“I put my money on the American worker."
The Export-Import Bank of the United States will guarantee a loan to finance $3.1 billion of Ford Motor Company “export sales” to Canadian and Mexican markets. The loan from the Federal agency will underwrite the sale of about 200,000 Ford vehicles.
The announcement came as the President of the United States visited a third Detroit Three auto plant in less than a week, defending his increasingly unpopular economic polices during a mid-term election year.
This time, President Obama was at a Ford plant in Chicago that will make the new Explorer. Ford of course made billions from what is arguably the most popular sport utility vehicle of all time, but it stayed with a heavy, relatively crude body-on-frame design for a decade after it became clear that more efficient, comfortable unit-body “crossovers” were the configuration of the future.
Unlike GM and Chrysler last week, Ford made no attempt to publicize the event, leaving all the promotion to the White House in what I take to be Ford’s latest attempt to distance itself from the wildly unpopular taxpayer subsidies that went to those two bankrupt companies last year.
Ford has now received a $5.9 billion Department of Energy credit line for the development of fuel-efficient vehicles, as part of the $787 billion government stimulus plan promulgated by the newly established Obama Administration in 2009. Part of the money went to refurbish the Explorer plant.
The Administration – under heavy criticism because of a slumping economy and high unemployment rates despite massive Federal government spending – claimed that the new export loan will help meet a previously announced goal of doubling U.S. exports over five years. (See Ford CEO to Serve on President’s Export Council)
In defense of its policies the Administration says that in the year before GM and Chrysler emerged from bankruptcy, the auto industry shed 334,000 jobs. In the year since, auto industry employment has increased by 55,000 jobs. This is the fastest year-over-year growth in auto employment since 1999, according to the Bureau of Labor statistics.
At the Ford plant this afternoon the President said: “I put my money on the American worker. I’d place my bets on the American worker any day of the week. And because of your efforts and the sacrifice that have been made across this industry over the past year, this industry is growing stronger. It’s creating new jobs. It’s manufacturing the fuel-efficient cars and trucks that will carry America towards an energy-independent future. Each and every one of you is proving the naysayers wrong.”
Left unaddressed by the stump speech was why Ford was unable to obtain its own export funding from the commercial markets after U.S. taxpayers spent almost one trillion borrowed dollars bailing out and/or subsidizing Wall Street firms, banks and other financial entities with the stated purpose by the Obama Administration that this would free up credit and resume private lending, thereby restoring the economy.
Since Obama took office, the economy has eliminated between two and three million jobs – on top of the massive losses that occurred during the final years of the Bush Administration. Unemployment remains at levels not seen since the Great Depression, while the U.S. budget deficit soars to the highest level since WW2.
The Administration is now expecting tax receipts to total 14% of GDP in FY 2010, below the 50-year average of approximately 18%. As a result the FY 2011 deficit was revised up to $1.416 trillion – and those are official numbers produced during an election year.
Critics say some – if not all – of today’s announcement was political slight of hand since there are already agreements in place that dictate the number of vehicles the Detroit Three can import into Canada. Under the Automotive Products Trade Agreement or Auto Pact signed by President Johnson in 1965, a ratio dictates that for every five new Detroit vehicles sold in Canada, three new ones would be made there.
The exported Fords will be made in plants located in Illinois, Michigan, Missouri, Kentucky and Ohio, all key states in the upcoming election.
Ford is in the process of laying off almost 400 workers at its Windsor, Ontario engine plant.
Ford Motor already exports about 250,000 vehicles annually – the equivalent of one final assembly plant, not including pieces from associated engine, transmission and other parts component plants. Vehicles exported from North America include the E-Series, Escape, Escape Hybrid, Expedition, Explorer, Focus, F-150, F-Series Super Duty, Mariner, MKS, Mustang, Mountaineer, Navigator, Ranger and Taurus models.