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A Project of The Annenberg Public Policy Center

Romney Distorts Facts on Jeep, Auto Bailout

Mitt Romney falsely claimed in a recent speech that “Jeep, now owned by the Italians, is thinking of moving all production to China.” Chrysler says it is considering adding Jeep production sites in China to address rising demand in that market. But the company says it is “a leap that would be difficult even for professional circus acrobats” to suggest that it would close U.S. facilities and move all operations to China.

Despite Chrysler’s admonition, Romney is now making a similar claim in a new TV ad.

The ad says, “Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China. Mitt Romney will fight for every American job.” It’s misleading to suggest that Chrysler’s decision to expand into China will cost U.S. jobs — especially after the company has said it would have no impact on its U.S. operations.

It’s also misleading to say “Obama took GM and Chrysler into bankruptcy” without mentioning that Romney, too, advocated a bankruptcy plan. In fact, Romney wrote a 2008 op-ed that said: “A managed bankruptcy may be the only path to the fundamental restructuring the industry needs.”

The ad also says that Romney “has a plan to help the auto industry,” but the Republican nominee has no specific plan for the industry. He is referring to his general tax and economic plans that he believes will help all industries, including the auto industry. And he touts an endorsement from the Detroit News, but the self-described conservative paper said it endorsed Romney “despite his wrong-headedness on the auto bailout.”

Building Jeeps in China?

The ad — titled “Who Will Do More?” — first aired in Toledo on Oct. 27, without giving the usual notice to reporters covering the campaign, as Politico wrote. Ohio is a key swing state that may determine the outcome of the election. It is also one of three states where Chrysler builds Jeeps.

In asking the question “Who will do more for the auto industry?” the ad makes two deceptive claims in a single sentence: “Obama took GM and Chrysler into bankruptcy, and sold Chrysler to Italians who are going to build Jeeps in China.”

Let’s take the claim about China first, since it has emerged as a new talking point for Romney. He made a similar — and outright false — claim during an Oct. 25 campaign speech in Ohio. In Defiance, Ohio, Romney said: “One of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China.”

That’s simply not true, and Chrysler has said so.

Here are the facts: Chrysler is considering returning to China because demand for Jeep vehicles is rising in Asia, as reported in an Oct. 22 article by Bloomberg News. The company had produced Jeeps in China for that market before 2009, when the Italian automaker Fiat became the majority owner of Chrysler as part of the U.S. government’s auto bailout.

But this doesn’t mean that Chrysler will be moving any of its U.S. operations to China. In fact, Bloomberg reported: “Chrysler currently builds all Jeep SUV models at plants in Michigan, Illinois and Ohio. Manley referred to adding Jeep production sites rather than shifting output from North America to China.”

In a blog item on its corporate website, Chrysler said that “despite clear and accurate reporting,” some misinterpreted the article to mean that Chrysler would end production of Jeeps in the U.S. and move operations to China. “It is a leap that would be difficult even for professional circus acrobats,” Chrysler spokesman Gualberto Ranieri wrote in his blog.

Ranieri, Oct. 25: Let’s set the record straight: Jeep has no intention of shifting production of its Jeep models out of North America to China. It’s simply reviewing the opportunities to return Jeep output to China for the world’s largest auto market. U.S. Jeep assembly lines will continue to stay in operation. A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments.

So, Romney was flat wrong when he said in his speech that Chrysler “is thinking of moving all production to China,” and his ad is misleading when it says that Chrysler is “going to build Jeeps in China.”

GM, Chrysler & Bankruptcy

The ad also misleads Ohio voters when it says “Obama took GM and Chrysler into bankruptcy.” That’s true, but not the full story. The facts are that Romney in 2008 advocated that U.S. automakers go through a “managed bankruptcy” without the kind of extensive government assistance that Obama ultimately provided.

In a Nov. 18, 2008, New York Times op-ed headlined “Let Detroit Go Bankrupt,” Romney argued against a bailout. He wrote: “A managed bankruptcy may be the only path to the fundamental restructuring the industry needs.” As for government assistance, he said the “federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.”

During the second presidential debate, Romney falsely claimed that Obama implemented “precisely” what he recommended. But there was a significant difference. Obama provided direct federal aid — federal loans and equity investments — that the Detroit News called “extraordinary” and essential to the industry’s successful turnaround.

In its endorsement of Romney — which the TV ad touts — the Detroit News wrote that it endorsed Romney “despite his wrong-headedness on the auto bailout.”

Detroit News, Oct. 25: Don’t assume that it was a no-brainer for a conservative newspaper to endorse a conservative presidential candidate. We recognize and are grateful for the extraordinary contribution President Obama made to Michigan in leading the rescue of General Motors and Chrysler. Had either of those companies been allowed to go under, Michigan’s economic maladies would have become fatal.

The president stepped up with the support the two automakers needed to keep themselves and their suppliers in business. We have said in past editorials that while Romney rightly advocated for structured bankruptcies in his infamous “Let Detroit Go Bankrupt” New York Times op-ed, he was wrong in suggesting the automakers could have found operating capital in the private markets. In that article, Romney suggested government-backed loans to keep the companies afloat post bankruptcy. But what GM and Chrysler needed were bridge loans to get them through the process, and the private credit markets were unwilling to provide them. Obama put a rescue team to work and they were true to the task.

In the end, the self-described “conservative newspaper” endorsed Romney because it prefers his economic plans — which brings us to our final point.

The Romney ad also says that he “has a plan to help the auto industry,” but he has no specific plan for the industry. Romney is referring broadly to his economic plans, which he believes will help all industries — including the auto industry.

In a Feb. 24, 2012, speech in Detroit, Romney outlined his economic plan. He called for cutting spending, “like subsidies to Amtrak and funding for Planned Parenthood,” reducing the size of the federal government payroll by 10 percent, and returning federal programs to the states, beginning with Medicaid.

“This is a plan to get America back on track. And to get Michigan on track we also need to see a strong and vibrant auto industry,” he said.

It’s a matter of opinion whether Romney’s plan is better for the nation in general and the auto industry in specific. We leave that up to voters to decide on Election Day.

Update, Oct. 31: The Obama campaign and Chrysler responded to Romney’s false claims about Jeep.

Sergio Marchionne, the chairman and CEO of the Chrysler Group LLC, released a statement on Oct. 30 that said: “Chrysler Group’s production plans for the Jeep brand have become the focus of public debate. I feel obliged to unambiguously restate our position: Jeep production will not be moved from the United States to China.” In particular, Marchionne singled out the car company’s plans to spend $500 million to retool and expand its Jeep plant in Toledo, Ohio – the state where Romney has been making his bogus claims about Jeep. Marchionne said the company’s investment is needed to build the next generation Jeep and will result in about 1,100 new jobs at the Toledo plant by 2013.

The Obama campaign released a TV ad that calls Romney’s claims about Jeep “dishonest.” It goes on to say: “The truth? Jeep is adding jobs in Ohio,” displaying an Aug. 10, 2011 headline from the Toledo Blade that says, “Jeep expansion to add 1,100 jobs.”

Meanwhile, the Romney campaign went up with a radio commercial in Ohio that repeated the false suggestion that Jeep’s expansion into China could come at the expense of jobs in Ohio. The radio ad opens by saying, “Barack Obama says he saved the auto industry. But for who? Ohio or China?” It later says, “Chrysler is planning to build cars in, you guessed it, China.”

The Romney radio ad also claims — correctly — that GM has cut 15,000 U.S. jobs under Obama. It’s true that 13,000 U.S. hourly employees and 5,000 salaried workers accepted a buyout offer in 2009 to either retire early or voluntarily leave the company, according to GM’s 2009 annual filing with the Securities and Exchange Commission. That same SEC filing (page 21) showed that GM had 91,000 U.S. hourly and salaried employees in 2008. GM’s 2011 annual report (page 15) showed that it had 77,000 such employees – a decline of 14,000. Its U.S. union employees dropped from 52,000 in 2008 to 48,000 as of Dec. 31, 2011 – a decline of 4,000. But those numbers don’t tell the whole story. GM eliminated old brands and shuttered dealerships when it went through bankruptcy in 2009 — resulting in fewer jobs. The alternative was to go out of business entirely. In fact, GM did exactly what Romney proposed in his 2008 New York Times op-ed, when he wrote that a “managed bankruptcy” was needed to “permit the companies to shed excess labor.”

The radio ad goes on to falsely claim that the reduction in GM’s U.S. payroll “means 15,000 more jobs for China.” That’s not true. As we wrote once before, GM is expanding operations in China to meet increased demand there for its vehicles. The increase in its China operations is unrelated to its U.S. operations.

Like Chrysler, GM responded to Romney’s misleading claims. GM spokesman Greg Martin told the Detroit Free Press: “We’ve clearly entered some parallel universe during these last few days.” Martin went on to say, “No amount of campaign politics at its cynical worst will diminish our record of creating jobs in the U.S. and repatriating profits back to this country.”

— Eugene Kiely