What a difference a year makes. Just about a year ago, the American auto industry was on the brink of collapse. Today, General Motors announced that it has repaid its $6.7 billion loan to the U.S. government in full five years ahead of schedule, and Chrysler announced that, after taking one-time charges last year associated with its restructuring, it produced an operating profit in the first quarter of 2010 for the first time since the economic crisis began. The prospect of a faster than anticipated exit from government involvement and a return of most of the taxpayers’ investment in these companies has materially improved.
This turnaround wasn’t an accident of history. It was the result of considered and politically difficult decisions made by President Obama to provide GM and Chrysler – and indeed the auto industry – a lifeline, if they could demonstrate the will to reshape their businesses and chart a path toward long-term viability without ongoing government assistance.
In a new White House report (pdf), we look back at the distance that these companies and this industry have traveled over the past year. The conclusion I found most striking: In 2008, the American auto industry lost over 400,000 jobs and analysts estimated that at least 1 million more jobs could have been lost had GM and Chrysler liquidated. That didn’t happen. Instead, over the past nine months since GM and Chrysler emerged from bankruptcy, the industry has actually added 45,000 jobs – the strongest pace of job growth in the auto industry in nearly a decade.
This industry and our economy have a long way yet to go to repair the damage from this recession and return to full health. But the distance these companies and the auto industry have traveled over the past year is a bright spot on the road to recovery.
Lawrence H. Summers is Director of the National Economic Council