More Voices Join: Romney Right on Best Way to Save Auto Industry

I said in my prior post that Mitt often comes to the right answer a couple beats before others do. Today’s Detroit News features an op ed from Hal Sperlich, a former president of Chrysler from 1984-88 and a member of the Automotive Hall of Fame, entitled “Romney was Right on Detroit Bankruptcy.” This article illustrates the point.

The entirety of Mr. Sperlich’s piece is below, but highlighted below are a few critical points we have made here on this site previously:

1. Obama’s assertion he saved the US auto industry while Governor Romney would have let it go under is simply not true.

2. Obama’s plan mirrored Mitt’s plan, with a couple key differences:

* Obama used $80 billion in taxpayer cash, about $25 billion is still at risk.

* Mitt’s “far superior” plan would have only guaranteed automaker obligations, not offered cash.

* Mitt’s plan would have built competitiveness, the key to long term success.

3. Mitt was not proposing abandoning the auto industry, that’s only an Obama soundbite. Mitt’s plan would have been less expensive and more successful.

Here’s the entire piece.

No, Mitt didn’t want to abandon the US auto industry. He wanted to save it, and his plan was better and cheaper:

Romney was right on Detroit bankruptcy
By Hal Sperlich

President Barack Obama alleges that he saved the U.S. auto industry, whereas Gov. Mitt Romney would have let the U.S. automakers go under.

Not true.

In an op-ed piece in the New York Times dated Nov. 18, 2008, Romney proposed a plan to enable GM and Chrysler to survive as strong competitors through a managed bankruptcy.

Four months later, the Obama administration proposed a similar managed bankruptcy, but with two very important differences.

The Obama administration proposed a very costly bailout of the two companies with $80 billion of taxpayer cash, a process started by President George W. Bush with $17 billion of TARP money. Close to $25 billion of those taxpayer funds remain uncollected, still tarnishing the GM brand with the label “Government Motors.”

The Romney plan was far superior.

First, it proposed using government guaranteed private financing, similar to what we did with Chrysler back in 1980, not massive quantities of precious taxpayer cash, as was done by the Obama administration. Second, as a man who has led many business and public sector turnarounds, Romney recognized that the auto companies not only had to survive the crisis, but they had to build the strength to allow them to be stronger competitors in the years to follow.

Let me digress for a moment to make a point. I was privileged to be in a leadership role during the Lee Iacocca led Chrysler turnaround that began in 1980. In fairly short order, we converted the world’s least competitive auto company into one of the most competitive. America’s first fuel-efficient front wheel drive cars, along with innovations like the first mini-vans, replaced the obsolete. Market share increased 50 percent by 1988 and, with dramatically improved costs, great labor management cooperation, major quality improvements and shared sacrifice from everyone, Chrysler became competitive and highly profitable. We baked a bigger pie so that all could share, including customers, shareholders and the folks who built the products.

That’s what competiveness does.

Just about every businessman will tell you it begins with competitiveness. If you do it better than the guy down the street, you will generate growth and jobs. If we do it better than the people in the next country, we will have more jobs here in America. It’s that simple. Competitiveness is the foundation for the prosperity we seek.

Romney understands this. He would not have abandoned GM, Chrysler and all their employees. In the end, either the Obama or the Romney approach would have provided the companies the support necessary to move forward.

But the Romney plan would have spared the taxpayer the billions invested by the Obama administration in the bailouts. Further, the more aggressive approach to new levels of efficiency proposed by Romney would have left the companies significantly more competitive.

As a result, the companies would have been better positioned to provide the long-term job security for their employees that only true competitiveness can guarantee, and to grow, adding thousands of new high paying American jobs.

In his November 2008 op-ed, Romney said, “Detroit needs a turnaround, not a check.”

In a way, I believe the same can be said of America at this point.

We don’t need to continue borrowing money we may never be able to repay.

America needs a turnaround.

America needs to become more competitive.

Romney understands this at a deep level and his policies are designed to enable a more robust and competitive America.

That’s what experienced leadership is all about.

UPDATE: An astute reader also caught the following post, also in the Detroit News’ op ed section: Delphi debacle spoils Obama bailout boast. One key quote:

When President Barack Obama uses the first of three debates Wednesday to tout his bailout of Detroit’s auto industry, as he surely will, Republican challenger Mitt Romney should be ready with a single number:

22,000.

That’s how many salaried retirees of the old Delphi Corp. saw their pension fund seized by the Pension Benefit Guaranty Corp. at the behest, documents suggest, of an Obama Treasury Department that ensured no such thing happened to the Troy-based auto supplier’s unionized workers and retirees.

Even worse, as the president and his proxies hail the auto bailouts as a cornerstone of an otherwise dismal economic record, they’re slow-walking congressional demands to explain fully why taxpayer dollars were used to favor the pensions of Delphi’s union employees over their salaried counterparts — many of them located in the politically critical battleground state of Ohio.

About Paul Johnson:

Paul Johnson is an attorney for venture capitalists and their portfolio companies by day, husband and father of three teenage boys by night. He’s an avid supporter of Mitt Romney for president and, as a graduate of Brigham Young University, a BYU football and basketball fan. Paul also enjoys competing in triathlons. Because he’s in the “Clydesdale” (over 200 lb.) class, he has even had podium finishes from time to time. Paul also has the distinction of being a big enough U2 fan to be willing to travel to Dublin to see them in their native environment.

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2 Responses to More Voices Join: Romney Right on Best Way to Save Auto Industry

  1. Audrey says:

    What about the op ed by Daniel Howes in today’s Detroit News about what Obama did TO the Delphi salaried employees, causing them to lose up to 2/3 of their pensions? Mitt needs to highlight that, as he needs to address and highlight the MYRIAD EXAMPLES OF CORRUPTION in the Obama administration. http://www.detroitnews.com/article/20121002/OPINION03/210020326 .

  2. Annette S says:

    Tom…Thanks for the article…very informative. All of your articles are.

    I know that Romney is just steaming about Obama’s claim that he would have let GM go bankrupt. Obama is naive if he thinks he will score points on this in the debates after spending 80 billion needlessly and carrying the UAW debt throughout the bankruptcy process. He did so at the expense of non union workers and secured creditors.

    I’m just going to quote from David Freddosa (writer):

    “Secured creditors are entitled to full repayment before unsecured creditors are entitled to anything. In situations like the one at Chrysler, where the company was worth little in liquidation but the business still had value as a going concern, they would normally be offered equity in the new firm in exchange for their cooperation, because the law gives them so much leverage. But that wasn’t going to happen in the restructuring of Chrysler, because the equity had already been committed to the UAW.” (Unions)

    “Yet here he was, undermining the confidence of all lenders that their obligations would be honored. Given this manipulation by gangster government, why would wise investors ever lend to any large American business again? At any moment, a presidential appointee can step in, say, “I don’t need you” and steer your money to a labor union.

    Ron Bloom…appointed deputy for Obama…..”I need workers to make cars, but I don’t need lenders.”

    If you are a Democrat or Independent reading this, let me ask you a question. Since when has American companies not needed lenders. There wouldn’t be any workers without lenders. The Obama administration bullied the secured lenders and literally took over the management of GM going through bankruptcy.

    Business and government need to be allies. Romney knows how to work with the private sector as a government servant. He doesn’t want to take them over. He wants businesses to flourish.

    Vote for Romney/Ryan…..2012!!