In Detroit, Obama Hails Auto Industry's Comeback
Three years after the American auto industry was on the brink of devastation, a broad (if not total) consensus agrees that the auto bailouts worked. Not only are General Motors and Chrysler still in business, but they paid back their loans to the US government ahead of schedule, added shifts at manufacturing plants, and are turning impressive profits. Together, GM and Chrysler topped US auto sales last month.
And for Labor Day, President Barack Obama was in Detroit to celebrate.
But Obama’s speech this afternoon before a crowd of tens of thousands at Detroit’s Labor Day parade and rally wasn’t just about automakers. Building up to his call for a national jobs program scheduled for Thursday, Obama came to the city viewed by many as the epicenter of the recession to rally enthusiasm for revived government intervention to spur economic growth—in all sectors.
“America can’t have a strong growing economy without a strong middle class and a strong labor movement,” said Obama in Monday’s speech.
But the car-centric story is, here, still the dominant one. And Obama knows it. His speech (not coincidentally, held in the GM parking lot in front of the Renaissance Center on Detroit’s riverfront) boasted of the turnaround in the American car industry under his tenure.
“We stood by the auto industry and made some tough choices and now the Big Three are turning a profit and hiring new workers,” the president said. “Right here in Detroit, right here in the Midwest, right here in the United States of America.”
Indeed, the numbers look good. GM’s sales in August were 18 percent higher than in August 2010. Chrysler—the company most often dismissed as doomed during the crisis—just completed its seventeenth consecutive month of year-over-year increases in sales, with August showing a 30.6 percent increase from a year before. (The numbers are tempered by accounting for increased incentives for buyers in August, and for the ongoing struggle of Japanese automakers with an inventory reduced by the earthquake and tsunami earlier this year.) The $81 billion bailouts, initiated by George W. Bush, are expected to lose about $14 billion in taxpayer funds through lowered stock values, but this is down from the $48 billion loss estimated two years ago.
Obama touted the labor history in his speech, lauding the automakers for elevating their workers’ economic status and noting that the US economy is stronger when good workers get good benefits. “This is the city that built the greatest middle class the world has ever known,” he said.
Indeed, the trend lines look promising—for the auto companies, at least. But for workers, the story is more complicated. While the bailouts supported and even created jobs—not just at the car companies but in the countless small businesses that make up the enormous American auto supply chain—the crisis facing the automakers was only one of the many financial hits that workers have taken. The mortgage crisis, too, has been a brutal punch. When Obama announced the Home Affordable Modification Program in the early months of his presidency, he said it would help 3-4 million people to modify their mortgages. But fewer than a million have found relief through the program so far. In Michigan, foreclosure rates are falling; the state saw a 42 percent decline in foreclosures in July. Even so, Michigan is still in the top ten for foreclosure filings. Obama is expected to announce a reworked mortgage relief plan this month, which he may mention in Thursday’s speech.
For Jean Irwin, a former employee at the Michigan Department of Transportation, the connection between the foreclosure and unemployment crises is concrete. Two years after losing her job, she lost her house. “After years of working to keep people from becoming homeless, now I’m here myself,” she says. Irwin was campaigning Monday for a foreclosure moratorium; she supports a government program in salvaging and rehabilitating derelict homes. “It’s a need everywhere, it can help people find a decent place to live, and it can also give us jobs,” she explains. “We have a right to jobs.”
Detroit, if it’s learned anything from the car crisis, knows that it cannot continue to rely on one dominant industry for job growth. The auto companies are posting robust numbers, but Detroit’s unemployment hit 15 percent in July. Michigan’s unemployment rate today is lower than when Obama was inaugurated, but still higher than the national average. The Labor Day parade in Detroit may have been dominated by autoworkers, but other workers also made their presence known: office professionals and actors, carpenters and letter-carriers, workers in red Michigan Nurses Association T-shirts and musicians from the Detroit Symphony Orchestra in their tuxes and tails. Collectively, their presence underscored a call for economic intervention that impacts diverse sectors.
Though Obama has not yet laid out specifics for his jobs plan, it is expected to include a plan for creating jobs through infrastructure improvements on bridges and roads, tax relief for working people and support for the long-term unemployed.
Vernita Stanton, a UAW member, is especially interested in the president’s strategies for bolstering unemployment assistance. After being laid off as a lineworker for Ford, she spent eighteen months without work, and only recently returned in another (lower-paid) job with the automaker. During her unemployment, “we went to the food banks. We went to state healthcare for our flu shots,” Stanton said. “We need to keep those open for people. People need to eat.”
Stanton added that it isn’t only Obama’s responsibility to create jobs; she thinks businesses need to step up. “If I had a corporation, if I was big-time, I’d begin to hire people—maybe at lower wages, but not too much lower—even just to sweep the floor or clean the bathrooms,” Stanton said. “They can feed their family and you can build your company because you’re looking clean and neat.”
Deno Felix, another UAW member who works with Ford, said that he needs to hear from Obama that he backs the unions and will do all he can to help them. “We set the standard for the middle class,” he said.
Whether or not it takes shape as Felix hopes, Obama said Monday that “as long as I’m in the White House, I’m going to stand up for collective bargaining”—one of the lines in his speech that earned him the most rousing cheers. In fact, Chrysler and UAW are negotiating seven days a week right now on a national four-year contract—the first post-bailout contract. GM and Ford workers are also at the bargaining table, discussing entry-level wages, among other things, in advance of their contract’s expiration on September 14. Local Ford unions across the country have been holding strike authorization votes for their 41,000 hourly workers.
As part of the bailout package, GM and Chrysler workers gave up the right to strike—though thousands of them were out marching for the holiday and wishing each other well. “Happy Labor Day,” said one employee to another on a Woodward Avenue street corner today. “Keep working.”