Auto Industry Turnaround Is A Two-Party Success

Toon by Eric Allie
"Each Chevy Volt Sold
Costs Taxpayers $250,000"

By Ken Blackwell, Contributing Author: As the 2012 election season turns full throttle, the president and members of his administration are pointing to their only economic success story — the government’s investment in an ailing, failing auto industry and the subsequent revival of the nation’s manufacturing base.

Vice President Biden recently stated on a campaign stop that “Osama bin Laden is dead and GM is alive.”

But let’s put this presidential campaign victory tour into perspective. The president and even the media fail to acknowledge a critical fact, that the initial decision to help the automobile industry began with the Bush administration. This recovery plan was set in motion under a Republican administration, approved with votes in Congress from both parties, and was then continued by President Obama.

It’s odd how this president and the press are so anxious and willing to blame former President George W. Bush for a failing economy and soaring national debt, yet the president’s primary example of a GM turnaround began under the Bush watch. Apparently the president wants it both ways. In reality, this auto industry recovery is an example of both parties working together to help save a national treasure in our auto industry and preserve jobs in industries that depend on auto manufacturing.

I wrote some time ago that conservatives, myself among them, were certainly justified in opposing government involvement and partial ownership of a private company such as General Motors. Generally, when the government gets its fingers into private industry, problems only get worse.

But since the decision was made to invest tax dollars in GM and Chrysler, let’s look under the hood of GM to examine how and why this company is making a comeback. When you check the facts, you quickly understand how GM’s accomplishments have nothing to do with this president and everything to do with restoring sound business practices that are rooted in conservative free-market principles — something you’ll never hear Obama, Biden or the media talk about.

The old days of GM building poor-quality vehicles that no one wanted to buy are over. The company finished 2011 by increasing U.S. sales by 14 percent versus 11 percent for the entire auto industry. GM’s market share increased to 19 percent, the first share increase for the company since 2002. All four GM brands increased their total sales and posted double-digit gains in retail sales.

Since the bailout, GM has racked up a remarkable seven consecutive quarters of profitability. How? Not due to any help from the Obama administration. New management at GM has made it clear that politicians will stay out of the car business.

GM renegotiated its deal with labor to bring employee salaries in line with its competitors. This new labor agreement with the United Auto Workers union maintains a low, break-even level and gives employees a direct stake in company’s performance. If the company doesn’t do well, people don’t make as much! Gone are automatic, built-in incentives for employees or overly generous retirement packages.

The company has been restructured to carry less debt on its balance sheet — $4.2 billion in automotive debt at close of Q3 2011, versus $45.8 billion for the old GM.

There are many new managers in top positions and a new board of directors is in place. Seven of eleven board members are new to GM.

But at the end of the day, GM’s resurgence is based on a fundamental decision to get back to work. The company is simply building better cars, trucks and SUVs, and no amount of bailout money would have helped if the people at GM, from the CEO to the line worker, weren’t working harder to help return this company to profitability.

Before Election Day, I am sure we will have to endure seeing more photos and video of the president sitting in GM and Chrysler vehicles and listen to him tell us how he is the savior of the auto industry.

Truth be told, it’s the American worker that is the real hero in this story, along with a company that is rededicating itself to a free-market system.
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J. Ken Blackwell formerly served as mayor of Cincinnati, Secretary of State of Ohio, as an ambassador to the U.N. Human Rights Commission and is presently a senior fellow for family empowerment at the Family Research Council. a National Federation of Republican Assemblies board member and a contributing author to the ARRA News Service. Blackwell's article was also published today on The Hill, Congress Blog

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