Why the auto industry matters in national politics this year

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The industrial Midwest -- a cradle for the U.S. auto industry, notably the Detroit 3 -- will be a key battleground for the 2012 presidential election.

It has become a bright spot for the U.S. economy; manufacturing employment, driven in part by rising light vehicle sales, is on the rebound.

Auto suppliers are hiring again. Attendance at the recent Detroit auto show hit an eight-year high.

On Friday, Ford is expected to post a healthy increase in 2011 profits over 2010, and will dole out both raises and bonuses to salaried workers for the first time since 2008.

So it’s no surprise if Detroit’s comeback merits more than a passing mention in President Obama’s State of the Union address tonight.

Among the guests of Michelle Obama during the speech will be Alicia Boler-Davis. She is the plant manager at GM’s Orion assembly and Pontiac stamping plants in Michigan.

The assembly plant produces the Chevrolet Sonic, the first subcompact car to be produced in the United States and a model that used to be built overseas.

You’ll recall President Obama and South Korean President Lee Myung-bak toured the plant last fall to showcase a new trade agreement and U.S. manufacturing competitiveness.

The factory is a central beneficiary of the U.S. government’s $85 billion bailout of the auto industry in 2009.

“Two years ago it looked like this plant was going to have to shut its doors,” Obama said during the October visit. “All these jobs would have been lost. The entire community would have been devastated. And the same was true for communities all across the Midwest.

“So we made a deal with the auto companies. We said if you’re willing to retool and restructure, get more efficient, get better, get smarter, then we’re going to invest in your future -- because we believe in American ingenuity. Most importantly, we believe in American workers.”

What Obama probably won’t mention tonight is that the administration in November upped its estimates of losses on the bailout to $23.6 billion from $14 billion.

That’s because the federal government still owns 26.5 percent of GM as part of its $49.5 billion rescue. And at current prices for GM shares -- about $24.85, vs. an IPO price of $33 -- the U.S. Treasury could lose more than $12 billion on the bailout.

Instead, Obama will return to Michigan once again this week to remind us all about profits, more jobs and Maserati SUVs destined to come off Detroit assembly lines.

And you can bet it won’t be his last visit this year, unless his poll numbers start to rebound along with car sales.

You can reach David Phillips at dphillips@crain.com.

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