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American Auto Industry A Highlight in Obama State-of-the-Union

“The American auto industry is back.”

by on Jan.25, 2012

Pres. Obama giving the state-of-the-union address.

At a time when the American government appears all but paralyzed by partisanship, where concerns remain about the U.S. economy and an upcoming election raises questions about the fundamental direction the nation must take, President Barack Obama came out swinging as he began his state-of-the-union address on Tuesday night.

And the president put the spotlight on two key success stories as a highlight of both what the nation can achieve – and what he and his administration have accomplished.  Members of both parties quickly jumped to their feet as he praised the men and women of the American military.  But there were cheers yet again when he turned to manufacturing and, in particular, to revival of the auto industry.

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“We bet on American workers.  We bet on American ingenuity.  And tonight, the American auto industry is back,” the president proclaimed.

It was an in-your-face reference to the controversial, $85 billion bailout of General Motors and Chrysler, a move that still has many conservatives referring to the two manufacturers as “Government Motors,” nearly three years after they entered bankruptcy, and despite their collective recovery.

But the president wanted to make sure the government-backed turnaround wasn’t ignored and he benefitted by fortuitous timing: just last week, General Motors appeared to regain its one-time perch as the world’s largest automaker.  With 2011 sales of more than 9 million vehicles, it soared past Toyota, which plunged from first to fourth — in large part because of production losses caused by last year’s Japanese earthquake and tsunami – as well as Volkswagen, which has set its sights on being number one by 2018.

(For more on the 2011 sales race, Click Here.)

The president also singled out the only domestic automaker that didn’t seek a government hand-out, pointing to Ford Motor Co. as another sign of success in an industry that, only a few years ago, many of his critics – indeed, some of his supporters – were forecasting might simply disappear.

But, the successful revival of the American auto industry isn’t only a matter of bringing back the Big Three.  Over the last quarter century the nation has seen the vast expansion of a “transplant” production base, manufacturers like Toyota, BMW and Hyundai setting up dozens of assembly and component plants that now produce millions of cars, trucks and crossovers annually.

And that production base is rapidly expanding because the “level playing field” the President referred to means that with a weak U.S. dollar it becomes increasingly cost-effective – indeed, essential, for manufacturers to shift assembly operations to American soil.  This month alone, Daimler and BMW have announced major expansion plans for their car and heavy truck plants.

And while Toyota went unmentioned in the state-of-the-union address, it figured into another element of the president’s speech.  Pres. Obama highlighted the free trade agreements signed during his term, including one with South Korea, which he said would result in “American cars driving on the streets of Seoul.”

Ironically, many of those may be wearing a Toyota badge.  With the fast-rising yen making it more and more difficult to produce cars on the Japanese islands, the maker recently announced plans to shift more production of its Camry sedan and Sienna minivans to the U.S. – specifically for export to the Korean market.

It’s no surprise the President wanted to spend so much time focusing on the auto industry – indeed, used it to frame much of the rest of his address.  He is facing a tough challenge responding to critics from all sides of the political spectrum who contend the administration hasn’t done enough to rebuild U.S. jobs.  Pres. Obama countered with a series of statistics that showed the trendline is on the rise.  And the auto industry, in particular, has seen the creation of 160,000 new jobs since he took office, he pointed out.

For those in the Motor City, the speech was readily welcomed.  In the decades since Detroit hit its post-War peak and began a half-century of decline it has seldom been cited as a success story, yet Obama called out Detroit’s nascent turnaround as a sign of what can be done in other once-great manufacturing centers, including Cleveland and Pittsburgh.

His speech – and the platform he laid out – put a sharp emphasis on the American middle class, a vast but endangered group that had counted on U.S. manufacturing for its rapid growth during the 20th Century.  And it is the return of the well-paying factory job that Obama called for.

The state-of-the-union address took some inevitable shots at the rich who pay less taxes than their secretaries – billionaire Warren Buffett’s own administrative assistant sitting in the gallery and flashing up on the television screen.

But the “fairness” the president called for also extended to the manufacturing world.  He called out tax loopholes that rewarded companies for shipping jobs abroad, and demanded key changes that would encourage and reward manufacturers for bringing jobs back to the U.S. – whatever the industry.

The president also called for efforts to retrain American workers, especially for the high-tech jobs of the future – for which there is already a shortage of qualified applicants despite the stubbornly high unemployment rate.  During the state-of-the-union, President Obama called out two workers sitting in the gallery as examples of what this could mean, one from North Carolina, the other from Holland, Michigan having landed a job in a plant producing wind energy equipment.

Clearly, in an election year, there was extensive posturing in Pres. Obama’s speech.  The call for millionaires to pay at least 30% in taxes was a direct shot at Republican candidate Mitt Romney who – also with fortuitous timing for the commander-in-chief – just belatedly released his own 2010 taxes showing he’d paid less than 14%.

Even the President acknowledged he’s not likely to get all he sought on Tuesday night, not in this era of intense partisanship, with an election fast-approaching.  Indeed, one GOP Congressman was quoted referring to the proposals as “fairy dust.”

But while the speech, overall, might have just added to the name-calling and finger-pointing between Democrats and Republicans, there was some rare unity on a couple of key issues: notably the success and valor of the American military, but also on the role that American manufacturing, the auto industry in particular, must play in the nation’s recovery.

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