‘The auto industry has added 113,000 jobs over the past two years.” So proclaimed President Obama in his speech Friday at the Chrysler-Fiat plant in Toledo, Ohio, his tone triumphal despite the horrific unemployment numbers that had been released that very morning.
Automotive jobs numbers are cited to end the argument against anyone who objects to the bailout/takeover of General Motors and Chrysler. The White House has largely abandoned the projection that bailout funds will be recovered fully after critics — including my Competitive Enterprise Institute colleagues Hans Bader and Sam Kazman — pointed out the shuffling of government loans to allow GM to claim deceptively that it had repaid taxpayers “in full.” Now the White House is projecting a $14 billion taxpayer loss, and so is putting the focus on the jobs added to the sector supposedly as a result of the bailouts
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But we need to look under the hood of those employment claims. And in this case, the first place to look is a June 1 Cleveland Plain Dealer story by Robert Schoenberger that seemingly contradicts the president’s figures for auto job growth. Schoenberger reported the sobering fact that even after the Bush and Obama administrations spent $62 billion to bail out Chrysler and General Motors, “the two automakers employ 16,500 fewer people than they did in 2009.”
How can these two statistics — 113,000 new jobs and 16,500 fewer auto workers — simultaneously be true? After all, Obama didn’t say “saved or created” — although there was plenty of that elsewhere in the administration’s talking points of the bailouts’ supposed success — he said “added.” And other administration officials and documents also specifically used the term “added” or “created” with the similar statistic of 115,000 jobs when touting the bailouts.
But the fine print, in Obama’s speech quoted above and the quotes listed below, is the artful use of the term “industry” or “auto industry.”
On June 1, for example, the White House issued a report claiming, “Since GM and Chrysler emerged from bankruptcy, the auto industry has created 115,000 jobs.” Treasury Secretary Tim Geithner chirped the same statistic in an op-ed in the Washington Post, bragging that since GM filed for bankruptcy, “the industry has added new shifts and 115,000 jobs.”
So how could the “auto industry” have added thousands of U.S. jobs when GM and Chrysler cut jobs? It so happens that both statistics are correct if the reader or listener understands what’s being referred to. But the Obama administration is obscuring what many would consider important information about the nature of the jobs to give undue credit to the bailouts. And that is that many of the jobs added by the “auto industry” have been created by foreign-owned automakers in nonunion states far away from the plants of the bailed out companies — not by GM or Chrysler.
A White House infographic and earlier White House “brag sheets” and reports attribute the job-growth figures to the Department of Labor’s Bureau of Labor Statistics. And indeed BLS’s industry category of “motor vehicle and parts manufacturing” does show substantial growth since the summer of 2009 — near the bottom of the recession.
Jobs in this category had been steadily falling since well before the recession, from 1.1 million in 2005 to around 950,000 by the end of 2007. BLS figures show that number of jobs reached a low point of 623,000, when the government took GM into bankruptcy, and rose to 695,000 this March, a gain of 72,000. That’s somewhat less than the administration’s figure of 113,000, and it’s not entirely clear from its charts where the start and end data points are. But I’ll cut the administration some slack on this, since even 72,000 is an impressive gain.
It's also the industries such as Jeg's, Summit, Affinia, Honeywell, JTEKT, Timken, Mahle, Competition Cams, Edlebrock, K&N, Tenneco, Federal Mogul, Bosch, NGK, NipponDenso, and other manufacturers that are the source of auto industry jobs. As cars become older, people keep their cars longer and want to let them run longer. The way they do it is replacing the parts on worn cars, and when rebuilding engines, transmissions, and differentials, they order new parts from those manufacturers. Jeg's and Summit are stores that sell those parts. The others manufacture parts for cars and the more parts from those companies, the more people keep their cars with new parts. I usually use an Affinia oil filter, Exxon Mobil oil, and a K&N air filter in my 15-year old Chevrolet.
All of Ford's gains have come by using everybody else's cars and tools. They've hardly needed to develop anything as they have used Mazda cars (2/Fiesta, 3/Focus, 5/C-Max, 6/Fusion/MKZ) and engines, Geely cars (Volvo/Taurus, Edge, Flex, Explorer, MKX), Mazda engines (Duratec), and GM transmissions (6F/6T) for car development. Zero homework. And they profit on the Chrysler seizure since they're partners with Fiat on the car Obama wants here, the Fiat Cinquecento (500), which in Eastern Europe is also sold as a Ford Ka. They are the same car.
The real gains in the auto industry are from the aftermarket parts suppliers.
No worries, the MSM will continue to peddle "the system (bailouts) worked" meme and the republican candidates will not bother to refute Obama's nonsense math and/or be too timid to respond for fear of looking like a recession-cheerleaders.
If only someone could reprogram the POTUS's teleprompter to flash RED every time this guy tries to BS an audience, we'd be a lot better off (and the thing would never stop blinking red!).
I would love to know since the Feds started their bail-out/take over of GM and Chrysler, what percentage of their sales have been to governmental bodies (state, federal and local) and what percentage to private citizens? If the Feds are like any other prudent investor, they would steer purchases in such a way as to help their investment. And, anecdotally, it seems that there's a lot more GM and Chrysler badges on law enforcement vehicles than a few years ago.
So, it would be interesting to know how the percentage of sales to gov't vs. the private sector have changed since the bail-outs started, and how many cars those companies would have sold absent the government purchases. If the numbers are what I expect, the "success" of the bailouts is even less than what everyone thinks.
Right on target Mr. Berlau. I was wondering when someone would point out the obvious dodges in his speech, including both the "auto industry jobs" ploy and the "paid back the money borrowed during my Presidency" gambit.
Here in Mississippi, Nissan has been zipping right along near Jackson, and in the northeast part of the state Toyota and its many suppliers have hired or are in the process of hiring several thousand workers for their various plants near Tupelo, scheduled to open this fall.
There is a reason that automakers as diverse as Mercedes, Volkswagen, Kia, Hyundai, Honda, BMW, those mentioned aove, and several others have chosen to locate across the south.
Affordable real estate, open arms from the state legislatures and populace, lower taxes and regulations, and especially right-to-work laws are what are providing the auto industry jobs in this country, NOT government meddling, and certainly not Michigan's lousy business climate!
The only question is, when do American manufacturers such as Ford see the opportunity and climb aboard the south-bound train? Oh, I forgot! The NLRB (see: Boeing)won't let them! GM and Chrysler, in particular, are out of luck on that score, as they are entirely in thrall to the Feds.
