Four years ago, the American auto industry was struggling. After a decade of focusing on trucks and SUVs, the Big Three—Ford, General Motors and Chrysler—were unprepared for the effect of higher energy prices and the economic crisis on consumer demand. Throughout the early 2000s, the Big Three produced big inefficient vehicles. But with high gas prices and smaller spending budgets, consumers switched to foreign car makers for smaller, less expensive alternatives. As sales plummeted and credit dried up during the Wall Street collapse, American car manufacturers idled plants, and GM and Chrysler turned to the federal government for financial assistance.
Now, in contrast, the American car industry is again on the cutting edge of technology and innovation and is competing globally. Thanks to $85 billion in loans from the federal government, GM and Chrysler emerged leaner but stronger from bankruptcy, and the entire American auto industry has increased sales. GM and Chrysler are repaying their debt, and the American car industry is better anticipating consumers’ future needs, particularly by increasing fuel efficiency.
For example, in September Chrysler began retail sales of its natural gas powered truck, the Ram 2500 Heavy Duty CNG. Although many auto makers have tried to develop natural gas technology, Chrysler is only the second manufacturer in the world to make these vehicles available to retail purchasers. Chrysler’s truck can go 255 miles on natural gas before it must revert to its backup gasoline engine.
Ford is working to improve both natural gas and electric car technology, and Ford’s main plug-in hybrid car, the C-MAC Energi, is now competing with the Toyota Prius Plug-In Hybrid. It can go nearly twice as far as the Prius in its electric-only mode, and it also has a higher overall fuel efficiency rating. While it’s not possible to measure the electric part of a hybrid car in traditional miles per gallon, the EPA developed an equivalent measure which combines a car’s electric capacity with its gas engine. Ford’s C-MAC Energi has a fuel-efficiency rating of 100 miles per gallon equivalent, in contrast to the Prius’s 95 mpge.
GM is experimenting with ways to make its cars lighter, which reduces the amount of gas they use. They’ve begun, for example, fabricating certain parts out of lighter materials, like aluminum. They’ve also developed a new way of using magnesium, a metal that’s 33 percent lighter than aluminum. High-end cars have been using die-cast magnesium parts for years, but GM has discovered a way to slowly heat the magnesium so that they can forge it as sheet metal. This will allow GM to expand the use of magnesium to larger car parts like panels. By 2020, GM hopes to routinely use 350 pounds of magnesium parts to replace 630 pounds of current components, increasing fuel efficiency by as much as 12%.
The Big Three struggled during the economic downturn because they weren’t in tune with consumers’ needs. Now they are working on building cars of the future, rising to President Obama’s challenge to increase fuel efficiency to 54.5 mpg by 2025. The auto bailout didn’t just save Detroit’s automakers—it gave the Big Three a chance to yet again revolutionize cars.
President Barack Obama, by contrast, has given some love to American car companies and American car workers. He rescued Chrysler and General Motors, preserving the American icon companies and hundreds of thousands of American car manufacturing jobs. He imposed sanctions on Chinese tires that received improper export subsidies, a move that saved thousands of U.S. tire-building jobs. And now he’s challenging illegally-subsidized Chinese auto parts to sustain American companies and workers.
Romney has blasted Obama every auto-manufacturing-job-preserving step of the way. On the auto bailout, Romney admonished, “Let Detroit go bankrupt.” He condemned the tariffs on Chinese tires. Romney claims he loves American cars. But the actions of his private equity firm, Bain Capital, in buying companies that were “pioneers” in offshoring American jobs, suggest he’s fine with American firms making cars and car parts overseas. Obama, by contrast, took the action necessary to ensure American cars are made in America by American companies employing American workers.
Here’s what Romney actually said about his adoration for cars:
“I love cars. I love American cars. And long may they rule the world.”
When it came to helping them continue to rule the world, however, Romney dissed Detroit.
President Obama embraced Detroit. He took money from the Wall Street bailout fund and used it to help GM and Chrysler continue to rule the world. GM regained the title of world’s largest car company in January and hundreds of thousands of auto and auto part manufacturing workers retained their jobs.
Damn right America is better off than it was four years ago.
Four years ago was September 2008. George W. Bush was president and Wall Street giant Lehman Brothers was collapsing. It was a time of fear. It was a time of panic about the future. Recalling that anxiety is unsettling. But it’s important for comparison sake.
Lehman filed for bankruptcy this week four years ago – Sept. 15, 2008. Global financial markets spun into a panic. Credit markets froze worldwide. The stock market plunged. GM and Chrysler fell into crisis. Foreclosures were spiking and housing prices plummeting. Main Street shops and factories couldn’t get ordinary loans essential to sustain routine business. Nearly half a million workers lost their jobs that month. It was the ninth consecutive month of massive job losses. The Bush administration had converted a vibrant economy and budget surplus it had inherited from former President Bill Clinton into the Great Recession and massive deficits. America was still mired in two wars, including one Bush started on false pretenses.
Now, in September 2012, global financial markets have stabilized. Credit is available to Main Street. GM and Chrysler are building cars and creating jobs. Unemployment is declining as the private sector has added jobs to the economy every month for the past 30. The value of housing is rising once again, creating wealth for the middle class. Now there’s a financial reform law to prevent another Wall Street bailout. There’s Obamacare to help families retain and secure health insurance. The war in Iraq is over and Osama bin Laden is dead. Is America better off than it was four years ago? Hell, yes it is!
September 2012 can’t be described as boom times. But it’s sure not the dread-filled days of September 2008. As former President Clinton so eloquently said last week in his convention speech, describing the Republican attitude toward President Obama:
“We left him a total mess. He hasn’t cleaned it up fast enough. So fire him and put us back in.”
Republicans want Americans to put them back in charge. Their presidential nominee, Mitt Romney, has promised to “restore” America, to return the country to the days before President Obama.
The Romney plan to “restore” America involves repealing, revoking and rejecting every advance President Obama has achieved, including health insurance reform and Wall Street regulation. As Andy Borowitz suggested, if Romney could, he’d revive Osama bin Laden and kill Detroit. Anything to take America back(wards).
Luckily, Romney wouldn’t be able to undo President Obama’s auto bailout – although he opposed it from day one, urging “Let Detroit Go Bankrupt.” He wrote:
“If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye.”
Remember the fear in 2008? Think of the collapse of Bear Stearns and Lehman Brothers. Wall Street melting down. Pension savings disappearing. Housing values plunging and foreclosures skyrocketing. Three million workers losing their jobs.
It had all the makings of another Great Depression. As Barack Obama took office on Jan. 20, 2009, he faced a dilemma. In this crisis he could play it safe and hold steady on his predecessor’s path of pampering the rich and pandering to corporations, pretending that possibly, eventually, some benefit would trickle down to workers. Or President Obama could keep candidate Obama’s promises of change.
He went with change. He focused on workers, believing restoration of the nation’s great middle would drive economic recovery for all. He secured an economic stimulus package and rescued the American auto industry. Both measures worked to halt, and eventually reverse, the previous year’s relentless economic decline. Both, as well as other changes President Obama has proposed, emphasize creating and securing jobs for everyday workers. He wagered on American workers. And it paid off.
They’re betting that more tax cuts for the rich will prompt reinvestment and economic resurgence. That’s the gamble former President Bush took when he twice cut taxes on the wealthiest. After seven years, here’s how Bush’s bet on the rich paid off: the economy and jobs were contracting at an alarming rate. Remember the fear in 2008?
Now, three years later, after President Obama placed his faith in workers, the nation’s economic outlook is brighter. As is that of GM and Chrysler.
Both companies suffered managed bankruptcies. Tens of thousands of workers lost jobs. Retirees took health care benefit cuts. Remaining workers accepted pay reductions. Plants and dealerships closed. It was pain all around.
There’s just something about manufacturing. Ask Rosie the Riveter. Ask the computer geeks and artists across America who create “Hacker Space” workshops to help each other invent and fabricate to their imaginations’ content.
Yeah, it’s cool to make stuff. The “maker,” whether an inventor or engineer or welder gets a thrill out of performing work that results in visible, viable products. Manufacturing also gives the “makers” the feeling of empowerment that can be seen all over Rosie the Riveter’s face.
Manufacturing is powerful. And power is coveted. That’s why mother America always loved manufacturing most. Since the early days of this country, visionary political leaders like Alexander Hamilton and Abraham Lincoln nurtured manufacturing. They knew manufacturing builds a country’s economic strength. And the capacity to manufacture secures a nation’s military might. So President Obama’s focus on reviving American manufacturing, including his proposal last week to give American manufacturers a small tax break, is wise, even if the banking brother and service sector sister feel aggrieved as a result.
President Obama said in his State of the Union address that his goal was to forge an economy built to last. That, he said, would be based on American manufacturing and American know-how, American-made energy and skilled American workers.
Since then, he has talked up his plans to reinvigorate manufacturing during several factory tours. At Master Lock in Milwaukee, Wis., he applauded the company for bringing 100 jobs back to America from overseas. The tax code should reflect that, the President said. He proposed the government give tax breaks to companies that on-shore jobs, instead of granting them to those that offshore.
It’s illogical, even unpatriotic to use tax dollars to subsidize companies that send jobs overseas, transferring America’s manufacturing power to foreign countries like China.
Later, in Everett, Wash., President Obama lauded The Boeing Co. for manufacturing planes in America. Orders for Boeing’s commercial aircraft rose by more than 50 percent last year, and it hired 13,000 Americans.
During a tour of the plant where Boeing manufactures its 787 Dreamliner, the President said:
“We can’t go back to an economy that was weakened by outsourcing and bad debt and phony financial profits.”
While Wall Street’s financial gambling took down the nation’s economy, the solid, steady, circumspect practices of manufacturers are facilitating recovery. No wonder manufacturing is the favored child.
Manufacturing, Obama pointed out, supports jobs throughout the economy, from mines to machines shops to malls. At the Boeing plant, he said:
“Every Dreamliner that rolls off the assembly line here in Everett supports thousands of jobs in different industries all across the country. Parts of the fuselage are manufactured in South Carolina and Kansas. Wing edges, they come from Oklahoma. Engines are assembled in Ohio. The tail fin comes from right down the road in Frederickson.”
Some lies are just tiny fibs, reshading the truth just a little bit, something all of us—except for the purest of heart—have done. Then there is the whopper, the bald-faced lie that completely blots out the truth. Just like what Sen. Bob Corker (R-Tenn.) said the other day.
Last week at a ceremony at GM’s Spring Hill, Tenn., plant to celebrate the rehiring of 483 workers to build a line of fuel-efficient EcoTec engines, Corker, who ranted and railed against the government help to save the auto industry, took credit for the government help to save the auto industry. Here is what he said. Really.
At the end of the day we all have to feel good about what we did, I contributed to strengthening the auto industry in this country.
Politicians do have a vastly different truth formula than the rest of us use, but even so, Corker’s claim to saving the auto industry is as far from the truth as Saskatchewan is from Rio de Janeiro in miles (6,285) and culture (use your imagination). (more…)
--------- Tula Connell --------- Photo by Joe Kekeris
By Tula Connell
AFL-CIO Managing Editor
Higher profits and new fuel-efficient models have put American-made cars back on the road again—with the help of taxpayers and the workers who have worked closely with the Big Three automakers to ensure their success.
In July, Ford posted a stronger-than-expected quarterly profit of $2.6 billion—some $1 billion more than analysts predicted—with promises of more earnings in 2011. Chrysler, which cut its net loss to $197 million from January through March, expects to announce its second-quarter earnings in mid-August. General Motor’s (GM’s) U.S. sales for June rose 11 percent from the year-ago period and the company is again building popular cars.
The commitment, sacrifices and hard work of the men and women at UAW-represented companies is an enormous part of the positive news coming from Ford, GM and Chrysler, where UAW members are producing best-in-class quality results and building vehicles that hands-down beat global competition. (more…)
Rosie the Riveter defiantly rolls up her blue work shirt to show off a brawny bicep. She’s a symbol of American strength.
She worked in a manufacturing job, one of millions that constructed the defense machine that won World War II for the Allies. She said, “We can do it.” And America did.
Now, however, shuttered U.S. factories and off-shored manufacturing are sapping American strength. The nation has lost more than 40,000 manufacturing plants and one-third of its manufacturing jobs, nearly six million, over the past dozen years. China is on the verge of overtaking the U.S. in manufacturing output. And Americans know it. Late in April, 58 percent of 1,000 likely voters told pollsters they believed America’s economy no longer led the world.
They also told pollsters they supported enacting a national manufacturing policy to promote resurgence of domestic production — a return to the days of a robust Rosie the Riveter and a country that could secure its independence with dynamic manufacturing capability.
Democrats in Congress heard that message. They’ve created a program called “Make It in America.” They plan to pass a series of bills to create an environment in which both Americans and American manufacturers make it. “We want everybody to make it in America,” House Speaker Nancy Pelosi said as she described the plan to 2,000 bloggers and progressive activists at Netroots Nation 2010 last week in Las Vegas.
After all the support America has given the financial sector – estimated to total more than $4 trillion – it’s time for Congress to invest in the productive sector, the one that creates jobs, real wealth and American power.
“We must stop the erosion of our manufacturing base, our industrial base, our technological base,” the Speaker told Netroots Nation, “It is a national security issue to do so, if we had no other justification,” she said, adding that there are, of course, plenty of other reasons.
She said the strategy is to pass “one bill after another” supporting American manufacturing. The House started last week with two, one to ease American industries’ access to raw materials and parts and another to improve specialized workforce training.
In addition, Speaker Pelosi said, House leaders want to address currency manipulation – the deliberate undervaluing of currency to make a country’s exports artificially cheap and imports into that country artificially expensive. Currency manipulation by China, for example, is believed by both conservative and liberal economists to be adding as much as 40 cents to every dollar of the cost of U.S. products exported to China and discounting Chinese goods sold in the U.S. by 40 cents on every dollar.
“There is a strong interest in our caucus in holding China accountable for manipulation of currency. That would make a tremendous difference in our trade because currency manipulation is really a subsidy to their exports to America – an unfair advantage,” the Speaker said at Netroots Nation.
Other bills Speaker Pelosi hopes to pass soon include $5 billion in tax credits for domestic manufacturers that produce components for alternative energy and a requirement that foreign manufacturers keep at least one worker stationed in the U.S. so the company can be officially served with court papers. Also, there’s a bill by Illinois Congressman Daniel Lipinski that would require each U.S. president to produce a manufacturing strategy in the second year of office and to review progress annually.
The survey that prompted Democrats to create the “Make It in America” program was commissioned by the Alliance for American Manufacturing (AAM) and conducted by Democratic pollster Mark Mellman and Republican pollster Whit Ayres. They found that likely voters believed creating manufacturing jobs was more important than reducing the federal deficit and more important than cutting government spending.
The survey also showed strong support for policies requiring the government to buy American-made goods. Similarly, it showed the Democrats, Independents and Republicans surveyed felt the quality of products manufactured in American exceeded those made in China, Japan, India and Germany.
Americans now even prefer U.S.-made cars: An Associated Press-GfK Poll in April showed 38 percent of Americans favor U.S. vehicles. Asian brands got 33 percent.
“The things that make us American are the things we make,” it begins.
“This has always been a nation of builders, craftsmen, men and women for whom straight stitches and clean welds were matters of personal pride. They made the skyscrapers and the cotton gins, colt revolvers, Jeep 4-by-4s,” the ad continues.
“These things make us who we are,” the narrator says. Yes. The things Americans make, make the country strong.
To the sound of a sledge hammer pounding a railroad spike, the narrator goes on to describe the reborn Grand Cherokee, “This, our newest son, was imagined, drawn, craved, stamped, hewn and forged here, in America. It is well-made and it is designed to work. This was once a country that made things, beautiful things, and so it is again.”
Well, not quite. Chrysler may make a terrific Grand Cherokee in Michigan. But American manufacturing needs some help. And with unemployment stuck at 9.5 percent, so do the American people. “Make it in America” is that aid. The AAM poll showed 85 percent of those who said the U.S. had lost economic leadership believed America could regain it.
Americans believe we can still do it.
Make sure Congress acts. Join the One Nation Working Together march on Washington Oct. 2 to demand good jobs, as well as Wall Street and immigration reform.
By Leo Hindery Jr.
Chairman, U.S. Economy/Smart Globalization Initiative at the New America Foundation
The Financial Times just devoted a special section of the paper to “individuals and companies who have displayed courage and vision in the aftermath of the most wrenching financial crisis since the Great Depression.” This piece of journalism — and the awards that were granted — were especially designed “to recognize boldness on a global scale.”
A few years ago, in a book I titled It Takes a CEO: It’s Time to Lead With Integrity (Free Press, 2005), I tried to identify all of the traits — including boldness — that I believe characterize truly successful CEOs. It would have been a pleasure to collaborate with the FT’s editor and writers — they did a great job — however, when it came to matching specific companies and CEOs with leadership attributes, I think that in at least one instance they missed the “Integrity” trait.
Let me elaborate.
In its foreword, the FT said: “While recognizing the profit imperative, these awards have also paid due weight to the impact of a company on the wider community, whether through innovation, education or philanthropy.”
But there are a lot more things — and, especially, a lot more important things — than what flows from “innovation, education or philanthropy.” Specifically, it’s the impacts on employees, communities and nation which are transcendent, and given how extremely difficult this current economy is, we should be particularly interested in how these impacts significantly help strengthen the American economy and create jobs.
When the FT chose Sergio Marchionne, the CEO of Fiat and now also of Chrysler, for its Driver of Change Award, it picked a CEO who is responding admirably to these two economic challenges. And in Marchionne, the FT also found a recipient who evidences an abiding responsibility to others than just his shareholders, and who leads his life with grace.
For most of the last century, American industry’s successes were hallmarked by a commonly held belief among CEOs that they had equal responsibility to shareholders, employees, customers, communities and the nation — and the nation as a whole was the beneficiary. It wasn’t until the late ’80s, with the advent of ‘trickle down economics’ and wildly excessive executive compensation, that this sense of responsibility began to be noticeably and widely lost.
On the day that he became the CEO of Chrysler, Marchionne said, “No executive has the birthright to lead, and no company has the right to exist” — and ever since, in trying to fulfill his stated commitment to creating a ‘sustainably profitable company,’ he has shown great sensitivity to the communities in which Chrysler operates, to the nation — the United States — which gave him and Fiat the Chrysler opportunity, and, notably, to the employees of Chrysler who for two decades bore the brunt of the company’s really crappy senior management. Beyond owning a large piece of the company through their Union, the employees of Chrysler are now active at the Board level in its management and, when hard decisions need to be made, they have a major role in working them out fairly.
The other trait that is a sine qua non of a great CEO is grace, a fine old trait with religious roots that in today’s corporate and secular worlds denotes dignified, polite and decent behavior and, especially, the capacity to accommodate and forgive people. It’s living your life to earn and keep the respect of others — and while hard to describe, we all know grace when we see it, and we all miss it when we don’t.
Mr. Marchionne seems to live this way, and a telling example is the relative ease and fairness with which he reached agreement with Chrysler’s beleaguered employees and their primary union, the United Auto Workers. (Of course, no one gets it right all the time or in all ways, and I must note that Marchionne, who is definitely a tough guy in a very tough business, still has some important fence mending to do with the Teamsters, which he needs to get to.)
All in all, however, Sergio Marchionne was a great choice to receive the Driver of Change Award. Which is why the FT’s choice of Roger Agnelli and the company Vale to receive its Emerging Markets Award is so puzzling, as pretty clearly the FT failed to require each of its Award recipients to manifest both grace and broad stakeholder responsibility.
Vale is a 67-year old Brazilian company that many people still remember as Companhia Vale do Rio Doce or CVRD, and that until fairly recently operated essentially only in Brazil. It is now in 36 countries and the world’s largest producer and exporter of iron ore, and thus certainly worthy of a lot of recognition. And to its particular credit, much of Vale’s growth has been organic and achieved through steady investments in modernizing its mines and rail and port infrastructure, especially in South America and Africa which it sees as “the future of the world’s natural resources and of food production.”
But what really angers me is that all the while Vale has been executing of late on its grand global mission, it is, to quote the FT, “embroiled in a long-running dispute” with its workers here in North America, a dispute that I lay squarely at the feet of its CEO, Roger Agnelli, and that arises from nothing other than Vale’s greed and Agnelli’s obstinacy.
And all the while, Vale, under the leadership of Agnelli, is also a long way from being the world’s ‘most environmentally friendly’ mining company, and it has at best only a passing interest in seeing South America and Africa enjoy the important fruits of non-resources based development. It is critical that powerful nations and powerful multinational corporations never again treat with disregard countries, regions and continents as their storehouses, bread baskets, cheap labor sources, or environmental dumping grounds — yet this is precisely what Vale does every day, to one degree or another.
Now, here in North America we are seeing firsthand Vale’s insensitivity to its workers and their communities, as it tries to run away from fair wages and benefits that are the product of longtime collective bargaining.
When Vale purchased the large nickel mining company Inco in a high-value auction in late 2006, it promised not to reduce the workforce for three years. But the company, now called Vale Inco, broke that pledge in a big way in March 2009 when it laid off workers and shut down operations for two months. Immediately thereafter, the company demanded from its remaining workers, who are mostly represented by the United Steelworkers, harsh concessions while conditioning any bargaining on workers first accepting these concessions.
As unfair as they would be in good times, the cruelty of these demands in a recession is beyond the pale — and then to further drive home its power over its employees, Vale used the resulting — and ongoing — strike as the excuse to cut many of its ties with local services companies and to offshore that work and related jobs. Almost nothing in labor relations is more vile than ‘conditioned bargaining,’ yet Vale has made this approach the base of its demands — and just this past weekend, using this demand, it again cavalierly broke of all negotiations for the umpteenth time.
For all the accolades it is receiving from the financial community — heck, the company earned $5.3 billion in 2009! — Vale is obviously employing the global economic crisis to impose on Vale Inco its philosophy that corporations bear no duty to meaningfully share gains with or to accept long-term responsibilities to others than just shareholders. Vale’s concessionary demands clearly illustrate this intent — even if the concessions Vale is demanding saved the company $25 million in the first year, which is a fair estimate, they would change Vale’s cost of extracting nickel by only about 5 cents per pound, yet these demands, which have been accompanied by some of the most aggressive anti-union tactics since the Appalachia ‘coal wars’ in the 1930s, would economically devastate the company’s 3,500 union employees and their communities.
Politicians of all stripes are fond of saying that “our best days are still ahead of us,” or words to that effect. Part of me — my heart, I think — dearly wants to agree with this.
The problem, however, is that getting to these best days isn’t going to happen automatically. Whether as a person, a CEO, a company or a society, it’s going to take smarts, courage, vision, sacrifice and persistence — plus, for the CEO in that crowd, grace and a broad, unselfish sense of responsibility.
*** Leo Hindery Jr. is the author of “It Takes a CEO: It’s Time to Lead With Integrity” (Free Press, 2005). He is a member of the Council on Foreign Relations and serves on the Board of the Huffington Post Investigative Fund. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor, AT&T Broadband.
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