DETROIT—President Barack Obama on Friday declared the controversial bailout of the U.S. auto industry a success in visits to Detroit auto plants that came weeks before General Motors Co. is expected to take a critical step toward an IPO.
Public and investor support of the U.S. government's $60 billion rescue of GM and Chrysler LLC is important to Detroit auto makers as they prepare to make a return to public markets that will rely on solid sales and Wall Street support.
Also, public support for the bailout is key for the Obama administration, worried that Democrats who supported the unpopular bailout could be ousted in November elections.
The collapse of the companies would have been a "brutal, inevitable shot" to the nation's already struggling economy, Mr. Obama said in a speech at a Chrysler truck factory in Detroit. "Today, the industry is growing stronger, it's creating new jobs."
A new White House report released Thursday defends the decision to take ownership stakes in GM and Chrysler, saying the bailout helped avert an economic disaster. The administration said the U.S. auto industry has gained 55,000 jobs after losing 334,000 in the GM and Chrysler bankruptcies.
Ron Bloom, the Obama administration's auto czar, said Friday the latest valuation of the U.S. investment into the auto industry by the Office of Financial Stability stands at $60 billion.
"If we had done nothing, not only were your jobs gone, but supplier jobs were gone and dealership jobs were gone, and the communities that depend on them would have been wiped out," Mr. Obama said at the Chrysler plant.
The argument has done little to win over critics of the bailout who see it as a massive overreach of the federal government and a misuse of federal funds.
"The Michigan auto industry still has a long way to go and President Obama's tax, borrow and spend policies will only prolong Detroit's recovery," Republican National Committee spokesman Ryan Tronovitch said.
GM in mid-August is expected to file papers to launch an initial public offering, which would allow the Treasury Department to begin offloading its 60% stake in the auto maker. The Obama administration would like GM to go public this fall, a goal GM is unsure it will meet, people familiar with the matter said.
On Friday, GM and Chrysler moved to prove the rescue was worthwhile. Chrysler Chief Executive Sergio Marchionne, speaking at the truck factory where Mr. Obama spoke, said the company would likely begin running the Detroit factory around-the-clock to meet improving demand. The company earlier announced a plant in Sterling Heights, Mich., which was previously expected to close, will remain open and will add a second shift.
Chrysler worker Harold Gilbert said he knows many Americans oppose the bailout that saved his job at the Chrysler Detroit factory. "We are proving the point that we are worth saving," said Mr. Gilbert, who waited seven hours to see Mr. Obama speak.
GM used the visit to announce it would build 45,000 Chevrolet Volt electric vehicles in 2012 rather than the 30,000 it planned. Mr. Obama toured and spoke at the GM factory in Hamtramck, Mich., where the Volt is being built. In a break from protocol, Mr. Obama, who almost never drives a vehicle for security reasons, drove a Volt about 10 feet. He called the ride "smooth."
The auto bailout ushered GM and Chrysler through bankruptcy with the goal of making them profitable and shifting toward more fuel-efficient vehicles. GM has repaid direct loans of nearly $7 billion, but the remaining $43 billion can be recouped only when GM returns to the public market.
In recent months, GM has added shifts and rehired laid-off workers. GM is expected to report a second-quarter profit in the next couple of weeks. It would be the second profitable quarter in a row for the auto maker after it reported its first profit—$865 million—since 2007 for this year's first quarter.
Chrysler reported an operating profit in the first quarter.
The Wall Street Journal, page A5
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