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Obama Says Administration Couldn't Afford to `Walk Away' From Auto Jobs
President Barack Obama defended government aid to the U.S. auto industry, telling workers at a Ford Motor Co. plant in Chicago that they are a vital part of the economy.
“I refuse to walk away from this industry and American jobs,” Obama said after touring a factory where Dearborn, Michigan-based Ford, the only Big 3 U.S. automaker that didn’t take bailout money, will begin assembling the new 2011 Explorer later this year. “I have put my money on the American worker.”
The assistance to General Motors Co. and Chrysler Group LLC helped prevent the loss of hundreds of thousands of jobs and “severe consequences” for the U.S. economy, Obama said.
He announced that Ford would get a $250 million loan guarantee from the Export-Import Bank. It will finance $3.1 billion of exports to Canada and Mexico of more than 200,000 U.S.-made vehicles, including Explorers, an administration statement said.
Ford is redesigning the Explorer, once the best-selling SUV in the U.S., on a chassis used for the Taurus sedan. Explorer sales in the U.S. slid 33 percent to 52,190 last year as more consumers bought smaller vehicles with higher fuel economy. Ford sold more than 400,000 of the SUVs in 2000.
Adding Jobs
The company is spending about $400 million to add 1,200 jobs to build the Explorer sport-utility vehicle. The Chicago plant is already hiring new workers at an entry-level wage of about $14 an hour, under a two-tier wage system that starts at about half the amount paid to hourly production workers hired previously.
In an interview with CNBC after the factory tour, Obama said, “Ford should be congratulated” for making decisions that allowed it to keep going without government help.
Still, if GM and Chrysler had been liquidated it would have been a “crisis for the entire industry, including Ford, because all those suppliers would have been lost and the brand of the American auto industry would have really been greatly diminished,” Obama told CNBC.
Building vehicles, including trucks, with better fuel efficiency will be crucial for the industry and a combination of regulations and incentives will help toward that goal, he said.
Obama also said he is “confident” the U.S. won’t slid back into a recession, even as job growth is sluggish. He told CNBC greater investment in the nation’s infrastructure could help cut unemployment and help the nation’s long-term growth.
Defending Policies
The president has stepped up his defense of government aid to automakers as polls show voters remain skeptical of the bailout. A Bloomberg National Poll conducted July 9-12 shows the federal assistance package to automobile companies is becoming less popular: 48 percent say they became less supportive of it in recent months, while 17 percent say they have become more supportive.
Last week in Michigan, Obama visited plants operated by GM and Chrysler, the two companies that received most of the $85 billion in government aid from Obama and the administration of his predecessor, President George W. Bush.
Without the government money, Obama has said, the two companies could have gone under, dragging down the entire auto industry, including suppliers and Ford, which supported aid for its competitors.
“The industry isn’t just on the way back, it’s on its way to being number one again,” Obama told the workers in Chicago. “Each and every one of you is proving the naysayers wrong.”
About $67 billion in loans and equity investments are still outstanding, according to administration figures. Obama advisers have said they expect to recoup about $60 billion of the taxpayer money given to the industry, including loan repayments and the proceeds from GM share sales to the public.
Ford fell 13 cents today to $12.98. The shares have risen almost 30 percent so far this year.
To contact the reporters on this story: Nicholas Johnston in Chicago at njohnston3@bloomberg.net
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