The 2012 Republican presidential candidates have a rich target when it comes to the disastrous economic policies of President Obama. Even the recent upturn in the economy is extremely slow by historic standards. We haven’t had such a pitiful recovery from a severe economic downturn since the 1930s.
But there is one target conservatives should avoid and that is going after General Motors and Chrysler in this election cycle.
Conservatives were right to criticize the White House’s handling of the GM/Chrysler bailout, a decision that began with the Bush administration in the fall of 2008. A short-term bailout could have been justified to cushion the rapidly declining economy, especially since the government helped contribute to Detroit’s woes with its cheap dollar policy that killed sales of profitable SUVs and a series of very damaging regulations. But Washington should have let GM and Chrysler reorganize under existing bankruptcy laws. Instead the White House orchestrated a reorganization that reeked of payoff politics to its union supporters.
Thankfully the two companies are now surviving Washington’s unwarranted meddling.
GM is making a real comeback but not due to anything that the president’s economic team has done. Conservatives should take a moment to really get under the hood of GM and learn why this company’s year-long successes have nothing to do with the Obama Administration and everything to do with a free market based business model that is leading the company back to permanent profitability.
GM is now taking in billions in profits and has done so quarter after quarter. Why? Because the company started building better cars, trucks and SUVs.
Noted automotive analyst Rick Kranz recently wrote, “Once scorned for unimaginative vehicles, General Motors’ Buick brand is on a roll.”
Another auto industry and market analyst, Kay Fitzpatrick, said this of GM:
“Its Chevrolet Sonic and Cruze models showed consistent strong sales growth increasing 54 percent from the same period last year. GM seems to be gaining some momentum as consumers come back into the dealerships. Its financial commitment to more innovation and updated manufacturing facilities could lead to improve brand perception and market share.”
GM has turned in seven consecutive quarters of profitability. The company’s U.S. sales increased 14% in 2011 vs. 11% for the industry and all four of GM’s brands posted double digit gains in retail sales.
GM is a fundamentally different and restructured corporation with improved credit ratings, fewer legacy costs and a much stronger balance sheet -- $4.2 billion in automotive debt at the close of Q3 2011, versus $45.8 billion for the old GM.
The Chevrolet Camaro continues to outsell Ford’s Mustang, and the Chevy Malibu and Equinox SUV are also selling well. International sales for GM continue to grow. GM’s sales in China rose in November at the fastest pace in 10 months, led by popular light trucks and Buick sedans.
In addition to a renewed commitment to quality, GM’s labor contracts have all been renegotiated placing GM in line with what Toyota and other companies are paying for a quality labor workforce. What was once a $28-per-hour starting salary for a union autoworker is now $14-per-hour. The new labor contract also includes a lengthy “no-strike” provision which gives GM far more flexibility to hire temporary workers so that its plants can remain open.
Chrysler has also been moving forward. Its sales have increased dramatically.
So while conservatives were right to shellac the Obama administration for needlessly and expensively intervening in the auto industry in early 2009, they should also recognize that GM and Chrysler are far stronger today thanks to their own efforts and not those of the government.
Let’s remind voters of the real reasons this president should be shown the door after one term – binge spending, trashing the U.S. dollar, ObamaCare and a tsunami of crushing, anti-business regulations. General Motors isn’t the reason.
Steve Forbes is chairman and chief executive officer of Forbes Inc. and editor-in-chief of Forbes magazine.
Steve Forbes is Chairman and Editor-in-Chief of Forbes Media. His latest book, with co-author Elizabeth Ames, is "Money: How the Destruction of the Dollar Threatens the Global Economy - and What We Can Do About It (McGraw-Hill May 13, 2014).