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Obama: GM plant ‘might not exist’ if he listened to critics

July 31, 2010

Obama: GM plant ‘might not exist’ if he listened to critics

Detroit News Washington Bureau

Detroit — President Barack Obama said today the auto industry was seeing "real progress" as he continued to dwell on his decision to save General Motors Co. and Chrysler Group LLC.

The president taped his weekly address at GM’s Detroit-Hamtramck Assembly plant on Friday, where he made one of two stops at U.S. auto plants. He also visited Chrysler’s Jefferson North plant.

He said the plant might not be in operation if he had listened to opponents.

"Of course, if some folks had their way, none of this would be happening at all. This plant might not exist. There were leaders of the ‘just say no’ crowd in Washington who argued that standing by the auto industry would guarantee failure," Obama said. "They said we should just walk away and let these jobs go. Today, the men and women in this plant are proving these cynics wrong."

He noted that at the GM plant "a hopeful story is unfolding in a place that’s been one of the hardest hit in America."

Obama reiterated his message that the $85.7 billion wasn’t his first choice. The government owns a 61 percent stake in GM as part of its $50 billion bailout and a 10 percent stake in Chrysler as part of its $12 billion bailout.

He also said several factors were to blame. "Years of papering over tough problems and failing to adapt to changing times — combined with a vicious economic crisis — brought an industry that’s been the symbol of our manufacturing might for a century to the brink of collapse," he said.

He said he didn’t have "many good options."

"On one hand, we could have continued the practice of handing out billions of taxpayer dollars to the auto industry with no real strings attached," he said. "On the other hand, we could have walked away and allowed two major auto companies to go out of business — which could have wiped out 1 million American jobs."

Officials in the Bush administration — which loaned the auto industry $25 billion — have strongly objected to the characterization that they loaned the money without strings. In fact, they required the companies to submit detailed restructuring plans by Feb. 17 — just six weeks after agreeing to bail them out.

But the Obama administration argues that delay essentially allowed them to burn through billions of dollars. Obama didn’t force the automakers into bankruptcy until May and June — after the automakers had billions more.

"We said to the auto companies — if you’re willing to make the hard decisions necessary to adapt and compete in the 21st century, we’ll make a one-time investment in your future," Obama said.

GM is set to hold a public offering by the end of the year and file its paperwork clearing the way next month. GM is set to report a second quarter profit around Aug. 10 — and Chrysler is set to report an operating profit for the second quarter on Aug. 9.

He said the auto industry has added 55,000 jobs over the last year — though he didn’t mention that most of those are at dealers or other automakers. In fact, the White House predicted the Big Three would add up to 11,000 jobs by the end of this year.

"Throughout Michigan, an advanced battery industry is taking root that will power clean electric cars — an industry that produced only 2 percent of the world’s advanced batteries last year, but will now be able to produce as much as 40 percent in a little over five years. That’s real progress," Obama said. "There’s no doubt that we have a long way to go and a lot of work to do before folks here and across the country can feel whole again. But what’s important is that we’re finally beginning to see some of the tough decisions we made pay off."

Obama also called on Congress to do more to help small businesses and approve a $30 billion measure that could also help small auto suppliers — including thousands in Michigan — diversify into other sectors.

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