Campaign Report: A Thriving Ohio Auto Industry

“We decided to do more than just rescue the industry from crisis.  We decided to retool it for a new age. We said that if everyone involved was willing to take the tough steps and make the painful sacrifices that were needed to become competitive, then we’d invest in your future and the future of communities like Toledo; that we’d have your back. So I placed my bet on you. I put my faith in the American worker. And I’ll tell you what -- I’m going to do that every day of the week, because what you’ve done vindicates my faith.”
-- President Barack Obama, June 3, 2011


In the winter of 2009, the American auto industry was on the brink of collapse. Rocked by the economic crisis, the Big Three automakers had lost a staggering $62 billion in 2008 alone.   Private lenders were unwilling to provide any funds, leaving GM and Chrysler unable to operate.

The struggles of the automakers put the Ohio economy at risk. Nearly 120,000 Ohioans are employed in making motor vehicles and parts, and independent analysts estimate that almost 848,000 Ohio jobs – one in every eight Ohio workers – depend directly or indirectly on the auto industry.  In the month the President took office, over 15,000 Ohioans lost jobs in motor vehicles and parts manufacturing.

Thanks to the auto rescue led by the president, U.S. automakers are once again profitable, growing, and making cars that excite our dreams. All told, the industry has gained over 217,000 jobs since GM and Chrysler exited bankruptcy in June 2009.  Tomorrow in Toledo – a city that has been building motor vehicles for over a century -- Vice President Joe Biden will describe the president’s decisive actions and the impact they have had in Ohio. A resurgent auto industry is a central part of the Obama-Biden Administration’s ambitious agenda to strengthen American manufacturing, make hard work pay, and build an American economy meant to last.

The Auto Industry in Ohio

Ohio is a linchpin of the American auto industry. In 2010, one in every six U.S.-made cars, and one of eight trucks, rolled off the line in an Ohio plant, according to the Ohio Department of Development. Eight Ohio plants produced over 1.1 million American cars and trucks that year. In addition to car assembly, industries concentrated in Ohio include metal stamping, transmission and power train parts, steering and suspension, and vehicular lighting equipment.

There are 120,000 Ohioans who are directly employed by motor vehicle and parts companies and 400,000 who work somewhere in the auto industry supply chain, including those who provide services like transportation and warehousing. Auto jobs are spread across the state: 80 out of 88 counties have at least one auto industry establishment.   According to the Center for Automotive Research, nearly 848,000 Ohio jobs – over 12 percent of jobs in the state – depend directly or indirectly on the auto industry.

Moreover, auto jobs in Ohio are good, high-paying jobs. The average Ohio auto industry worker makes $53,700 per year, compared to $38,500 for a typical private sector worker in the state.


The Auto Industry in Ohio: By the Numbers

Number of Ohioans directly employed by the auto industry: 120,000
Percentage of Ohioans whose jobs depend on the auto industry, directly or indirectly: 12.4%
Cars and trucks made in Ohio in 2010: 1.1 million
Average wage of Ohioans employed in the auto industry: $53,700
Sources: Ohio Department of Development, “The Ohio Motor Vehicle Industry,” February 2011; Center for Automotive Research, “Contribution of the Automotive Industry to the Economies of All Fifty States and the United States,” April 2010.

The resurgence of the American auto industry is leading the auto companies to invest more in Ohio and hire more Ohioans:

• GM: Three years ago, only one shift of workers was needed at GM’s Lordstown plant. Today, 4,500 employees staff three shifts at Lordstown, and GM has poured $350 million in new investments into the plant.  Since the recovery, GM has also invested hundreds of millions of dollars and is creating hundreds of jobs at plants in Defiance and Toledo.

• Chrysler: Today, 70 percent of parts in the Jeep Wrangler are American-made, up from 45 percent several years ago. American-made parts include glass made in Crestline, steering columns from Perrysburg, seats from Northwood, hard tops from Carey, and cargo components from Holmesville.  Chrysler recently announced it was adding a second shift at its Toledo complex, adding 1,100 jobs in 2013.

• Honda: The Honda plant in Marysville is one of the largest in the United States, producing over 340,000 vehicles in 2010.  Honda recently invested $98 million in their auto engine plant in Anna, part of their efforts to create 1,200 jobs across the U.S..

President Obama Rescued the Auto Industry

In late 2008, the largest economic crisis since the Great Depression brought the auto industry to the brink of collapse. The private sector was losing jobs at a rate of more than 700,000 jobs a month. Auto sales plunged by 35 percent in December as access to credit for car loans dried up.   Both GM and Chrysler were running out of cash and faced the very real possibility of liquidation.

The rapid liquidation of a major automaker would have created chaos, leading to cascading failures throughout the industry, from auto suppliers to auto dealers. Because Ford and other automakers depended on the same suppliers, failures could bring down the entire industry.  Over 1 million jobs were at risk.

The Jeep Wrangler – made here in Toledo – is one example of how the collapse of the U.S. auto industry would have devastating consequences that ripple through the economy.  In addition to the 2,400 workers at Chrysler’s Toledo Assembly Complex, 3,000 additional workers are employed by over 200 suppliers providing parts and components. They work in cities like Grand Rapids, Michigan; Dry Ridge, Kentucky; and Greensburg, Indiana. In the nearby area, Toledo Molding and Die and Johnson Controls employ hundreds of workers who are directly involved in the production of the Wrangler. And many more Ohioans have jobs that are supported by the services employees buy and the economic activity auto manufacturing creates in the local community.

President Obama decided that decisive action was needed to save the auto industry. But he rejected the companies’ initial plans, refusing to give the companies additional rescue loans until they developed more ambitious strategies to reduce costs and overhaul their business models. The restructuring required shared sacrifice among all of the company’s stakeholders, including shareholders, creditors, executives, and workers. 

And because President Obama bet on American autoworkers, the devastating impact that would have come with the liquidation of GM and Chrysler never happened. The auto industry is back on its feet. With new technologies from touchscreen controls to carbon-fiber frames, futuristic hybrid-electric cars, and throwback sports cars inspired by the classics, Detroit is once again designing cars that Americans can dream about. And through a historic partnership between the Administration, the major automakers, the United Auto Workers, and consumer and environmental groups, Detroit is implementing new standards that will make their cars more fuel-efficient – nearly doubling their miles per gallon, and saving the typical family more than $8,000 per vehicle over time at the pump.

The result has been a stronger American auto industry. Chrysler and GM have repaid their outstanding loans in full years ahead of schedule.  GM has reclaimed its title as the world’s largest automaker, and in 2011, GM, Chrysler and Ford all gained market share for the first time in decades.  As the economy strengthens, more Americans are buying autos. Annualized February US sales stood at 15.1 million vehicles, including 11.4 million domestic cars and trucks.  And automakers and part suppliers are hiring in Ohio and across the country, with 217,000 auto industry jobs created since GM and Chrysler exited bankruptcy in June 2009.

Building an Economy Meant to Last

The resurgence of the American auto industry is part of a broader recovery for the manufacturing sector, which has created over 400,000 jobs since the beginning of 2010.  But our work is not done. President Obama is continuing to build an economy where hard work pays, responsibility is rewarded, and we make things that the rest of the world buys. The President’s planned investments in infrastructure, skills, and energy – combined with tax cuts that support companies that create jobs at home – will help Ohio manufacturers continue to grow.  In his State of the Union address, the President laid out a blueprint for an economy built to last, one that emphasizes manufacturing as a central pillar of a strong middle class. He has proposed steps to:

• Cut Taxes for American Manufacturing: The president proposed reducing tax incentives for companies to shift jobs overseas and creating incentives to bring them home. He would cut taxes for American manufacturers and permanently expand the tax credit for research and experimentation.

• Rebuild Infrastructure: To make our infrastructure a competitive advantage for our businesses, President Obama will rebuild roads and upgrade bridges, modernize the electrical grid and expand access to high-speed broadband. And he will pay for it with half the money saved by ending the wars in Iraq and Afghanistan, reinvesting that money in America.

• Train Workers for Jobs in Growing Industries: Some businesses are growing, but can’t find workers with the right skills. Growing industries in science and technology have twice as many openings as we have workers who can do the job. The president will forge new partnerships between community colleges and businesses to train and place 2 million skilled workers.

• Produce Secure, Affordable Energy:  President Obama is pursuing an all-of-the-above energy strategy that develops America’s natural resources responsibly while protecting the environment. The president’s strategy is reducing our reliance on foreign oil, saving families and businesses money at the pump, and positioning the United States as the global leader in clean energy.

• Double American Exports: President Obama set a goal of doubling exports between 2010 and 2015.  So far, our country is ahead of schedule to achieve that goal. In Ohio, average monthly manufacturing exports grew by 12 percent from 2010 to 2011.  The President has signed new trade deals with Korea, Colombia and Panama that will open new markets to American products, while offering financing and export assistance to small businesses.  At the same time, the President is committed to holding our trading partners to their commitments, bringing trade cases against China at nearly twice the rate of the prior Administration – including defending the tire industry against unfair imports and standing up to Chinese restrictions on the export of rare earth metals – and bringing the full resources of the U.S. government to bear on unfair trade practices.

Republican Candidates Opposed Help for Automakers

All four Republican candidates for president opposed the auto rescue package. In 2008, Governor Mitt Romney wrote that we should “let Detroit go bankrupt.”   In 2009, he wrote that “What is proposed is even worse than bankruptcy–it would make GM the living dead.”  And looking back in 2011, he said, “I wouldn't have just written checks like the Bush and Obama administrations did.”

Other Republican candidates agree. Speaker Newt Gingrich has called the President’s actions “a mistake.”  Senator Rick Santorum said all the rescue did was “pay off a special interest.”  Santorum argued that the rescue package gave GM and Chrysler to the unions, even though workers made significant concessions and the union itself owns no GM or Chrysler stock.  Congressman Ron Paul said, “it won’t work. It can’t work.” 

In the depths of the financial crisis, there was no alternative to government financing. As bankruptcy expert Harvey Miller said this week, it was “very unlikely” that GM or Chrysler could have survived without government support. “Without the debtor-in-possession financing, they would have had to shut down. The court ruled there was no possibility for DIP financing except from the government. The Republican candidates are ignoring this. I’ve watched the debates. The misstatements are so shocking.”  If the Republican candidates for president had got their way, there would be no American auto industry today.

The Republican candidates’ plans for the future echo their positions on saving the auto industry. They would fail to invest in American manufacturers. While their plans include massive tax cuts favoring millionaires, billionaires and large corporations. While they would drive up the deficit, they would also require steep cuts in critical investments like community colleges, infrastructure, secure and affordable energy sources, and innovation and scientific research in order to balance the budget. The Republican candidates offer no plans to make American manufacturers competitive.


ENDNOTES

 

Bloomberg News, “GM Posts $30.9 Billion Loss as Wagoner Seeks New Aid,” 2/26/2009; New York Times, “Ford Reports a Record $14.6 Billion Loss for 2008,” 1/29/09; and Detroit News, “Chrysler to Close Eight Plants, Says It Lost $16.8 Billion in 2008,” 4/30/09.
  Center for Automotive Research, “Contribution of the Automotive Industry to the Economies of All Fifty States and the United States,” April 2010.
  Bureau of Labor Statistics data, accessed 3/13/12.
  Bureau of Labor Statistics data, accessed 3/13/12.
  Ohio Department of Development, “The Ohio Motor Vehicle Industry,” February 2011.
  Ohio Department of Development, “The Ohio Motor Vehicle Industry,” February 2011.
  Center for Automotive Research, “Contribution of the Automotive Industry to the Economies of All Fifty States and the United States,” April 2010.
  Ohio Department of Development, “The Ohio Motor Vehicle Industry,” February 2011.
  Gov. John Kasich and Dan Akerson, Foxnews.com op-ed, “GM and the US auto industry's remarkable comeback is about more than just money,” 2/28/12.
  GM Press Release, “GM to Invest $890 Million to Build Cleaner, More Fuel-Efficient Engines,” 4/27/10 Bloomberg, “GM Will Invest $2 Billion in U.S. Plants,” 5/10/11.
  Senator Sherrod Brown, “Brown Highlights Trends in U.S.-China Auto Parts Trade: U.S. Auto Parts Deficit with China Grew to $10.2 Billion in 2011,” 1/8/12.
   Toledo Blade, “Jeep Expansion to Add 1,100 Jobs,” 8/10/11.
  Ohio Department of Development, “The Ohio Motor Vehicle Industry,” February 2011.
   UPI, “Auto Outlook: Survey Shows U.S. Automakers Improved,” 2/19/12.
  The White House report, “The Resurgence of the American Automotive Industry,” 6/1/11.
  The White House report, “The Resurgence of the American Automotive Industry,” 6/1/11.
  The Center for Automotive Research, “The Impact on the U.S. Economy of the Successful Automaker Bankruptcies,” 11/17/2010; Robert E. Scott, “When Giants Fall: Shutdown of One or More U.S. Automakers Could Eliminate up to 3.3 Million U.S. Jobs,” 12/3/2008; Mark Zandi, Philadelphia Inquirer op-ed, “Bailing Out Detroit,” 2/26/12.
  The White House report, “The Resurgence of the American Automotive Industry,” 6/1/11.
  The White House fact sheet, “Obama Administration Proposes Historic Fuel Economy Standards to Reduce Dependence on Oil, Save Consumers Money at the Pump,” 11/16/11
  SIGTARP Office of the Special Inspector General for the Troubled Asset Relief  Program, “Quarterly Report to Congress,” 1/26/12
  New York Times, “Good Year for Autos, but a Test Waits in 2012,” 1/4/12.
  Reuters, “Table: February U.S. Auto Sales 15.1 Million Annualized Rate,” 3/1/12.
  Bureau of Labor Statistics data, accessed 3/13/12.
  Bureau of Labor Statistics data, accessed 3/13/12.
  Census Bureau,  December 2011
  Mitt Romney, New York Times op-ed, “Let Detroit Go Bankrupt,” 11/18/08.
  Mitt Romney, The Corner Blog on the National Review Online, “From Bad to Worse,” 4/29/09.
  Real Clear Politics,  “Romney Faces Michigan Test on Auto Bailout Stance,” 6/9/11.
  Newt Gingrich and Jim Frogue, McClatchy-Tribune op-ed, “Another Medicaid Bailout,” 2/9/09.
  National Journal, “Santorum Slams Obama ‘Hubris’ and ‘Snobbery,’” 1/7/12.
  Politifact, “Mitt Romney Says Obama Gave Away Car Companies to Union,” 2/27/12.
  Congressman Ron Paul, House office web site, “The Bailout Surge,” accessed 3/13/12
  New York Times, “When Debating the Auto Bailout, Consider Lehman’s Fate,” 3/9/12.  See also Congressional Oversight Panel, “January Oversight Report, 1/13/11; Mark Zandi, Testimony before the Senate Banking Committee, 12/4/08; and The Daily Beast, “Ford CEO Alan Mulally on the Auto Bailout, Electric Cars,” 10/16/10.