Bloomberg News

Auto Bailout Makes Ohio Contest Microcosm of National Debate

October 19, 2012

Auto Bailout Makes Contest Between Ohio Lawmakers Microcosm

Spectators watch as General Motors Co.'s 2011 Chevrolet Cruze compact sedans make their way down the assembly line at GM's assembly plant in Lordstown, Ohio, U.S. in this Sept. 8, 2010 file photo. Photographer: David Maxwell/Bloomberg

U.S. Representative Jim Renacci says he wouldn’t have run for Congress had his Chevrolet dealership in Wadsworth, Ohio, not closed when the federal government bailed out General Motors Co. (GM:US) in 2009.

“That was the darkest day in American capitalism,” Renacci, a Republican, said in an Oct. 8 forum outside Akron.

His opponent, Democratic Representative Betty Sutton, said that day was a necessary part of a rebirth. She points to GM’s August announcement that it will invest $220 million in two northeast Ohio plants with more than 5,000 jobs to build the Chevrolet Cruze, and Ford’s adding a third shift with 350 jobs at its Cleveland Engine plant this year.

“When politicians, some said, let the auto industry go under, taking thousands of Ohio jobs with it, I said, ‘No way, no how,’” Sutton said during an Oct. 10 Cleveland City Club debate with Renacci.

The viability of U.S. auto industry and manufacturing in general defines the presidential race in Ohio, a state that no Republican won the White House without. The Buckeye State has lived the debate, losing 419,400 manufacturing jobs from the end of 1999 through 2009 and adding 52,100 since, according to federal labor data. Renacci and Sutton, in one of only two House contests in the country pitting incumbents from both parties on Nov. 6, stick closely to the line of their presidential candidates.

Little America

President Barack Obama and Sutton credit the government action with saving jobs and boosting Ohio’s economy, while Republican Mitt Romney and Renacci said there should have been a bankruptcy restructuring before any government involvement to ensure long-term success for the industry.

Ohio Among Six Battleground States With Lower Joblessness

“It really is a microcosm of the national campaign,” Stephen Brooks, a political-science professor at the University of Akron, said in a telephone interview.

Ohio Republicans controlled redistricting after the 2010 Census, which put Renacci and Sutton in the same district after two congressional seats were eliminated because of population changes. Still, both the nonpartisan Cook Political Report and Rothenberg Political Report rate the race a toss-up between well-funded candidates attracting spending from outside groups.

Car Dependent

The auto bailout was a focus of Renacci’s first television in ad in August, showing him inside the empty dealership saying “President Obama’s government took over General Motors.” The ad ends with him saying, “Big government is running the economy. It’s not working for Ohio.”

In response, Sutton said in a release that Renacci “thinks this is about him, but the auto recovery was about Ohio families and Ohio jobs, not Jim Renacci and his wealth.”

Ohio has the second-highest total automotive industry employment after Michigan, with almost 850,000 jobs from manufacturing, parts and dealers, according to an April 2010 report by the Center for Automotive Research in Ann Arbor, Michigan.

The center concluded that under a worst-case bankruptcy scenario for Chrysler and GM under which GM never fully recovers, Ohio would have lost more than 201,000 auto-related jobs in 2009 and 2010, a May 2009 report said.

The industry accounts for 4 percent of Ohio’s jobs, and since 2009, the start of Obama’s bailout initiatives, auto- related jobs have increased by 6.1 percent, or 11,100 jobs in Ohio, according to Bloomberg Government.

That has helped keep the unemployment rate lower than the national average, the analysis concluded. In September, the jobless rate in the Buckeye State was 7 percent compared with the U.S. rate of 7.8 percent that month.

Two-Year Run

In 2007, General Motors approached Renacci about taking over a Chevrolet dealership with about 50 employees that had been operating in Wadsworth for decades, Renacci spokesman James Slepian said. The 53-year-old former Wadsworth councilman and mayor had worked as an accountant before forming LTC Management Services in 1985 to own and manage nursing facilities, according to his House biography.

After two years in the car business, Renacci learned in May 2009 that Renacci-Doraty Chevrolet, which billed itself as the “Hometown Chevrolet Dealership” and sponsored a 3-on-3 basketball tournament, was targeted for closing, Slepian said. Renacci’s was one more than 1,300 dealerships nationwide that GM, after the government takeover, planned to shut down by October 2010, according to the National Automobile Dealers Association.

Sutton, 49, a labor lawyer from Barberton, served on the City Council, the Summit County Council and four terms in the Ohio House before being elected to Congress in 2006.

Lemon Aid

Besides backing federal assistance for the auto industry, Sutton introduced, with 55 co-sponsors, the so-called “Cash for Clunkers” program in 2009 that offered incentives for people to trade in older cars for new ones.

The debate about the auto industry favors Obama and Sutton in Ohio because voters can see the results, said Brooks, the University of Akron professor.

“It’s always hard to make the ‘what-if’ argument,” Brooks said. “The line that helps Sutton in this one is, ‘I voted for it.’”

Renacci’s Experience

Renacci and Sutton are introducing themselves to many voters because about half the new district includes areas Renacci now represents, with about 20 percent from Sutton’s current 13th District, according to the candidates.

Brenda Hamas, a 48-year-old administrative staff worker from Uniontown, said while she likes Sutton, Renacci’s experience in business and as a CPA won her support.

“As a previous business owner, he is what our country needs right now,” Hamas said in a telephone interview.

Catering to corporations and the wealthy won’t turn around the economy, and the auto industry is too important for the federal government to ignore, said Kevin Daugherty, 51, a Medina County purchasing manager supporting Sutton.

“Nobody enjoys bailing things out, Wall Street or the auto industry,” Daugherty said by phone. “With that much at stake, it was worth taking a chance.”

To contact the reporter on this story: Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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