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Will the auto industry bailout influence swing state voters?

October 16, 2012|By Jerry Hirsch

Could the auto industry determine the next president?

The different views of the $85-billion auto industry bailout by the contenders for the White House are sure to influence voters in a swing state such as Ohio, where making cars represents a huge chunk of the state’s economy.

The recovering industry makes for "a good story to tell," especially for the Democrats and President Obama, who pushed the bailout, said Thilo Koslowski, an automotive analyst at research firm Gartner Inc. when the latest auto sales numbers came out earlier this month.

Republican presidential nominee Mitt Romney said that he would not have supported the automotive industry bailout.

The controversial bailout was barely mentioned in the first presidential debate. Now it looks to take center stage in the closing weeks of the election.

“Just a few years ago, the auto industry wasn’t just struggling -- it was flat-lining,” Obama said in his most recent weekly address. “But we refused to throw in the towel and do nothing. We refused to let Detroit go bankrupt. We bet on American workers and American ingenuity, and three years later, that bet is paying off in a big way.”

Romney has said the bailout will have wasted “$20 billion or so that otherwise” could have been spent on teachers, policemen and investments in the economy.

The bailouts were certainly a success for General Motors Co. and Chrysler Group, Jeremy Anwyl, vice chairman of auto information company Edmunds.com, said in a video interview with The Times, but he doesn't buy into the idea of a wholesale industry collapse if the government had not stepped in. 

“We hear a lot about how the bailouts actually saved the auto industry, and there I think that it gets to be a little bit of a stretch,” he said. “The auto industry would look very different today without the bailouts. I am not sure you can make the case that it would have been better or worse off."

As a consequence of the bailouts, the federal government took almost a $3-billion loss on the money it loaned to keep Chrysler afloat and still holds more than one-fourth of General Motors' stock. So far the Treasury has recovered almost half of the $49.5 billion loaned to GM, but the automaker’s stock would have to more than double its price – to above $50 a share – for the government to break even.

But there's no doubt the auto industry has been an important factor in the critical swing state of Ohio. The state has 18 electoral college votes and is seen by both campaigns as a rich prize.

Transportation equipment manufacturing, which includes auto manufacturing, has added more than 11,000 jobs in Ohio since August 2009, a 12% gain, and now employs more than 104,000 workers, according to the Bureau of Labor Statistics.  

The auto industry accounted for 12.4% of Ohio’s employment in 2010, according the Center for Automotive Research, an Ann Arbor, Mich., automotive think tank. That is the latest year that the center has detailed employment data for car making in Ohio and several other swing states.

In Wisconsin, another swing state, the auto industry accounted for 5.6% of the state’s labor force in 2010. The percentages have likely grown as the industry is adding jobs faster than the rest of the economy.

Auto employment (4% of labor force in 2010) also is significant in North Carolina, another swing state far from the industrial Midwest.

The industry is on track to sell about 14.4 million autos this year, which would be about a 12% gain from 2011 and a 38% jump from a recession-induced low of 10.4 million vehicles in 2009.

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