Reaffirmed: 4 Pinocchios for a misleading Mitt Romney ad on Chrysler and China

at 06:00 AM ET, 01/25/2013

“Who will do more for the auto industry? Not Barack Obama. Fact checkers confirm that his attacks on Mitt Romney are false. The truth? Mitt Romney has a plan to help the auto industry. He is supported by Lee Iacocca and the Detroit News. 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.”

— voiceover of a Mitt Romney ad that ran in the final week of the 2012 campaign

The Fact Checker received a letter earlier this week from Stuart Stevens, chief strategist for the Mitt Romney campaign. He asked us to reconsider a Four-Pinocchio ruling for Romney’s ad on Chrysler and China, which aired in the campaign’s last week.

 Stevens said his note was prompted by Chrysler’s announcement that it would begin building Jeep models in China.

 “I would hope that you would take another look at this and stress test it for accuracy away from the heat of a campaign,” Stevens wrote. “I've been doing campaigns and writing about campaigns for some time and I believe that the ad and Romney's statement were completely accurate, unusually so by any standards.”

 As Stevens put it: “It seems that the crux of the argument revolves around the question of Chrysler (Fiat) moving production from the U.S. to China. That question has been answered. They are moving production to China and other countries.”

 Several other readers had written us about this issue, asking if Romney’s assertion had turned out to be right. So, given those questions, we thought it would be worthwhile to review what we said, and what actually happened.

 

The Facts

First of all, we should note that our critique of the ad covered more than the Jeep issue. We also faulted the ad for incorrectly citing a PolitiFact column to suggest all fact checkers were critical of Obama’s comments on the bailout. And we noted the Detroit News endorsement cited in the ad was highly critical of Romney’s position on the bailout — and lauded Obama for his “extraordinary” response to the auto industry crisis.

Just those facts alone are worthy of at least Two or Three Pinocchios. The Detroit News editorial, after all, actually backed up Obama’s criticism of Romney’s response to the auto industry crisis, thus undercutting a key message of the ad.

(Stevens says it is not “misleading or irrelevant” that the conservative newspaper supported Romney, despite their differences over the bailout. He also suggests that the citing of PolitiFact was akin to the snippets of movie reviews used in newspaper ads.)

 Regarding the Jeep issue, we criticized Romney for making this statement on the campaign trail: “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. I will fight for every good job in America. I’m going to fight to make sure trade is fair.”

 We noted “this was completely wrong.” Bloomberg News had reported that Fiat, the majority owner of Chrysler, was planning to once again start building Jeeps in China, after production had been on hold since 2009.  (We never did find out the source of Romney’s statement. The Bloomberg story had a confusing beginning, which was further misinterpreted by the blogosphere.)

 When Chrysler disputed Romney’s statement, saying it had “no intention of shifting production of its Jeep models out of North America to China,” a Romney spokesman said: “The larger point that the governor made is that rather than creating jobs here, the foreign owner, handpicked by President Obama, is planning to add jobs overseas.”

 In light of that history, at the time we thought that the ad was designed to piggyback off Romney’s initial misstatement and thus mislead voters in Ohio. We wrote:

 

Finally, the ad’s reference to Jeep production in China is technically correct but misleading, particularly in light of Romney’s comments on the campaign trail. The ad says that Obama “sold Chrysler to Italians who are going to build Jeeps in China,” but then adds: “Mitt Romney will fight for every American job.”

 The unspoken message is that American jobs are being sent to China, even though the ad carefully tiptoes around that claim. (The ad, in fact, includes brief text quoting Bloomberg as saying Jeep production was returning to China.)

 

So, now what has actually happened? And has that changed the facts at all?

 Back in October, after Romney’s comments were reported, Sergio Marchionne, chairman of Chrysler, sent a letter to employees saying that “Jeep production will not be moved from the United States to China.” Instead, he said, “we are working to establish a global enterprise and previously announced our intent to return Jeep production to China, the world’s largest auto market, in order to satisfy local market demand.”

 That joint venture with Guangzhou Automobile Group Co., Ltd. was announced in mid-January. Speaking to reporters, Marchionne said it was  “impossible to use an American asset base to produce and effectively distribute [in China]. There is a mid-range of cars which, because of price sensitivity and market demands, need to be produced locally. China is the first step in the globalization of Jeep.”

 As far as Marchionne is concerned, the deal he announced is no different from what was forecast in October. In an e-mail to The Fact Checker this week, Marchionne wrote: “We stand by what we said at the time of the election.”

 Gualberto Ranieri, a spokesman for Marchionne, said Jeeps will be produced in China in order to save on shipping costs and to avoid a 37 to 42 percent tariff that is levied by the Chinese on vehicles with an engine displacement of 2 to 3 liters. He said that such mid-range vehicles simply couldn’t be competitive in the Chinese market if they are imported.

 In the meantime, Ranieri said Chrysler has recently announced plans to add more than 2,350 new jobs in 2013 in the United States, including more than 1,100 new jobs for a second shift at Toledo, Ohio, where a next-generation Jeep SUV is being manufactured .

 In other words, Chrysler is expanding production both in the United States and in China. As we noted, this marks a return to Chinese production for Chrysler. The company had once built Jeeps in China, in the first U.S.-China joint venture for an automaker, but then abandoned the market when it filed for bankruptcy protection in 2009.

 Meanwhile, both Ford and General Motors produce vehicles in China. So it would seem strange for Chrysler to remain uncompetitive in China — now the world’s largest automotive market. According to the Toledo Blade, GM sold 2.08 million vehicles in China in the first three quarters of 2012, Ford sold 428,083, and Chrysler sold just 33,463. Chrysler’s cars were made in North America, while the others were made in China.

“Jeep survives on the fringes of the Chinese auto market,” according to China Car Times.

 This is how Mike Manley, president and chief executive of Jeep, put it after the mid-January announcement: “I think we have been very clear on this point that we will not be moving jobs from the U.S. to China. Without local production, the volume we will get is not available to us.”

 So this is the very thin reed upon which Romney’s defenders have hung their argument: Chrysler may not be moving U.S. jobs to China, but Jeeps now made in the United States and sold in China, such as the compact Jeep Patriot, will now be made in China.

 But by any reasonable reading, this is an expansion of existing production because currently an imported Jeep Patriot is not really economically viable in China. Meanwhile, Chrysler has recently added jobs at the Belvidere, Ill., plant where Patriots are produced, in order to service the existing North American market.

 “There is no hope of either the Grand Cherokee or the Wrangler being produced in China as they are iconic American vehicles that people buy for their ‘American-ness,’ but compact SUV’s are extremely popular with Chinese consumers,” says China Car Times. Indeed, Marchionne made the same point when he announced the deal, calling Wrangler and Grand Cherokee the “essence of Jeep being true American icons.”

Asked directly if any Jeep production is being moved to China, Marchionne answered via email: “A categorical no. Everything which may be produced in China in the future is not currently being produced in the U.S.”

Stevens looks at the same information and comes to a different conclusion.

“I appreciate you making an argument for the economic necessity of outsourcing. But that’s relevant to the situation in this case,” he said. “At the time of this ad — and today — all Jeeps sold in China are made in the U.S. Yes, with the current tariff laws in effect. Chrysler is making the decision to stop production for the Asian market in the U.S. and shift that production to China. By any reasonable standard, that is moving jobs to China.”

That may be the standard for campaign ads, but not for reality. As long as those Chrysler workers are still making Jeeps in the United States — and especially when the company is adding even more U.S. jobs, it is a real stretch to say the U.S. jobs are moving overseas. When the Romney campaign fought back against claims of outsourcing during the election, in fact, it made exactly the same argument in a slide presentation leaked to Politico.

Incidentally, it is worth remembering that Obama did not sell Chrysler to Fiat, as the Romney ad claims. Fiat and Chrysler had announced they signed an agreement for a strategic alliance just hours before Obama took the oath of office. (Stevens counters that the actual sale took place under Obama’s watch, with $6.6 billion in financing from the U.S. government. But the fact remains that the deal was set in motion before Obama became president.)

  

The Pinocchio Test

 To some extent, this may be a matter of semantics. Stevens says Chrysler is “moving production” to China. We think it is more accurate to say that Chrysler is expanding — in fact, returning — production to China. A “move” suggests that some jobs in the United States will be lost, and that does not appear to be the case. Instead, jobs are being added in both the United States and China.

 So let’s review:

 Romney first said “all production” of Jeeps would be moved to China. Not true.

 Then a Romney spokesman said Chrysler was adding jobs in China and not creating them in the United States. Not true either.

 Then the ad said: “Obama sold Chrysler to Italians who are going to build Jeeps in China. Mitt Romney will fight for every American job.” This is a smarmy way of restating the previous incorrect statements with an air of plausible deniability.

There is no evidence that any American jobs will be lost as a result of the Chrysler deal in China. In fact, greater success in China might well strengthen the overall company.

With all due respect to Stevens, the claim that Romney turned out to be right is simply not accurate. We fail to see how the argument used to defend Romney against charges of outsourcing — which this column often argued was mostly bogus — can be turned on its head in this particular situation.

Meanwhile, the ad has other serious problems — such as mischaracterizing the PolitiFact column, ignoring the context of the Detroit News endorsement and miscasting Obama’s role in the sale to Fiat. We reaffirm our earlier ruling of Four Pinocchios.

Four Pinocchios





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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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