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US car industry brought back to life -

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US car industry brought back to life

Broadcast: 22/12/2010

Reporter: Michael Brissenden

A restructured workforce and the launch of an American-built electric car have revived hope in the
industrial heartland of the us economy.


HEATHER EWART, PRESENTER: The US auto industry was one of the more visible victims of the global
financial crisis.

In 2008, General Motors and Chrysler were only saved from bankruptcy by a controversial
multi-billion dollar bailout from Washington, and even then analysts were expressing doubt that the
car industry would ever fully recover.

But the recent public offering of new GM stock has sold higher than all expectations.

A restructured workforce and the launch of an American built electric car have also revived hope in
the industrial heartland of the US economy.

ABC North America correspondent Michael Brissenden reports.

MICHAEL BRISSENDEN, REPORTER: The American auto industry is the story of American enterprise, one
of the foundations of this country's industrial might, but in 2008 it was one of the more visible
examples of the economic collapse.

SCOTT BURGESS, AUTO CRITIC, DETROIT NEWS: Those blue collar jobs are really important. We can't
rely on just service industry jobs. You need something that has a decent pay that those people can
contribute back into the economy. You can't do that if you're just working at Starbucks or

MIKE GREEN, AUTO WORKER: Last year, you might as well say the world was upside-down. If you told me
that we were going to be where we're at today a year ago, I'd have thought you were probably crazy,
but it's really turned itself around some and we're really happy for that.

MICHAEL BRISSENDEN: Today, the car industry has become one of the few bright spots in what is
proving to be a remarkably stubborn recession. For the President, it's also a rare, tangible
example of a policy success.

BARACK OBAMA, US PRESIDENT: There were those who said it was going to be too difficult or that it
was bad politics or it was throwing good money after bad. You remember the voices arguing for us to
do nothing, they were pretty loud. Suggesting we should just step back and watch an entire sector
of our economy fall apart.

But we knew that the auto industry was not built and this country was not built by doing the easy

So here's the lesson don't bet against America. Don't bet against the American auto industry, don't
bet against American ingenuity, don't bet against the American worker, don't bet against us!

AUTO WORKER SUPERVISOR: How was thanksgiving, alright?

AUTO WORKER: Haven't had a bad one yet.


MICHAEL BRISSENDEN: In this instance, the American auto worker was saved by the American taxpayer
with a politically contentious $85 billion industry bailout.

MIKE GREEN: My grandfather was the first one to hire in and then my father and I followed in their
footsteps and he's followed in mine I guess, and we're pretty proud of that, so. It's a decent
living and that's what we do.

MICHAEL BRISSENDEN: Mike Green's family has produced four generations of auto workers, and there
are plenty of other families like his, but he for one thinks the death of the car industry would
have been a blow to the whole nation.

MIKE GREEN: If GM would have went down, and I don't think the part people don't understand is that
manufacturing job supports within 7 to 10 people within the community.

If GM would have went down more likely it'd definitely took Chrysler and probably four with them,
but just the General Motors part of itself would have been a million jobs, with the manufacturing
jobs and the jobs that are attached to that.

Now can you imagine if a million more jobs would have been lost on top of it where we would be?

MICHAEL BRISSENDEN: For all that, there were plenty of critics of the Federal bailout, but you
won't find many of them in Detroit. Scott Burgess is the auto writer for the 'Detroit News'.

Did it surprise you the car industry turned around so fast?

SCOTT BURGESS: Well, I lived here, it wasn't as fast as you thought (laughs). I mean the downfall
for a lot of people, they just saw the headlines of the bankruptcies. I saw two or three years
leading up to those bankruptcies where every month sales would be down 10 percent over the...
compared to last year.

MICHAEL BRISSENDEN: The truth is the American car industry had been on the slide for decades. The
perception was the big three just weren't making good cars. They weren't just big, clumsy fuel
guzzlers they were also technologically inferior to the Japanese, the Koreans and the Europeans,
but the near-death experience has changed that dynamic.

The mood at the launch of the Vault, the most sophisticated almost totally electric car designed
and built in the US, was confident.

JENNIFER GRANHOLM, GOVERNOR OF MICHIGAN: I feel like that Chumba Wumba song, we all do. We get
knocked down, but we get back up again, you ain't never gonna keep me down, you know what I'm

That's for all of you, it's for General Motors, it's for the UAW, it's for the State of Michigan,
it's for the city of Detroit. It's great for America.

MICHAEL BRISSENDEN: It's a confidence reflected in the higher than expected price of $33 paid for
stock in the recent initial public offering of new GM shares.

A year ago auditors reported they had substantial doubt about GM's viability and GM shares then
were worth just over a dollar. The Federal bailout was controversial, but few now doubt it did save
the US auto industry.

For decades the car industry has been a reflection of both the good and the bad in the US economy.
The question now is, does this symbolise a wider recovery?

PAUL ZIMMERMAN, CAR DEALER: We've got five on our list right now which means you know, as soon as
those vehicles come in, those first five will be you know the first five in line, so to speak.

MICHAEL BRISSENDEN: At small dealership like this, advance orders have been strong, still few
industry observers believe the Vault will be anything more than a niche part of the market at this

Dealers like Paul Zimmerman say the improved stock line is good, but the one thing that is really
turning around business is access to credit.

PAUL ZIMMERMAN: So more folks that were determined to buy you know maybe 12 months ago, 15 months
ago, 20 months ago are now back in trying to get into a lease vehicle.

And then those folks that have been through some bumps in the road, whether it be a mortgage or
that type of thing where it's dinged their credit score a little bit, are more easily able to
access financing now, which is the biggest thing when it comes to buying a car.

MICHAEL BRISSENDEN: And industry analysts say the car market is still a good indicator of the
overall state of the economy.

SCOTT BURGESS: It speaks well to the recovery. What we're seeing is that the car market has gotten
as bad as it's going to get.

Nobody is forecasting instantaneous returns to the way it was five years ago. That was a time when
people were just gobbling up SUVs, but the stability in the market is much more important than the
actual year over year growth.

Most experts predict that there's going to be just very moderate and very modest growth and that's
something that, I think, is better for the economy and better for the outlook.

MICHAEL BRISSENDEN: For moderate and modest read 'slow'. GM has announced its hiring again 1,000
new engineers, but on the same day the official nationwide unemployment rate went up again 0.2
percent to 9.8 percent.

There's still a long road to recovery yet.

HEATHER EWART: Michael Brissenden with that report.