Romney Prescribes Tough Love for Detroit

Nov. 24, 2008 -- Back in the Republican primaries, when Mitt Romney staked his campaign's prospects on victory in his native Michigan, he was a loud voice calling for Washington to save Detroit.

"The question is, 'Where is Washington?' " Romney said outside a General Motors plant in January. "Where does it stop? Is there a point at which someone says 'enough'? Or are we going to allow the entire domestic automotive manufacturing industry to disappear?"

But now, with the Big Three automakers lobbying Congress for a bailout that executives say is needed to keep the industry alive, the former Massachusetts governor is prescribing a tough love approach to the industry he grew up in.

Romney is strongly opposed to the auto industry's request for $25 billion in low-interest loans. He is calling for management shakeups inside the companies as they engage in extensive economic restructuring, and is recommending bankruptcy or similar legal arrangements for America's auto giants.

"Just sending a check and hoping for the best is not the right choice," Romney told ABCNews.com Friday, in between campaign stops in Georgia, where he was campaigning for Sen. Saxby Chambliss' re-election.

"Simply patting the sick patient on the back and saying don't worry, everything will be fine -- that is not the right course for the auto industry," Romney said.

Romney entered the national debate this week with an op-ed in The New York Times that carried an eyebrow-raising headline: "Let Detroit Go Bankrupt."

His stark statements caught many political observers -- including some of his most influential backers in Michigan -- by surprise.

"It's a complete 180. ... People are dismayed by his betrayal," said Oakland County executive L. Brooks Patterson, a veteran Republican elected official from the Detroit suburbs who was a prominent Romney supporter in the primaries. "I just can't believe that these words tumbled out of his mouth, given his background, given everything he said during the campaign."

Romney's Michigan Roots

Romney was born and raised in Michigan, and his father, George, ran American Motors Corp. in the 1950s and 1960s. In this year's presidential primaries, he wrapped himself in populist rhetoric about the need to save auto jobs and boost the Michigan economy -- a strategy that helped lead him to a victory in the state over Sen. John McCain.

Romney's recent comments have split members of both parties in Michigan, said Bill Nowling, a spokesman for the Michigan Republican Party.

"It's a wakeup call to everyone," Nowling said. "Some people were shocked by it. But a lot of people recognize his expertise, as a turnaround businessman.

"Maybe you need kind of a shot across the bow like Mitt did to get people to pay attention," Nowling added. "Going to D.C. with your hat in your hand in a corporate jet strikes people the wrong way."

Romney's comments come at a time of increased attention on his past policy shifts, in the wake of the release of a book by his former primary opponent, Mike Huckabee, that includes scathing passages about him.

"He spent more time on the road to Damascus than a Syrian camel driver. And we thought nobody could fill John Kerry's flip-flops!" Huckabee wrote.

But Romney, who is widely considered to be a 2012 presidential contender, said there's no inconsistency in what he's recommending. In January, he delivered a speech to the Detroit Economic Club that included this line: "I am not open to a bailout, but I am open to a work-out."

"That's what I said then; that's what I'm saying now," Romney said Friday.

Romney said he does see a major role for Washington in helping Detroit -- just not, he said, in writing a "blank check."

He expressed general support for congressional efforts to force automakers to prove that they have a long-term plan to restore themselves to profitability.

"My view is that government will be a partner in this effort, but I want government supporting an industry that has a bright future," Romney said.

Romney said bankruptcy or a similar legal remedy, as managed by the federal government, is probably the best option to help the industry restructure and to reopen union pacts that have proven onerous.

Michigan's Lifeline, the Auto Industry

"This is an opportunity for the auto industry to do some needed reorganization, restructuring, to become competitive," he said. "You can't help but notice that Hyundai, Nissan, Toyota -- they are able to open manufacturing plants in the United States and grow and gain market share. Our guys are losing market share."

Responding to Romney's op-ed, a General Motors executive wrote Friday that the former governor doesn't fully grasp the problems facing the industry.

"Nearly every recommendation Mitt Romney makes for United States automakers has already been undertaken by current management in Detroit. Automakers have been investing in the future on the order of $12 billion a year in research and development -- second only to the semiconductor industry," wrote Steve Harris, GM's vice president of global communications.

"In addition, General Motors has cut $9 billion in structural costs since 2005 and last year reached a landmark agreement to transfer the delivery of health care to the United Auto Workers union," Harris added.

Patterson said that, as a candidate, Romney never suggested bankruptcy as a viable option for automakers. Leaders of the Big Three fear that such a move would scare away car buyers and kill a company entirely.

Patterson noted the irony in the fact that President-elect Barack Obama gave a tough speech to the Detroit Economic Club early in the campaign, where he talked of the need for automakers to modernize their practices, only to emerge now as a supporter of the auto bailout.

"Mitt was our favorite son. We enthusiastically supported him, and we embraced him," Patterson said. "Obama is now our champion. Politics is a strange business."