Sergio Marchionne confirmed the wisdom of the Obama White House leading the rescue of American automakers almost three years ago. The chief executive of Chrysler, and its parent Fiat of Italy, announced last week a $500 million investment in the Toledo Assembly Complex. That includes an expansion of the body shop and other improvements, plus the addition of 1,100 jobs, all driven by plans to build the next generation of the Jeep sport utility vehicle.
It isn’t a stretch to suggest that none of this would have happened without the bailout. The renewed vigor of Chrysler and General Motors invites easy analysis about how the companies could have emerged from bankruptcy on their own. Not likely. Missing was the cash required to make the transition, its absence pointing to certain liquidation, the fallout bringing severe damage to the parts industry, and thus to other automakers.
The conversation about spurring the Ohio economy often, and rightly, focuses on enhancing clusters, the interaction of related aspects of an industry, the whole larger than the sum of the parts. The auto industry is a cluster, and the bailout didn’t just translate into the needed money. The feds pushed and provided a platform for managers and workers to make tough decisions about their future. The new workers at Chrysler will be paid entry-level wages, roughly $15 per hour, or a bit more than half what most workers earn now.
Marchionne gushed about the Jeep, which may return to the name Cherokee. He called the Jeep “truly one of the world’s most legendary brands.” He’s convinced that the brand hasn’t been marketed effectively around the globe. He sees the opening, and offers a lesson, too. A Chrysler/Fiat struggling in the weak European market must look for sales overseas. In a word, exports are an essential component to sales, growth and livelihoods.
Other lines of companies and industries neglect the lesson at their peril.
No surprise that John Kasich stood at Marchionne’s side, just as the governor joined Jaime Vigil, the chief executive of Republic Steel, as the company unveiled its own welcome news last week, an investment of $85 million in Lorain, adding 450 jobs. Ohio Democrats grumbled about the governor taking credit for the result of an auto bailout that he hardly embraced. They have a point. Too many Republicans retreated from the risk. They made the wrong choice.
That doesn’t mean Kasich should have skipped the event. This editorial page has plenty of quarrels with his policy-making, economic and otherwise. At the same time, the governor is hustling, prodding, daring to try new things. He belonged there. What would have helped his cause is admitting the obvious: The bailout has worked.