By Tom Blumer | Special to Ohio Watchdog
Last week, it looked as if Republican presidential challenger Mitt Romney and his campaign were overly aggressive in their criticism of President Barack Obama and his administration’s 2009 bailout of Chrysler.
Now it looks like a case of “right story, wrong country.”
Bloomberg reported on Oct. 22 that Fiat, Chrysler’s Italy-based, post-bailout owner, ”plans to return Jeep output to China and may eventually make all of its models in that country.”
The report made it clear that the company’s discussion with its Chinese partner, Guangzhou Automobile Group Co., was about manufacturing Jeeps and other vehicles in China for the Chinese market.
While such an alliance has the potential to reduce production at its U.S. manufacturing plants, the company seems to be on track to continue to grow its domestic volume to make up for potential reductions in exports to China.
U.S. retail sales for the first nine months of 2012 are up by 24 percent over the first nine months of last year, and the company appears to be better positioned than General Motors and Ford, its two other U.S.-based rivals, to continue expanding domestically at a double-digit pace.
Romney and his campaign overreacted to the Bloomberg report. Romney said Jeep “is thinking of moving all production to China,” which is not what Bloomberg reported.
A Romney TV ad told viewers that Obama “sold Chrysler to Italians who are going to build Jeeps in China,” an assertion which in my opinion is on the edge of being ethnically pejorative. Fiat is a publicly held company based in Italy, which is emphatically not the same thing.
I believe many viewers have incorrectly interpreted this information as an assertion that U.S. production will either be sharply reduced or disappear.
Though moves by companies to start Chinese manufacturing operations in the auto and other industries have led to imports of products formerly made in the U.S. while domestic plants have been shuttered, the Obama campaign and self-appointed fact-checkers had some basis for claiming that Team Romney went too far — as far as China is concerned.
Just as the issue of Chrysler and outsourcing appeared to be headed for the rear-view mirror, a Monday report from Bloomberg dropped the following bombshell:
To counter the severe slump in European sales, (Fiat CEO Sergio) Marchionne is considering building Chrysler models in Italy, including Jeeps, for export to North America. The Italian government is evaluating tax rebates on export goods to help Fiat.
On Tuesday, the Detroit Free Press reported that “Marchionne wants to use some of Fiat’s Italian plants to export Chrysler products to the U.S., according to various European press reports.”
A move by Fiat to manufacture cars and light trucks in Italy for the North American market would appear to make business sense, as the company has a great deal of unused capacity there. Such a move would clearly be a direct threat to U.S. jobs.
This threat can be traced back to the Obama administration’s decision to arrange a shotgun wedding between Chrysler and Fiat through the bankruptcy courts. Fiat’s dowry was a disproportionate ownership share in the company, a result achieved by robbing certain secured creditors of their common law lien-based interests in bankruptcy.
Fiat and outsourcing is once again a legitimate electoral issue.
Obama and his campaign need to explain why the administration failed to include contractual provisions, which would have prevented Fiat’s proposed move.
Romney and his campaign can point to Obama’s failure to protect Chrysler workers, including the thousands who toil at its Toledo, Ohio, Jeep plant.