President Obama is launching an all-out attack on Romney in key battleground state Ohio, where Chrysler-owned Jeep brand vehicles are manufactured. The center of the controversy is whether or not Chrysler plans on expanding or perhaps even moving some or most of its manufacturing capacity to China.
They are also squabbling over the issue of letting the auto industry go into bankruptcy. Romney favored allowing for bankruptcy proceedings first in hopes that the companies could pull themselves together without taxpayer cash, and then government intervention if necessary. Obama chose to go with federal intervention first in order to prevent such a bad outcome, but the auto industry ended up in bankruptcy proceedings anyway. With 20/20 hindsight we can see this argument is merely semantics since both plans would have ended up in bankruptcy.
In previous ads the Obama campaign slams the Romney Jeep ad as being an outright lie. In addition, Chrysler Group Chief Executive Sergio Marchionne felt led to say, “Jeep assembly lines will remain in operation in the United States and will constitute the backbone of the brand.”
The Romney camp is not backing down, continuing to run ads throughout Ohio and Michigan.
In response, according to USAToday.com Obama had this to say this morning:
“You got folks who work at a Jeep plant who have been calling their employers worried, asking, ‘Is it true that our jobs are being shipped to China?’ The reason they are making these calls is because Gov. Romney ran an ad that says so. Except it’s not true. Everybody knows it’s not true. The car companies themselves told Gov. Romney to knock it off.”
So where did this all start? It began on October 25th in Defiance, Ohio, the site of a General Motors plant, where Romney claimed he saw an unidentified news story that said Jeep was thinking of moving “all” production to China. According to DigitalJournal.com:
“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. I will fight for every good job in America. I’m going to fight to make sure trade is fair, and if it’s fair America will win.”
This “unidentified story” was likely an October 22nd interview with Chrysler’s 58.5 percent majority owner Fiat, who are Italian. Bloomberg.com is quoted as saying, “Fiat SpA, majority owner of Chrysler Group LLC, plans to return Jeep output to China and may eventually make all of its models in that country, according to the head of both automakers’ operations in the region.”
“‘The volume opportunity for us is very significant,’ Manley, who is also president of the Jeep brand, said in an interview at Chrysler’s Auburn Hills, Michigan, headquarters. ‘We’re reviewing the opportunities within existing capacity” as well as “should we be localizing the entire Jeep portfolio or some of the Jeep portfolio.'”
There are two ways to interpret the situation. One is that Romney misinterpreted the article, and Mr. Manley of Fiat was only intending to say that Jeep is setting up additional manufacturing in China primarily for expansion into a rapidly growing emerging market. Any Jeeps currently sold in China are not manufactured there and must be exported, potentially from American manufacturing plants. The localization of production would be planned due to the high expense of manufacturing all Chrysler vehicles in America and then shipping them to overseas markets. Thus potential American job are being outsourced as the Chinese market grows, but the current American jobs are being kept for the American localized market. Despite being corrected on this misinterpretation, the Romney campaign chooses to go ahead with their assertions. This means that it is right for Obama to slam the Jeep ad.
The other scenario is that Mr. Manley of Fiat was openly discussing their plans for shifting production to China over the long term, thinking that only business people would read the interview and that it would not end up in the middle of a political crossfire. When called out on the carpet Chrysler and Fiat decided to backpedal, not wanting to seem “bad” to the average American. This means that Romney is right to call them out. After all, Obama is also responsible since GM outsources almost two thirds of its jobs overseas and the U.S government sold its shares in Chrysler at an estimated loss of $1.3 billion in taxpayer money according to StrokesOfCandor.com, with 98,000 of those shares going to Fiat.