On the heels of Vice President Joe Biden’s Saturday speech praising the auto industry comeback, Treasury Secretary Tim Geithner has written an Op-Ed piece in The Washington Post on the successful rescue plan. The industry, he said, “is mounting one of the most improbable turnarounds in recent history.”
Geithner reminds his readers of the economic situation in 2009:
“The challenges extended beyond GM and Chrysler. The restructuring of these automakers could affect companies throughout the supply chain that employed nearly 400,000 American workers. Ford and other automakers depended on those suppliers, increasing the risk of damage if they liquidated or moved overseas.
“With the credit markets frozen and no major sources of private financing available, government inaction meant devastating liquidations. Nonetheless, even a federally supported bankruptcy could aggravate the situation by causing car buyers to lose confidence. And the automakers realistically could have taken a long time to emerge from bankruptcy. In the balance hung thousands of auto dealerships nationwide and small businesses in communities with concentrations of auto workers.
“It was the uniquely deep linkages between the auto companies and suppliers, dealers and communities that led some experts to estimate that at least 1 million jobs could have been lost if GM and Chrysler went under.”
Geithner concludes with the good news:
“Today, six years earlier than planned, Chrysler has repaid its outstanding government loans. While it has a long way to go, Chrysler has made enormous strides. Tough decisions, stemming from the restructuring, have helped Chrysler post five consecutive quarters of operating profit. It has announced more than $3 billion in investments in plants and technology since emerging from bankruptcy and is poised to hire back workers.
The story has been similar for GM — and the industry as a whole. The domestic automakers are getting stronger. For the first time since 2004, each has achieved positive quarterly net income.”
