Why Michigan is split on the auto bailout

 
Amy Farmer at a Flint, Michigan assembly line "It is a very good feeling to be part of a team that is really on the upswing," Amy Farmer says

Flint, Michigan - The engine is delivered by robotic arm but it still takes two burly men to wrestle it into place in the chassis of a heavy duty pick up truck.

It is an iconic image.

The work horse of the American economy, a vehicle which is both an essential tool and the pride and joy of the blue collar workers who drive it, being put together by workers on an assembly line.

But is it a picture of Obama's success, or his failure?

'A very good feeling'

I'm inside the final assembly plant of General Motors (GM) in Flint, where after years of problems they feel they can celebrate a success story. GM as a whole has celebrated record-breaking profits of $7.6bn (£4.8bn) in 2011.

Here, they put on a third shift, meaning jobs for 800 more workers. They now make more than 700 trucks a day and sales are up.

The plant manager Amy Farmer has had to close factories in the past and she says it is a joy to work here.

"If you ever have to go through closing a facility it is devastating to the community and the families and the lives that you touch," she says. "So it is a very good feeling to be part of a team that is really on the upswing. "

She takes it as a sign the American economy is picking up.

"It bodes well for the American economy. A vehicle is a discretionary purchase. We have seen a nice growth spurt in the truck market which means things are better for construction, for building.

Start Quote

Lilisa Wright at an assembly line in Flint, Michigan

It would have been a tragedy for our country to lose General Motors”

End Quote Lilisa Wright GM employee

"That is what has allowed us to put on a third shift. When I see heavy duty trucks moving at this rate, it is a good sign for the economy."

But GM's recovery is based on its share of a massive $80bn bailout of the car industry approved by President Barack Obama.

It has become a hot issue in this primary election, and it will be even more so in the presidential election in the autumn.

All the Republican candidates opposed the bailout, although Rick Santorum has produced an advert attacking Mitt Romney for doing so. His argument is that Romney was inconsistent because he backed the bailout of Wall Street banks.

Assembly floor appreciation

On the assembly line they say everyone is entitled to their views, but it is clear they don't think much of the Republicans' stance.

No one I speak to has any doubt that the bailout was needed.

Lilisa Wright has worked at GM for 17 years.

"I feel better when I punch out everyday," she told me. "I feel I have a future. The bailout was very important. It was the only thing to do at that particular time.

"Without the bailout we may not have had a job. It would have been a tragedy for our country to lose General Motors."

So how does she feel when she hears candidates saying it was the wrong thing to do?

"I am not happy with that," Ms Wright says. "It doesn't show any respect for General Motors and the people who have put so much work into General Motors, and it doesn't show a commitment to our work force."

Unsurprisingly, there's no dissent from this view from the factory floor.

But the idea that Michigan is united in its support for the bailouts is simply not the case.

Pick and choose

I meet a group of Tea Party supporters near Brighton, outside of Detroit. They aren't agreed on a candidate: some are for Romney, some Santorum and some have yet to make up their mind.

Tea party meeting in Brighton, Michigan Many at the Brighton tea party meeting thought bankruptcy would have made GM stronger

But they are united in telling me that the bailouts were misguided.

"I have a lot of friends from a lot of companies who didn't get bailed out," Bill Gavette says. "A lot of suppliers. The companies the auto companies owed money to, got 17 cents on the dollar and they went under, they went bankrupt.

"I have a problem with the government picking and choosing. I have a small business, a lot of us here have small businesses, if we fail we fail. The government choosing who succeeds and who fails is so against our constitution and what we were founded on."

Susan Kotrys agrees: "I owned a small business. I owned record stores in the Detroit area but they went under because the industry changed, nobody bailed me out. I didn't think of asking the government for millions. I started working and doing something else."

Their opposition is both that it is unfair some people don't get the help, but also that it stops the system from working.

Larry Recca calls bailouts "a real bad idea".

"That's not how free markets work," Mr Recca says. "If you have a lousy company they should go out of business. If they can't deal with the unions and make a profit they should go out of business."

Most of the people here see Obama and the management appeasing the unions. They think a structured bankruptcy would have let GM survive.

"My husband is in the auto industry but I thought they should go through the natural process," Deb O'Hagan says. "They may not have been called GM but they would have come out stronger."

In the primary elections, bailouts have been peripheral, because all the candidates agree that such moves were wrong.

But in November's presidential election this debate will take centre stage, hinging on whether Obama saved the American economy from a terrible state, or put it deeper into debt by defying the logic of the free market.

 
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  • rate this
    -1

    Comment number 21.

    12.Phffft
    Bean counters just count beans.

    "When Rolls Royce aero space nearly went under in the 70`s it was some what begrudgingly bailed out.To day it has an order book of £62 billion.'


    When Airbus380s are being grounded due to fires, etc, in its RR turbines one wonders, again, whether its governments which should pick up winners.

    Or quell investigations re BAE corrupted deals

  • rate this
    +2

    Comment number 20.

    The main difference between the Republicans IMO is while Romney, Gingrich, and Santorum would take America back to the imagined good old days of the 19th century when Robber barons ruled the US, Ostrich Ron Paul would take it back to the imagined 18th century when the US was isolated from the world.Neither are possible, neither vision a reflection of actual US history.

  • rate this
    -1

    Comment number 19.

    Wherever it may be on the map, Brighton should not be "outside of Detroit" on a BBC website.

  • rate this
    +5

    Comment number 18.

    How nice to have the luxury of discussing whether or not it was a good idea to bail out GM instead of trying to figure out how to replace millions of US jobs that would have been lost if it hadn't been as all the Republicans would have had it.Republicans have nothing but contempt for working people in the US.They are so far out of touch with mainstream America all they can appeal to is emotion

  • rate this
    +4

    Comment number 17.

    It makes sense sometimes for Government to intervene at times like this, if you have seen the effect large industries failing can do to entire areas for decades then you will have little doubt. Conversely when things are going well it is a good idea to encourage small businesses, and discourage large monolithic industries dominating an city/region so the government isn't put in that position.

  • rate this
    +2

    Comment number 16.

    14 Ever hear of an emergency? You don't solicit bids or hold debates when the house is already on fire, you call the fire department to put it out immediately while that's still possible.

    11 All investments are gambles, some lose.I don't hear any screaming about taxes going to develop expensive military weapons systems that eventually failed.

  • rate this
    +5

    Comment number 15.

    The automobile industry has been bailed out by the government many times. Each time, the industry has become complacent.
    You will notice huge numbers of Japanese, German, and Korean cars on the road. Many of these are assembled in the US. They did not need or get a bailout. Why should the poor performers survive?

  • rate this
    -6

    Comment number 14.

    ref #1 and 13
    You two ignored the people who did not benefit by the bailout. the ones that got 13 cents on a dollar.

    That is the point right Romney makes a controlled bankrupcy would have cost less and benfited more.

    Why should i care about the workers on the line when they don't care about how the rest of us got screwed.

  • rate this
    +2

    Comment number 13.

    Why do some Michiganas oppose the bailout, bite the hand that fed them? Because they're stupid.They hate Obama more than they like making money.The bailout was good for the US auto industry, good for Michigan, good for America, bad news for foreign car makers.Suppliers who got 17C on the $ are lucky.Had GN gone under they'd have gotten less, maybe nothing.Then Reps would be screaming even louder

  • rate this
    +8

    Comment number 12.

    Bean counters just count beans.
    When Rolls Royce aero space nearly went under in the 70`s it was some what begrudgingly bailed out.To day it has an order book of £62 billion.
    For GM to have gone it would be so short sighted bordering on criminal.
    Like people,industry at time`s need help,new thinking, new direction & new products = jobs & hope.

  • rate this
    -5

    Comment number 11.

    "The government choosing who succeeds and who fails is so against our constitution and what we were founded on."

    Solyndra case is the best recent example of what happens when the federal government picks up winners rather than leaving it to the free market to determine who wins and who loses.

  • rate this
    -4

    Comment number 10.

    GM female manager (quoted by MM):
    We have seen a nice growth spurt in the truck market which means things are better for construction, for building.

    "That is what has allowed us to put on a third shift. When I see heavy duty trucks moving at this rate, it is a good sign for the economy."


    At least one poster would claim here GM is a German company.
    And euro is the next global currency.

  • rate this
    -1

    Comment number 9.

    MM: "The engine is delivered by robotic arm but it still takes two burly men to wrestle it into place"

    Not for long, since as I've mentioned many a time pretty soon even (non-creative) BSs in IT will have a hard time to find a well-paying job.

    [no, it's not only the U.S. problem; it's a global problem]

  • Comment number 8.

    All this user's posts have been removed.Why?

  • rate this
    +2

    Comment number 7.

    So as the tumble weed blows through what remains standing of abandoned American industry not owned by the Indians and Chinese the Tea Party will say we kept faith with the religion of 'free markets' - we did it our way!

  • rate this
    0

    Comment number 6.

    I'm no tea partier, but using federal funds for bailing out this massive incompetant failed industry was just plain wrong and unfair. If these folks weren't working here, they'd surely find work at a competently run manufacturer making the same kind of trucks.

  • rate this
    +3

    Comment number 5.

    To bailout or not to bailout? If the GOP/Tea Party-ers had their way, the US would be allowed to go bankrupt on the back of the free-market and 150 million people, or so, would simply get another job. I think its a question of scale. In protecting the bigger and more prestigious brands, the US (and other economies) provided a ground for growth, rather than chuck out the baby with the bath water.

  • rate this
    +7

    Comment number 4.

    To d_m,

    That's not really addressing the substance of the point though, is it? I think it has real merit. Upon what basis, and which circumstances, should the government intervene in the economy? It's a difficult question, and one that has divided the world for years.

  • rate this
    +12

    Comment number 3.

    "The government choosing who succeeds and who fails is so against our constitution and what we were founded on."

    Perhaps he ought to read it before claiming to know what it says. And if he has read it, then he needs to hire a tutor to help him understand it. Then again, maybe he just doesn't want to be confused with facts. He certainly hasn't let them interfere with his understanding of history.

  • rate this
    +17

    Comment number 2.

    "I have a problem with the government picking and choosing. I have a small business...if we fail we fail."

    What a joke. Small business get all kinds of tax breaks to help them succeed, and low-cost loans form the Small Business Administration. And that's just two things I can think of without looking. If tax policy and loans aren't picking and choosing I don't know what is, and neither does he.

 

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