Obama Defends Auto Bailout During Visit To Chicago Ford Plant

By Sarah Mamula - Talk Radio News Service

“America’s automakers have added 55,000 jobs since last June,” said President Barack Obama at a Ford facility on Thursday. “And over the next two months, this plant will bring on a second shift of 1,200 workers…nearly doubling your workforce,” he added.

After recent visits to GM and Chrysler plants, Obama followed up his 49th birthday by touring a Ford Motor Company assembly plant in Chicago. While reiterating the success of the administration’s decision to bail out the auto industry, Obama also applauded Ford’s ability to survive the recession without taking government funds.

“Ford was in better financial shape and was able to weather the storm without federal assistance,” said Obama to an audience of 1,700 employees, industry representatives, elected officials, and community and labor leaders.

“That’s a testament to the hard work you all do and the choices this company made.”

The President also announced a new $250 million Export-Import Bank loan guarantee for Ford that will support the company’s efforts to sell cars overseas and increase opportunities for jobs. 

“This [loan guarantee] will help Ford export more than 200,000 cars and trucks…that means more production and more manufacturing jobs,” said the President.

The loan initiative, Obama said, is one of several efforts the administration is making to help fulfill a pledge he made during his State of the Union address to double America’s exports of goods and services in the next five years.

“We’re going to support millions of good jobs for American workers to do what they’ve always done: build great products and sell them around the world,” said the President. 

Automakers must "transform" energy, efficiency

Chairman of the House Select Energy and Global Warming Committee Edward Markey (D-Mass.) said that U.S. automobile companies are in trouble because of "their inability to move from Car 1.0 to Car 2.0 over the past half century. A business model premised on bigger cars, wider highways, and more oil is a failed equation."

At a hearing to discuss the potential automobile bailout's effect on energy independence, Markey said that these car companies should "use this moment as an opportunity to transform." He felt that "innovation and technological change over the long term" must be made a priority in the future for these companies.

The automobile industry is a "very cornerstone industry" in the U.S. said Rep. Candace Miller (R-Mich.). If they went bankrupt, Miller said it would have "a catastrophic effect on our economy." Miller praised the automobile industry as a lynchpin for creating the U.S. middle class.

Joan Claybrook, President of Public Citizen, felt that laws must be put in place to demand technological and energy-efficient improvements to ensure that auto industries sufficiently attempt these initiatives. She stated that the fuel efficiency required of 35 mpg by 2020 is a "meager provision."

"We're going to have these vehicles one way or the other," said Peter Morici, Professor of International Business at the Robert H. Smith School of Business at the University of Maryland, referring to more energy-efficient and higher gas mileage automobiles. He felt that the only question is whether these improved vehicles are going to be made in the U.S. or not. Morici thinks that these companies should be bailed out only if they agree to share their patents with their competitors for a small price.

Today at Talk Radio News Service

Pentagon Correspondent S. Dawn Casey will be attending a live briefing from Iraq with Army Maj. Gen. Mark P. Hertling, commander of Multinational Division-North and the 1st Armored Division, to provide an update on ongoing security operations.

The Washington bureau will be covering a discussion on "Oil Drilling and U.S. Energy Policy at the American Enterprise Institute for Public Policy Research (AEI) with Former House Speaker Newt Gingrich (R-Ga.).

Auto bailout must lead to "self sustaining" companies

At a hearing today with executives from Ford, Chrysler, and General Motors, Chairman Frank lamented that the U.S. is in its worst economic situation since the Great Depression including 533,000 lost jobs in November. He called the current lack of jobs in the U.S. "an unmitigated disaster." Rep. Al Green (D-Texas) said that allowing the car companies to fail would put "2 million people out of work."

Rep. Spencer Bachus (R-Ala.) said the reality is that "Detroit is making good cars." He called a potential $34 billion loan to the major U.S. automobile companies "limited transitional assistance" and said he would only support giving the car companies the loan they requested if there is an "expectation of success." Rep. Judy Biggert (R-Ill.) claimed these companies must find a way to be "self sustaining."

Rep. Donald Manzullo (R-Ill.) said that the U.S. needs to "increase the demand for these vehicles." He felt that either the government or the car companies need to find a way to encourage Americans "to start buying cars again."

Ron Gettelfinger, President United Auto Workers (UAW), said workers in the automobile industry are "prepared to do our part." He did caution against making auto workers and retirees the "scapegoat" since they only make 10 percent of the total cost of the businesses. He also said that allowing the car companies to declare Chapter 11 bankruptcy is not an option because people will not buy vehicles from a bankrupt company.

President and CEO of the Ford Motor Company Alan Mulally said that Ford had "too many brands" of vehicle, but they are now "matching production" with "customer demand." He claimed Ford needs to become more balanced and efficient. He also stated that he has worked with the UAW to "reduce labor costs." On behalf of Ford, Mulally asked Congress for a $9 billion bridge financing loan.

Robert Nardelli, CEO of Chrysler, asked Congress for $7 billion in bridge financing. He blamed his company's lack of success on current U.S. auto sales, which he said were the worst in 20 years. Nardelli was excited about current improvements in his company's vehicles though, saying that 73 percent of them would have improved fuel economy in 2009.

Chairman and CEO of the General Motors Corporation (GM) Richard Wagoner, who asked Congress for $12 billion in short term loans, said that GM is dedicated to conserving energy volumes and finding new "green jobs" in the future. He also said that his company will change the way they give executive compensation after his company's economic fallout.

More money, more money -- Automakers ask Senate for $34 billion

The CEOs from the big three automakers testified before the Senate Banking, Housing and Urban Affairs Committee to discuss their $34 billion bridge loan appeals to prevent their companies from failing.

“Ford is an American company and an American icon....The entire Ford team...is absolutely committed to implementing our new business model and becoming a clean, profitable company that builds the best cars and trucks on the road for our customers,” said Allan Mulally, President and CEO of Ford Motor Company. All three CEOs discusses their plans to implement new business models, cut costs and build better, more fuel-efficient vehicles in the future.

Dr. Mark Zandi, chief economist and cofounder of Moody’s Economy.com discussed how research suggests that if an automaker files bankruptcy, it would cause a loss in consumer confidence and decrease in sales. “I recommend that Congress provides the $34 billion in aid that the three requested...this is necessary given the potential for automakers imminent, disorderly bankruptcy at an extraordinarily fragile time for the economy,” said Zandi. He also estimated that the $34 billion would not be enough money to stabilize the domestic auto industry. The big three “would ultimately need, in my view, somewhere between $75 billion and $125 billion” to avoid bankruptcy, said Zandi.