Sunday, October 30, 2016
Let’s get something straight: The headline on the front page of Wednesday’s Vindicator, “GM’s 3Q earnings up 104% to $2.77B,” was made possible by the 2008-2009 rescue of the American automobile industry.
There would not have been such a headline had the administration of President Barack Obama abandoned General Motors.
Indeed, without the $50 billion invested by the federal government in mid-2009, the Mahoning Valley would probably have lost one of its most important economic assets, GM’s Lordstown assembly plant.
Auto workers who not only are earning a decent living today, but are sharing in the company’s profits, and retirees who were spared the pain of losing their benefits, should remember the rescue of the auto industry and remind family and friends of it.
Why? Because white male blue-collar workers in regions like the Mahoning Valley have been drawn to Donald Trump, the New York City billionaire businessman who took the Republican presidential primary by storm – with the help of crossover Democratic and independent voters. He secured the GOP nomination with about 14 million votes.
And while he failed to carry Ohio – it was Gov. John Kasich’s only victory in his ill-fated presidential foray – Trump did win in Mahoning and Trumbull counties.
This region’s industrial roots run deep, and while the cavernous steel mills that dotted the banks of the Mahoning River have been relegated to the history books, GM’s Lordstown plant still provides a great living and lucrative retirement benefits to thousands of residents.
Steel industry’s demise
That’s important because of what Trump has said with regard to the rescue of the auto industry. This isn’t about politics. It’s about the economic wellbeing of a region still struggling to recover from the demise of the steel industry four decades ago.
In 2015, during a pre-speech press conference in Michigan, Trump was asked if Democratic President Obama showed leadership in the bailout of GM and Chrysler Corp. Here’s what he said:
“You could have let it go, and rebuilt itself through the free enterprise system. You could have let it go bankrupt, frankly, and rebuilt itself, and a lot of people felt it should happen. Or you would have done it the way it went. I could have done it either way. Either way would have been acceptable. I think you would have wound up in the same place.”
Having filed for bankruptcy four times in his career as a real estate developer, Trumps knows the pitfalls of such action.
During one of the primary election debates, his bankruptcies were highlighted as proof of his failings as a businessman. Trump responded that he was merely taking advantage of federal laws that provide for such measures when businesses fail.
In fact, when confronted with the reality that investors in his enterprises lost money, Trump contended that they weren’t nice people.
It is this attitude that should give pause to blue-collar voters who have been drawn to his take-no- prisoners candidacy.
Had President Obama not intervened to save General Motors, the Mahoning Valley would have added the auto industry to its list of failures.
Instead, here’s what The Vindicator said in an editorial published in June 2009:
“For once, the Mahoning Valley appears to have gotten a better deal than much of the rest of the nation. After a company-wide furlough planned to address an excess of inventory, the Lordstown plant will resume making its popular line of Cobalts and Pontiac G5s. And it will then transition into producing Chevrolet’s new Cruze.
“Even Mahoning Valley GM dealers appear to have come out better than other areas, no doubt due to the large number of buyers here who identify with the corporation.
“But there is no doubt that General Motors and Washington (and Canada) and the United Auto Workers are entering uncharted waters. Even the apparent success of Chrysler’s well orchestrated bankruptcy is not a guarantee that GM’s reorganization is going to be as uneventful.
“It’s not as if there were no losers and that there could yet be glitches in the Chrysler restructuring – just ask the hundreds of dealers who maintain that they were treated unfairly, unethically or even illegally.
“General Motors Corp. will permanently close nine more plants and idle three others to trim production and labor costs. Each of those plants is in a community that will feel varying degrees of pain from those closures.
“It is not difficult for residents of the Valley to empathize. We’ve seen the effects of cutbacks over the years at General Motors facilities here, and we know what it does to the local economy, to real estate markets, to the tax base and to charitable organizations. We can imagine what the effect could have been here if labor and management had not made the decision years ago to reinvent Lordstown as a plant where changes were made and better cars are built.
“The next 60 to 90 days will be critical in demonstrating whether GM’s reorganization can be pulled off as seamlessly as the administration has envisioned. But it will be years before the new corporation is firmly defined and established and decades before we know whether the restructuring of Chrysler and GM has produced companies that can compete in the world market and at home – and stem the loss of U.S. manufacturing jobs.”
Nine years later, GM’s Chairwoman and Chief Executive Officer Mary Barra had this to say during an earnings conference call Tuesday: “We are on track to deliver a record 2016 on top of a record 2015 and a very strong 2014.”
The company reported total net income of $2.77 billion, compared with $1.35 billion in the third quarter of 2015.
And here’s a reminder for any GM Lordstown worker who may be under the illusion that having Donald Trump as president would be good for the Mahoning Valley: For every $1 billion made in North America, General Motors gives $1,000 to each hourly employee in profit-sharing.