Nothing about the president’s call was popular. It may have been more politically expedient to let Chrysler fail. But the president knew that if Chrysler collapsed, tens of thousands of jobs would have been shed in the near term — a body blow to an economy already on the ropes.
In return for government support, we demanded tough concessions from Chrysler and from GM — substantially tougher than had been proposed before. They were forced to go through bankruptcy, clean their balance sheets and adopt stringent plans to move toward profitability. We gave the companies enough space to make sound business decisions and push ahead as they would in a private restructuring. That meant sacrifices across the board — from managers, unions, stockholders, creditors and dealers. These investments offered Chrysler and GM a second chance but also helped the workers, communities and suppliers depending on them.
Today, six years earlier than planned, Chrysler has repaid its outstanding government loans. While it has a long way to go, Chrysler has made enormous strides. Tough decisions, stemming from the restructuring, have helped Chrysler post five consecutive quarters of operating profit. It has announced more than $3 billion in investments in plants and technology since emerging from bankruptcy and is poised to hire back workers.
The story has been similar for GM — and the industry as a whole. The domestic automakers are getting stronger. For the first time since 2004, each has achieved positive quarterly net income.
While it remains unacceptably high, Detroit’s unemployment has fallen nearly one-third over the past two years. The car companies are leading a comeback in American manufacturing. And while we will not get back all of our investments in the industry, we will recover much more than most predicted, and far sooner.
What happens next for Chrysler and GM is up to their executives, managers and workers — just as with any other company. We cannot guarantee their success, and at some point they may stumble. But we’ve given them a better shot. The choice to stop the American automobile industry from unraveling was the right one.
The writer is secretary of the Treasury.