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.