Romney Ad Seen as Distortion Prompts Protest by U.S. Automakers

Nov. 1 (Bloomberg) – Bloomberg’s Hans Nichols reports on the final jobs report before the presidential election and the latest on the campaigns. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

Republican presidential nominee Mitt Romney, attacking President Barack Obama for his auto industry policies as he battles for votes in Ohio, is drawing pointed rebuttals from General Motors Co. (GM) and Chrysler Group LLC, which are being pulled into the election against their will.

Chrysler Chief Executive Officer Sergio Marchionne told employees Oct. 30 it is “inaccurate” to suggest any plans to expand in China would diminish jobs in Ohio, something the Romney campaign implies in recent campaign commercials. GM disputes Romney ads that leave the impression its growth in China comes at the expense of U.S. jobs, said Greg Martin, a GM spokesman in Detroit.

Slideshow: The Battle for the Presidency... of Ohio?

“This ad was so misleading, that we had no choice but to offer a vigorous defense of our progress since emerging from bankruptcy,” Martin said. “We are grateful to both parties for the second chance, and we’re making the most of it.”

Then-President George W. Bush gave emergency funding to keep the predecessors of GM and Chrysler solvent in late 2008 until Obama, newly elected, could craft the final form of an $85 billion managed bankruptcy of the automakers and their finance units. Fiat SpA (F), where Marchionne is also CEO, obtained control of Chrysler in exchange for vehicles, technology and managerial expertise.

‘Predictable’ Ads

“We’re in the last days of the campaign, so these types of ads are predictable,” said Martin, who was GM’s Washington-based spokesman during the bankruptcy. “GM’s creation of jobs in the U.S. and repatriating profits back to this country should be a source of bipartisan pride. GM has gone out of its way to be neutral.”

The U.S. government still owns 32 percent of GM and the Detroit automaker has specifically banned political visits to its factories this campaign season. Chrysler hasn’t had a candidate visit its assembly plants since June 2011 when Obama was at a Toledo factory to mark Chrysler paying back its government loans.

The rescue of the auto industry has been a key selling point for Obama’s campaign, particularly in industrial states such as Michigan and Ohio.

Obama has regularly led in polls in Ohio, which no Republican has ever lost while winning the presidency. An Oct. 23-28 CBS News/New York Times/Quinnipiac University poll of likely voters in Ohio put Obama ahead of Romney by five percentage points, 50 percent to 45 percent. The president had a two-point lead in the state, 48 percent to 46 percent, in the Ohio Poll of likely voters, which is sponsored by the University of Cincinnati and was conducted Oct. 25-30.

Romney’s Op-Ed

Romney has battled the perception, fueled by a 2008 New York Times op-ed column he wrote, that he wouldn’t have rescued the auto industry. Romney has said he favored a managed bankruptcy with government loan guarantees instead of direct loans.

“Romney has been able to finesse his opposition to the bailout by arguing that he wanted to see a bankruptcy-based solution,” said David Primo, a political science professor at the University of Rochester in New York. “Whether he is right on the policy side of this, it’s a difficult political case to make, given the recovery of GM.”

Initial Claim

Romney first claimed that Jeep is decamping for China in front of a crowd of 12,000 supporters at an Oct. 25 rally in Defiance, Ohio. The singer Meat Loaf performed at the event in the Defiance High School football stadium.

“I saw a story today that one of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China,” Romney said. “I will fight for every good job in America, I’m going to fight to make sure trade is fair.”

Romney was citing an Oct. 22 Bloomberg News story about Fiat’s discussions to make Jeeps in China that never said the company would move all production to that country. Even before Romney spoke in Defiance, Chrysler defended the accuracy of the story after it was misrepresented in a blog on the Washington Examiner’s website.

“Despite clear and accurate reporting, the take has given birth to a number of stories making readers believe that Chrysler plans to shift all Jeep production to China from North America, and therefore idle assembly lines and U.S. workforce,” Gaulberto Ranieri, a senior vice president for corporate communications, wrote in an Oct. 25 blog post on Chrysler’s website. “It is a leap that would be difficult even for professional circus acrobats.”

‘Unnecessary Fantasies’

The company has no intention of abandoning its North America production, Ranieri wrote. “A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments.”

Romney’s spokeswoman, Andrea Saul, told the Associated Press yesterday that Romney had relied on what she called an inaccurate story from Bloomberg News, and that Bloomberg had updated its story to indicate that Chrysler wasn’t moving its operations to China.

The story’s first version didn’t say that Chrysler intended to move its Jeep production from the U.S. to China. Bloomberg News did update the story within hours of its first posting to stress that point -- three days before Romney spoke.

Asked to explain what was erroneous with the Bloomberg story, Saul asked to see it then didn’t respond to requests for comment. Bloomberg News spokeswoman Meghan Womack said last night, “Bloomberg’s story was not inaccurate. We stand by our reporting.”

Joint Ventures

China taxes imported vehicles and is proposing additional tariffs on U.S.-made vehicles. To avoid China’s tariffs on imported vehicles, automakers form joint ventures with Chinese companies to make cars and trucks in the country.

Fiat, based in Turin, Italy, and now the majority owner of Chrysler, is in discussions with its Chinese partner, Guangzhou Automobile Group Co. (2238), to make Jeeps in China. At the same time, Chrysler is adding production crews at Toledo and Detroit plants, an expansion that the company said means 2,200 new jobs.

Signs point to a lucrative Jeep market for Chrysler in China. In May, Chinese dealers were able to charge the equivalent of $189,750 for a high performance version of a U.S.- built Jeep Grand Cherokee that retails in its home market here for $54,470.

“Our brand awareness and consideration is running way ahead of where our actual volumes are,” Mike Manley, chief operating officer of Fiat and Chrysler in Asia, said in an interview in Beijing in April. “That’s why I can’t say strongly or often enough just what an opportunity China offers for us.”

Romney’s TV ad with the theme that auto jobs were going overseas debuted last weekend and has appeared more than a dozen times each in the Toledo and Youngstown markets in Ohio, according to Kantar Media’s CMAG, a New York-based ad tracker.

Crushed Cars

The 30-second spot shows cars being crushed as a narrator says Obama “sold Chrysler to Italians who are going to build Jeeps in China. Mitt Romney will fight for every American job.”

The Washington Post and PolitiFact.com were among media outlets that said the commercial was misleading.

“They’re trying to scare the living devil out of a group of people who have been hurt so badly over the last previous four years before we came to office,” Vice President Joe Biden told voters during a campaign stop yesterday in Florida, according to the AP.

Biden labeled the Romney commercials “one of the most flagrantly dishonest ads I can ever remember in my political career,” the news service reported.

Repaid Loans

Chrysler repaid its loans in May 2011 and the following month, the Treasury Department sold its last remaining equity interest in the company. The government has said Chrysler returned more than $11.2 billion of the $12.5 billion committed to the company and that it is unlikely to fully recover the remaining $1.3 billion.

GM, which employs about 14,000 fewer workers now than it did before slipping into bankruptcy, has brought back 18,600 laid off workers and invested $7.9 billion in the U.S., including adding production of a new version of a small sedan in Michigan that had previously been produced in Korea, Martin said.

The auto industry accounts for 4 percent of Ohio’s jobs, and since 2009, the start of Obama’s bailout initiatives, auto-related jobs have increased by 6.1 percent, or 11,100 jobs in Ohio, according to a Bloomberg Government analysis.

That has helped keep Ohio’s unemployment rate lower than the national average, the analysis concluded. In September, the jobless rate in the Buckeye State was 7 percent compared with the U.S. rate of 7.8 percent that month.

“It’s a symbol for many working and middle class Americans that President Obama is trying, even if the economy is still struggling,” said Julian Zelizer, a professor of history and public affairs at Princeton University in New Jersey. “For many who work in this industry or in businesses that depend on this industry, helping to save the auto industry is evidence that the administration has had an impact on helping to bring improvement to average Americans lives.”

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net; Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net.

To contact the editor responsible for this story: Clark Hoyt at choyt2@bloomberg.net;

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.