JONATHAN COHN FEBRUARY 24, 2011
The federal government's rescue of Chrysler and General Motors was highly unpopular at the time; the majority of voters saw it as one more wasteful, unjustified bailout. And it wasn't just the average voter who hated the idea. Most experts on the right and quite a few on the left predicted it would end badly. As the argument went, the companies were in a hopeless situation, burdened by unsustainable labor costs and incapable of competing with foreign manufacturers that made better cars. If the government got involved, surely it'd mess things up.
But the news out of Detroit has been good for a while. And it just got even better. From the New York Times:
General Motors, which nearly collapsed from the weight of its debts two years ago before reorganizing in a government-sponsored bankruptcy, said Thursday that it earned $4.7 billion in 2010, the most in more than a decade.
It was the first profitable year since 2004 for G.M., which became publicly traded in November, ending a streak of losses totaling about $90 billion.
In addition, G.M. said 45,000 union workers would receive profit-sharing checks averaging $4,300, the most in the company’s history. ...
Globally, G.M.’s sales rose 12.2 percent in 2010, to 8.39 million, coming within about 30,000 vehicles of retaking the title of world’s largest automaker from Toyota. For the first time, it sold more cars and trucks in China, where its sales rose 28.8 percent from 2009, than in the United States, where sales were up 6.3 percent.
Take that, Rush!
Seriously, though, this is another important milestone for GM. Profits for the final quarter were actually lower than initial expectations. But the company attributed that, in part, to heavy investment in the development of new products, which is a sign of company health. “Their recovery has been fueled by significant cost-cutting, arrival of new products that consumers were seeking along with better management of incentives and supply,” Jesse Toprak, vice president of industry trends and insight at TrueCar.com, told the Times. “The sky is the limit for G.M. after becoming profitable at this low of a sales pace.”
Of course, the usual caveats apply: The two companies could still stumble and Chrysler, in particular, still needs to prove they can cars as good as their television commercials. And it's not as if workers in the auto industry didn't take a huge hit anyway: Many did lose their jobs and new employees are making a lot less money than old ones do.
Still, it looks increasingly like the rescue of the auto industry was an overall success, saving hundreds of thousands (if not millions) of jobs and bolstering the country's manufacturing base for years (if not decades) to come. Maybe it's time to start giving President Obama some credit for it--and recognizing that, when properly managed, the federal government can do a lot of good.