Biden and Marchionne Look To The Future

Vice President Joe Biden promising that U.S. automakers will thrive in the coming years despite the economic challenges still facing the industry.

Addressing workers at Chrysler's Toledo Supplier Park, Biden painted a rosy picture of an industry that only a year ago was facing questions about whether it could survive and still is struggling to sell cars and other vehicles.

``Don't believe those who will say this is temporary,'' Biden said at a Chrysler assembly plant less than a week after General Motors announced plans to return to the stock market this year.

During a tour of the plant, which builds the Jeep Wrangler, Biden said he was pleased that GM plans to return to the stock market some time this year. But he was less confident that the government will end its ownership of the automaker any time soon.

``I don't know if we can totally get out of GM,'' he said when asked whether the government would be able to get rid of its stake of GM this year.

He later said that he had no idea how much money the government will get back this year. ``I don't know what the number will be, but it's a big number,'' he said.

The factory that Biden visited integrates auto suppliers more than any other UAW represented factory in the United States.

Biden told the workers that letting the industry fail a year ago would have crippled not only the automakers but also parts suppliers that employ more than 420,000 people nationwide.

``What people fail to understand about the industry is that it's not just not the jobs here,'' Biden said. ``It's the guy making the steel, it's the guy making the rubber.''

Chrysler Video Of Biden Visit

Analysts say evaluating the government aid to suppliers is a complex job.

"I think the direct help to suppliers was absolutely minimal," says Jim Gillette, who tracks suppliers for the industry consulting group IHS Automotive. "I think the way suppliers were able to survive during the downturn was the aid to General Motors and Chrysler."

That aid, Gillette says, allowed G.M. and Chrysler to pay their bills. Failure to do that, would have caused far more suppliers to go out of business.

The recession was very difficult for auto suppliers. Gillette says they went into the downturn with 800 thousand employees. They are coming out with 400 thousand workers.

While some hiring is being done, Gillette doesn't expect things to return to pre-recession levels.

"I don't expect to see us get back anywhere near that 800 thousand," he said. "What suppliers have learned over the past few years is they can do almost as much with far fewer employees."

Gillette says suppliers have learned to adapt to lower sales rates. But, they won't see their business return to normal until annual sales return to the 15 million level, probably between 2013 and 2015.

"The patient is in the recovery mode. We have a ways to go."

Hear the Jim Gillette interview on Jeff Gilbert's Worldwide Automotive Report

Chrysler Group LLC CEO Sergio Marchionne told reporters that the company will pay back its governments loans within four years. The automaker received about $15 billion in government help and was placed under control of Italian automaker Fiat as part of its bankruptcy. The company has repaid about half of the $4 billion loan portion of its aid and is considering a public stock offering sometime in 2011.

``I'm satisfied,'' Marchionne said. ``We're ahead of the plan.''

He cautioned, though, it would be difficult to show a net profit this year.

Chrysler has made strides in the past year, lowering its losses and increasing demand for its cars after emerging from bankruptcy protection. But the automaker still needs to show it can make a profit and pay off government loans.

Chrysler said earlier this month it had a second-quarter loss of $172 million, a $25 million improvement from the first quarter.

WWJ AutoBeat Reporter Jeff Gilbert contributed to this story.

(Copyright 2010 by The Associated Press. All Rights Reserved.)