The auto bailouts of 2008-09 may seem like a lifetime ago but remain a present-day issue in the Midwest, especially during this election season. One of the few things Presidents Bush and Obama agreed on (at least conceptually), the government's support for the industry is a major flashpoint between President Obama and GOP Presidential nominee Mitt Romney.
The Obama administration views the recovery of the U.S. auto industry as one of its signature accomplishments, and hopes its support will help secure victories in key states like Michigan, Indiana and, the ultimately swing state, Ohio. Obama's critics, however, say the bailouts unfairly benefited organized labor.
Romney, meanwhile, has taken flack for opposing the bailouts in 2008 and 2009 but then seeking to "take a lot of credit" for the industry's recovery as recently as last month. (See: Mitt Romney Deserves No Credit for Auto Revival: Fmr. Auto Czar)
With the benefit of hindsight, Ford CEO Alan Mulally says the bailouts were the right thing for the industry and ultimately benefited Ford (F) too, even though his firm didn't take government assistance.
"If GM and Chrysler would've gone into free-fall they could've taken the entire supply base into free-fall also, and taken the U.S. from a recession into a depression," Mulally says in the accompanying video, taped Friday at Ford's world headquarters in Dearborn, MI. "That's why we testified on behalf of our competitors even though we clearly did not need precious taxpayer money."
Referring to his testimony before the Senate Banking Committee on Nov. 4, 2008, "today looking back I think we'd absolutely make the same decision," Mulally says.
To be sure, Ford was "disadvantaged" by having to pay back its debts while GM and Chrysler emerged from government-mandated bankruptcy with clean balance sheets, he says. But the boost to the macro economy was well worth the price -- as were the intangible benefits Ford earned by not taking government dollars.
"Everybody watching the hearings could see GM and Chrysler were bankrupt," Mulally recalls. "But they also saw Ford was not and they started checking out Ford."
Two weeks after the hearings, 74% of Americans said they would consider Ford for their next car purchase, he recalls. "Who would've thought that would've turned out to be such a positive thing for Ford?"
Fast forward to today, and Mulally has some advice for U.S. policymakers, regardless of political party: "What's going to be good for the United States of America is this continuing focus on economic development and U.S. competitiveness," he says. "That's the most important thing for the leadership of the country to focus on, clearly."
Moving toward a balanced budget, addressing the trade deficit, reforming tax policy and getting a comprehensive energy policy are the biggest policy items on his agenda list, as we'll explore in more detail in a forthcoming segment.