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With Ohio’s 18 electoral votes very much in play, the Mitt Romney campaign aims to blunt one of Barack Obama’s key advantages in that state -- his rescue of the auto industry. The carmakers account for about one out of eight jobs there, and many Ohio assembly line workers are backing Obama for a second term.
The Romney campaign has produced a controversial ad that argues Romney would be better for the auto industry than Obama. In the ad, an announcer says, "Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China. Mitt Romney will fight for every American job." Images of cars being crushed accompany those words.
The not-so-subtle message is that American workers have suffered from the Chrysler deal. In this fact check, we examine whether the sale of Chrysler came at the cost of American jobs.
How Fiat got Chrysler
By early 2008, it was clear that GM and Chrysler were teetering. Both firms had huge debts and high costs. The recession had slowed car sales to a trickle. Chrysler’s owner, Cerberus Capital Management, was hunting for a buyer and had been talking to Italian carmaker Fiat. In late 2008, President George W. Bush approved billion dollar loans to the companies to keep them afloat.
On Jan. 20, 2009, the day Obama took the oath of office, Fiat announced it was interested in buying Chrysler. Obama created an auto task force and in March, the task force told Chrysler to cut a deal with Fiat or be cut off from further government loans. In early April, Chrysler filed for bankruptcy and at the same time, announced an alliance with Fiat.
By the end of April, the terms of the deal were complete and by June, it was finalized. Cerberus Capital had lost its stake, and Fiat held 20 percent of the new Chrysler and had full operational control.
Steve Rattner, chair of the president’s auto task force, said Fiat was essential to Chrysler’s survival.
"If we had been unable to strike this arrangement with Fiat, I believe that we would have allowed Chrysler to liquidate. So it was a great outcome for all concerned," Rattner said.
Aaron Bragman, a senior analyst with IHS Automotive, a financial research group, said the government couldn’t sell Chrysler because it never owned it. In fact, the auto industry and Chrysler were in such bad shape, this wasn’t a sale at all in the conventional sense.
"Fiat paid nothing for Chrysler," Bragman said, but "they poured MASSIVE resources into the company, such as design help, executive staff and personnel, joint development, engine technology, all sorts of non-cash things that helped Chrysler recover considerably."
Chrysler is now profitable. Laid-off union workers have been rehired, and the company is adding new personnel.
Fiat, Jeeps, and China
When Fiat got Chrysler, it got Jeep. Right before the ad came out, Romney told a crowd in Defiance, Ohio, that plans were afoot to shift the Jeep jobs in Ohio to China.
"I saw a story today that one of the great manufacturers in this state Jeep — now owned by the Italians — is thinking of moving all production to China," Romney said.
Romney had been working off an article from Bloomberg News about Fiat’s discussions to start making Jeeps again in China. The old Chrysler had assembly plants in China, but they had been idle since 2009.
Romney’s words drew an immediate and firm denial from Chrysler headquarters. "Jeep has no intention of shifting production of its Jeep models out of North America to China," the statement said. "A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments."
Bragman, the auto analyst, said Romney’s notion that expansion in China comes at a cost to American workers runs counter to the facts. Chrysler’s Toledo plant is running at full capacity, and its Detroit plant is at three shifts. Chrysler is building cars in the United States for sale here.
The production of cars in China is a sign of Chrysler's growing strength in overseas markets. It would like to build Jeeps in China to sell in China. It is not outsourcing American auto jobs.
"I'm astonished that more people aren't thrilled by the fact that an American company on the brink of literal oblivion has come back strong enough to now once again be making and selling its products in the hottest auto market in the world," Bragman said. "It is a phenomenal success story, quite frankly, and one that has sadly been bizarrely twisted out of shape for political expediency."
The Romney campaign ad says Obama "sold Chrysler to Italians who are going to build Jeeps in China" at the cost of American jobs. The ad leaves the clear impression that Jeeps built in China come at the expense of American workers.
The ad miscasts the government’s role in Fiat’s acquisition of Chrysler, and it misrepresents the outcome. Chrysler’s owners had been trying to sell to Italy-based Fiat before Obama took office. The ad ignores the return of American jobs to Chrysler Jeep plants in the United States, and it presents the manufacture of Jeeps in China as a threat, rather than an opportunity to sell cars made in China to Chinese consumers. It strings together facts in a way that presents an wholly inaccurate picture.
We rate the statement Pants on Fire!
Mitt Romney for President, Who will do more, October 28, 2012
Detroit News, Romney picks up incorrect story about Jeep production moving to China, October 26, 2012
Executive Office of the President, Obama administration auto restructuring initiative: Chrysler-Fiat alliance, April 30, 2009
Chrysler, Jeep in China, October 25,2012
Bloomberg News, Fiat Says Jeep Output May Return to China as Demand Rises, October 22, 2012
Reuters, Timeline: Chrysler bankruptcy, June 10, 2012
Email interview with Steve Rattner, former head of Obama administration auto task force, October 29, 2012
Email interview with Aaron Bragman, analyst, IHS Automotive, October 29, 2012
Email interview with Robert Terra, Romney for President campaign, October 29, 2012
Email interview with Kara Carscaden, Obama for America campaign, October 29, 2012
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