Sunday, June 6, 2004

The Detroit News Reagan visits a Jefferson Avenue plant with Chrysler's Lee Iacocca in 1980. Reagan swayed from his usual hard-line, hands-off government policies to give a boost to the auto industry.

Fed policies gave boost to Michigan auto industry

Efforts important to Detroit's recovery

By Lisa Zagaroli, Alison Bethel, and Mark Truby / The Detroit News

The Detroit News Ronald Reagan and George H.W. Bush, left, were nominated at the Republican National Convention in Detroit in 1980. Former President Gerald R. Ford joined in the festivities. UPI Ronald Reagan dons a Michigan State Fair T-shirt during a campaign stop in Detroit in 1980. Comment on this story Send this story to a friend Get Home Delivery

WASHINGTON — Barbara Gattorn of Grosse Pointe Shores says Ronald Reagan will always have a special place in many Michigan residents’ hearts because he accepted the Republican nomination at the convention Detroit hosted in 1980.

“It was fabulous,” remembered Gattorn, senior adviser to the president of the Detroit Regional Chamber of Commerce. “Detroit showed the country how to host a convention. Coleman Young was mayor at the time, and he worked very hard to get the convention here, and he addressed the convention and greeted everybody.”

Others remember how his economic policies helped rejuvenate a badly flagging U.S. auto industry.

Though his path to the presidency began with a grand kickoff in Detroit, the city and state were facing painful economic times at the start of his eight years in the White House. The nation was focused on oil shortages and the Iran hostage situation.

The manufacturing economy, led by the auto industry, was having a hard time competing.

“He was in some ways less sympathetic to the auto industry than either preceding or subsequent administrations were,” said Michael S. Flynn, director of Office for the Study of Automotive Transportation at the University of Michigan Transportation Research Institute. “He was a little more ideologically consistent — he wasn’t real big on handouts to the industry; he took a tough line.”

However, Reagan swayed from his usual hard-line, hands-off government policies to give a boost to the auto industry by putting a quota on the number of Japanese vehicles that could be imported.

“It was an important factor in helping Detroit recover from the problems of the 1980s,” Flynn said. “In so doing, he bought (U.S. automakers) a little more time, it’s not clear they used that time well.

Gerald Meyers, CEO of the former American Motors from 1978 to 1982 and now a University of Michigan professor, said Reagan was “one of the guys who really pulled the fat out of fire for the auto industry. He brought the country out of a recession. He took a personal interest in the auto industry.”

Meyers and other auto industry leaders met with Reagan several times in the Roosevelt Room of the White House. “He really listened, and he took action,” Meyers said.

In one conversation, Meyers said he told Reagan that the United States needed to get control of auto regulators in Washington. “Get control of them?” he said Reagan responded. “We need to get rid of them.”

“I knew then,” Meyers said, “that this guy had his head on straight.”

Clark Durant, a Detroit attorney who was appointed by Reagan in 1983 to a four-year term as chairman of Legal Services Corp., which provided legal assistance to the poor, said the former president was a friend to Michigan.

“Reagan ushered in the longest peacetime economic period of growth in the last century. That helped industrial states like Michigan. Michigan started to grow. More jobs were produced, more autos were sold,” said Durant, CEO of Cornerstone Schools in Detroit.

The president’s effect on the economy in Detroit was enormous, said Harry Veryser, a professor of economics at Walsh College and chairman of Stampings Inc., an automotive supplier in Fraser.

“They were excellent years for my business,” he said. “If I could go back, I would. We never had such good years. Ask any supplier, and they will tell you the same thing.

“We were in a very serious recession, remember, in the late ‘70s, and after Reagan was elected in 1980 that turned around by 1982.”

Veryser explained that Reagan knew economic dynamics like no other president.

“He understood that regulations were a big part of business costs, and that cutting regulations and taxes opened up capital to invest in parts, inventory, ventures — if you lower regulation it really gives business a big boost,“ he said.

In late 1981, Reagan dealt a lasting blow to organized labor and enhanced his reputation as a man of action when he fired striking members of the Professional Air Traffic Controllers union. Many view Reagan’s decision a crucial tipping point in the decline of the labor movement in the United States.

But in a testament to his appeal and charisma, Reagan was supported by many rank-and-file union workers even though he butted heads with labor leaders.

The phenomenon of “Reagan Democrats” was born in Michigan, in particular Macomb County.

Reagan was defeated in the 1980 Michigan presidential primary by George H.W. Bush. But, after putting Bush on his ticket, Reagan carried the state over Jimmy Carter in November, 1,915,225 to 1,661,523.

In 1984, the Reagan-Bush ticket carried Michigan, 2,251,571 to 1,529,638, over Mondale-Ferraro.

Detroit News columnists George Weeks and Daniel Howes contributed to this report. You can reach Lisa Zagaroli at (202) 906-8206 or lzagaroli@detnews.com.

Reagan and George H.W. Bush meet with Detroit Mayor Coleman Young over breakfast in 1980. Young worked hard to get the Republican National Convention in Detroit, at which Reagan was nominated for the presidency.