Chrysler, Obama take the truth about plant closings for a spin

[Sam Spade]

I always knew why I liked Kucinich, even though he's a little strange - honesty...
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Chrysler, Obama take the truth about plant closings for a spin

Sunday, May 10, 2009
Stephen Koff
Plain Dealer Bureau Chief
Washington --

Late in the morning on Thursday, April 30, three officials serving under President Barack Obama got on a telephone conference call with members of Congress and Capitol Hill staffers.

Steve LaTourette, a former Lake County prosecutor and current Republican lawmaker, was on the other end of that call. So, too, on another phone, was Dennis Kucinich, the Cleveland Democratic congressman who has built a career as a champion of the little guy. Staffers who help inform Sherrod Brown, a Yale graduate and Democratic U.S. senator, were on it. So were staffers for Sen. George Voinovich, a multi-decade Republican policy-maker and attorney.

These are smart people, and they listen carefully. They all took notes on what was said by Larry Summers, Ed Montgomery and Ron Bloom, three of the advisers Obama had tapped to rescue the American auto industry. And what these and other Congress members heard in this private telephone conference was consistent with the message that President Obama publicly made a few minutes later in the White House grand foyer: Chrysler, the storied American automaker, was entering a short, government-assisted Chapter 11 bankruptcy and would merge with Fiat, the Italian car maker.

But this "will not disrupt the lives of the people who work at Chrysler or the communities that depend on it," Obama said.

That seemed straightforward enough, and it mirrored the statements the Congress members had just heard from the top task force officials -- that there would be no plant closings and no layoffs, with only short-term plant idling to restructure and move excess inventory off the lots. It also followed a telephone briefing with reporters little more than an hour earlier, in which a senior administration official was asked about the potential loss of Chrysler "head counts." The administration official, talking with reporters on the condition that he and others not be named, responded that "there are no plans to have any immediate plant closings or major white- or blue-collar head-count reductions."

Maybe someone should have asked what the White House meant by "no plans" and "disrupt."

Congress members say they were blindsided by the news the next day, May 1, that Chrysler in fact intended to permanently shutter five plants: one each in Ohio, Wisconsin and Missouri, and two in Michigan.

The news was embarrassing as well as shocking, since many members, like LaTourette, had issued statements applauding, for instance, the report that no jobs would be cut at the 1,250-worker Twinsburg, Ohio, stamping plant. Candice Miller, a Republican congresswoman representing Sterling Heights, Mich., home of a 1,400-worker Chrysler plant, even went on the House floor soon after Obama's announcement, saying it meant, "most importantly, no plant closures or new job losses."

Wrong. Sterling Heights, like Twinsburg, would be sucker-punched the next day with news of a plant closing.

Were Congress members duped? If so, by whom and why?

The short answers appear to be yes, by both Chrysler and the White House. Chrysler's top lobbyist, John Bozzella, has since apologized to LaTourette, as a company spokesman confirmed.

What's more difficult to assess is why -- other than the likelihood that the White House and Chrysler both wanted to announce the bankruptcy without an immediate onslaught of squawking from mayors, governors and members of Congress representing Twinsburg; Sterling Heights; Detroit; Kenosha, Wisc.; and Fenton, Mo.

The White House and Chrysler won major headlines across the country with first-day stories of saved jobs. With the exception of the Detroit Free Press, which had the plant closings in its Friday, May 1, editions, most media were unable to review the entire U.S. Bankruptcy Court filing in time for their Saturday editions, one of the worst days of the week for readership.

The bad news was largely limited to press outlets in cities where plants would close.

If it was, in fact, a media strategy, it worked. Despite complaints from a couple of congressmen - notably, LaTourette and Wisconsin Republican Paul Ryan - the fact that congress members believe the White House misled them has gained almost no traction in the press. Then again, it has barely resonated among many rust-belt Democrats, despite their being just as surprised as LaTourette and Ryan. Theirs is a partisan silence, with their opinions known only because this reporter asked.

Would Democrats have been so quiet if President George W. Bush's administration had announced that no plants would close, only to be boldly contradicted within 24 hours?

Brown's office said the Ohio senator is focusing on ways to try to keep the Twinsburg plant open, rather than looking back and pointing fingers.

Betty Sutton, the Democratic congresswoman from Copley Township, said she doesn't remember the exact language that the White House officials used in their call, but that regardless, "it didn't make an impact on me, because I would not be so naive as to believe" that auto plants were safe.

"Obviously, the auto industry is facing extremely difficult times, and perhaps I'm just not surprised, despite anything that was said, that we're still fighting for the life of the domestic auto industry," Sutton said.

Kucinich, however, said he is struggling even to understand why the administration would tell him and others something that wasn't true. "To me," he said, "it really becomes a question of credibility."

He added that he was also troubled by what he called "arbitrary" deadlines that Obama set for stake-holding hedge funds to reach an agreement with Chrysler. Bankruptcy might have been avoidable were it not for those deadlines, said Kucinich. He plans "to watch how this develops, because I hope this wasn't an attempt to deceive members of Congress."

Michigan Gov. Jennifer Granholm, a Democrat, is an especially interesting case. According to other participants, Granholm played a prominent role in a call between public officials and Chrysler executives at 1 p.m. on April 30, just after Obama made his announcement. In that call, she pressed Chrysler CEO Robert Nardelli after he spoke of maintaining 30,000 jobs at Chrysler's domestic plants.

Granholm, a Harvard law graduate and former federal prosecutor, quickly noted that Chrysler actually employs thousands more, and she wanted to discern if Nardelli was playing games with those numbers, according to call participants.

But Nardelli glossed over the numbers and left the impression that his was a ballpark figure and that no cuts were planned. Granholm appeared to believe it. Visibly pleased, she told a news conference that afternoon that all Chrysler jobs would be saved, adding that there was even "the opportunity for more" jobs through the Fiat deal and restructuring.

Soon enough, this would prove to be incorrect. Yet Granholm, a Democratic star, apparently has not complained publicly about being misled. Her office did not return The Plain Dealer's calls to discuss the matter.

[Sam Spade]

All part of the plan

For the Obama White House, the Chrysler episode raises a question about one of its favorite buzz words: transparency. Administration officials, including those close to the negotiations involving Chrysler, have refused to talk for attribution. One official told The Plain Dealer that he is still working with struggling auto companies, including General Motors, and doesn't wish to trade accusations with lawmakers.

In a not-for-attribution background interview - the only way he would speak - an official close to the Chrysler-administration negotiations said no one should have been surprised by the factory closings. Chrysler's annual sales dropped by more than 45 percent over a year, he noted, a clear indication of excess manufacturing capacity.

He and another White House representative said that when the automaker filed its proposed reorganization plan with the Treasury Department on Feb. 17, hoping to get billions in government aid, potential closures were mentioned as part of a restructuring plan, although exact plants were not specified. Regardless, he said, Obama on March 30 rejected Chrysler's plan as inadequate, making it doubly obvious that more sacrifices were needed.

Why didn't the administration announce those closings on April 30, then, when boasting that the short-term bankruptcy would cause no pain?

White House spokeswoman Amy Brundage answered this way: "This was a simple misunderstanding. The Twinsburg plant is not closing as a result of bankruptcy; it was always slated to close as part of Chrysler's original restructuring plan."

Chrysler last Wednesday answered similarly, issuing a statement after days of criticism. The company said its earlier plan "contemplated several plant closings based on continued volume deterioration trends," as well as the planned Fiat alliance. "The specific plant actions were not made public because it would have been presumptuous to assume that the plan was going to be approved, and inappropriate to communicate prior to thorough discussion with the United Auto Workers union."

'That's just not true'

There's a problem with all of these explanations, as LaTourette's office and Plain Dealer reporter Robert Schoenberger, who covers the industry closely, found independently. Chrysler's Feb. 17 restructuring proposal never mentioned plans to close additional plants, whether unidentified or not. The 177-page filing said just the opposite - that due to cuts that had been made already, Chrysler should be able to return to its previous competitive position in two years. As for the union, it, too, was blindsided - because it had negotiated a tentative new contract with concessions to keep Twinsburg open.

Told of the White House rationale for failing to disclose plant closings, LaTourette said, "Well, that's not true. That's just not true."

And said Dennis Hancock, mayor of Fenton, Mo., where another plant will close: "That seems like a stretch to me." Hancock, like Twinsburg Mayor Katherine Procop, had thought from the calls and assurance on April 30 that his town was safe.

Confusing? Yes.

Transparent? Hardly.

And so this White House has itself a problem with some congressmen.

"I think," said Voinovich, as surprised as the others, "what they tried to do is paint as favorable a picture as they possibly could. And what they should have done is, if it was their intention that these plants be closed, they should have said it in the meeting. And you wouldn't be writing this right now."