by Keith Laing, The Hill Newspaper
General Motors announced Thursday it made a profit of $7.6 billion in 2011, a record for the company.
“In our first full year as a public company, we grew the top and bottom lines, advanced our global market share and made strategic investments in our brands around the world,” GM CEO Dan Akerson said in a statement.
“We will build on these results as we bring more new cars, crossovers and trucks to market, and make GM a far more efficient global team,” Akerson said Thursday.
GM’s profits have a bearing on the political world because President Obama is using GM’s comeback as part of his reelection pitch, arguing that his controversial decision to bailout GM and Chrysler is paying off as the companies hire workers.
The federal government loaned GM $6.7 billion from the Troubled Asset Relief Program (TARP) in 2008 and 2009. The company has since repaid the government for some of the money it borrowed, though critics note that the government still owns a large percentage of GM’s shares on the stock market and has not recovered all of the nearly $50 billion it initially pumped into GM.
Republican presidential candidates have criticized the bailout. Mitt Romney wrote in an op-ed this week that Obama should have allowed the two companies to go through a managed bankruptcy.
“The president tells us that without his intervention things in Detroit would be worse,” Romney wrote. “I believe that without his intervention things there would be better.
The news of GM’s profit was cheered by Democrats, who see Romney’s opposition to the auto bailouts as a political winner for Obama.
“GM posted record annual profit,” Obama’s reelection campaign manager Jim Messina tweeted Thursday. “Glad we didn’t let Detroit fail as Romney suggested. Never bet against the American worker!”
With the next Republican primary contests scheduled for Arizona and Michigan, the financial health of GM and the other American auto companies has emerged as a central campaign issue. Romney’s op-ed this week was meant to follow up on a widely-publicized op-ed in The New York Times in 2008 titled “Let Detroit Go Bankrupt.”
In the essay, Romney argued that helping the companies when they were on the verge of going bankrupt would be worse for them in the long run than the consequences of bankruptcy itself.
“If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye,” Romney wrote. “It won’t go overnight, but its demise will be virtually guaranteed.”
Despite GM’s profits, the federal government is still one of its biggest shareholders, and reports have said the government has not recovered about $14 billion of the money it lent the company. Those facts have led some conservatives to derisively refer to GM as “Government Motors.”
For their part, Democrats have prominently featured Romney’s 2008 op-ed in campaign ads, and they say the attacks will multiply in the fall if he is the Republican nominee.
GM Chief Financial Officer Dan Ammann said the company plans to continue growing in 2012, spending about $8 billion in capital investments.
“We are executing an aggressive product plan that will give customers around the world even more reasons to purchase a General Motors vehicle,” Ammann said in a statement. “Behind the scenes, we are working hard to eliminate complexity and cost throughout the organization to increase margins in all of our regions, and return Europe and South America to profitability. Overall, we have made good progress and we have more work to do.”