 PM on 05/29/2011

As usual absolute nonsense... so deep in bitterness and hate, impossible to see past the ugliness! Just can't tolerate for even a millisecond to acknowledge that a non-white President is having successes! Must be incredibly stressful to live in constant negativity...

[Viper]

12:14 PM on 05/29/2011

Funny, demand is so high they have doubled production... I guess you work for won of the socialist county car makers... who just assemble cars here, about 3% of the sales price and get an export rebate of 18% from their country, sell at cost here, show no profit, pay no taxes and get money in the red welfare state south to build their assembly plants here.. sounds like the south is socialist?

Regards

[wsdave]

12:56 PM on 05/29/2011

"Funny, demand is so high they have doubled production­..."

Sure, but people bought pet rocks back in the day, too.

The Volt is half the car it should be, and a fraction of what the Leaf is. If GM plans on surviving, they need to step it up, or Hyundai will take their entire market share.

[cathyjs]

01:54 PM on 05/29/2011

What? 10,000 were built and as of April 1 only 1536 have been sold. And most of those have reportedly been sold to dealers as demonstration vehicles.

[dhinds]

01:26 PM on 05/29/2011

Is that why Motor Trend named it the 2011 Car of the Year?

http://www.motortrend.com/oftheyear/car/1101_2011_motor_trend_car_of_the_year_chevrolet_volt/index.html

And many Volt owners are driving at no cost.

http://www.thestreet.com/story/11134237/1/chevrolet-volt--the-art-of-driving-for-free.html

Nice avatar picture

[freshie]

11:23 AM on 05/29/2011

many typos sorry