Obama touts Chrysler rebound during Indiana visit
Tuesday, November 23, 2010; 8:36 PM
KOKOMO, IND. - A week after General Motors made a showy return to Wall Street, President Obama highlighted the revival of the other bailed-out auto company during a trip to an Indiana transmission factory.
The campaign-style visit to a Chrysler plant here, a city battered by plant closures, was meant to underscore the message that the stimulus, the auto-company bailouts and other federal measures had prevented even worse economic devastation.
The unemployment rate in Kokomo has dropped from 20 percent last year to 12 percent, thanks in part to $400 million in stimulus money and the rescue of General Motors and Chrysler, administration officials said.
"No, we aren't out of the woods yet," Obama said at the plant. "It took a lot of years to get us into this mess. It will take longer than anybody would like to get us out. But I want everybody to be absolutely clear, we are moving in the right direction."
The appearance highlighted the administration's efforts to revive Chrysler, which has four plants in the city, employing nearly 4,500. The smaller of the two bailed-out automakers, Chrysler faced far graver challenges than did General Motors during the downturn.
Although both companies had been staggered by financial burdens, Chrysler also suffered from a nearly empty pipeline of products. Many analysts and even some within the administration argued, in fact, that the company should not be saved.
"They had a product cupboard that was essentially bare," said Michael Robinet, an auto analyst with IHS Global Insight in Northville, Mich. "In some respects, it's almost a miracle that they're still here."
The United States invested $12.5 billion in the rescue of Chrysler, and arranged for Italian automaker Fiat to take over its management. Chrysler has repaid $1.9 billion in loans and still owes $7.1 billion. Administration officials say that most of the investment will be returned. The United States holds a 9.8 percent stake in the company.
Auto industry analysts said they have been surprised at the speed with which the company has met some of its goals. Its market share plummeted during the downturn, but has since grown from 5.5 percent in the fourth quarter of 2009 to 7.7 perdent in the third quarter of 2010. It now turns an operating profit, although the interest on the government loans depletes that.
"Like a lot of people, I was skeptical after the bailout," said David Whiston, auto stock analyst at Morningstar. "They've still got a long way to go, but so far they're proving the skeptics wrong."
The real test, analysts said, may come next year when the company introduces new models, including the fuel-efficient subcompact Fiat 500 in the United States. In January, the car will go on sale in about 130 Chrysler Group dealerships across the country, starting at $15,500. Among its principal rivals is the BMW Mini Cooper.
"Chrysler's performance cannot be evaluated fully until later in 2011 when we have a full influx of Fiat vehicles in the market," said Jesse Toprak, vice president of industry trends for TrueCar.com.
Obama and Vice President Biden, sporting safety goggles, toured the Chrysler plant, surveying a conveyor belt lined with transmissions and chatting with plant workers. Chrysler announced its intent to invest $843 million in its factories here.
During his speech, Obama trumpeted the success of the big three automakers, saying that they had returned to profitability, and that Americans are now choosing at a higher rate to buy American-made cars over foreign brands. He said that factories that had gone dark are coming back to life.
"Don't bet against Americans, don't bet against the auto industry, don't bet against American ingenuity, don't bet against the American worker," he said as plant workers applauded loudly. "Today this plant is coming back."
Whoriskey reported from Washington.