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Lansing mayor relieved by GM comeback

By the CNN Wire Staff
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Lansing mayor: Manufacturing matters
  • Lansing mayor calls for trade agreements favorable to U.S. manufacturing
  • "We were scared to death" over possible GM bankruptcy, said Lansing Mayor Virg Bernero
  • GM boasts two auto plants in Lansing and pledged to add or rehire 600 new workers

(CNN) -- One day after embattled Michigan-based automaker General Motors boasted the largest initial public offering in history, Lansing's mayor called on lawmakers to recognize that "manufacturing matters" and to work for "trade agreements that do not put us at a disadvantage."

"We're a GM town... an auto town," Lansing Mayor Virg Bernero told CNN's Parker Spitzer show.

"[In the U.S.] we adopt this rigid stance that government should be on one side and business on the other, and that would be fine if we were isolated, but we're not," he said.

Sixteen months after a controversial federal bailout and bankruptcy reorganization, strong investor demand prompted GM to increase the number and price of its shares, raising questions whether it can attain the kind of recent growth of rival Ford.

"We had some scary days here," Bernero said, sitting at a Lansing restaurant during the city's annual "Silver Bells" holiday celebration. "For any mayor or citizen of a town like this, when GM was facing bankruptcy we were scared to death."

GM shares on the New York Stock Exchange closed Friday at $34.17, $1 over the offering price.

The company boasts two auto plants in Lansing and recently pledged to add or rehire 600 new workers, according to a GM statement in October.

But the company's 6,000 employees in Lansing pale in comparison to the 30,000 autoworkers GM once employed there.

"Part of it is the reality that we're more automated today," Bernero said. "This is not your fathers [auto plant]," he said. "We're never going to get back to 30,000 [employees], but...anybody who believes, who accepts that Mexico or China can do all of our manufacturing for us, I think is mistaken."

Despite President Barack Obama's trip to Asia last week that focused on opening markets for American goods, a long-running dispute over U.S. access to South Korea's auto and beef markets stifled efforts to reach new a trade pact between the two countries, according to the White House.

On Friday, Federal Reserve Chairman Ben Bernanke defended a recent Fed decision to buy U.S. Treasuries, pumping $600 billion into the financial system in an effort to curb unemployment.

Bernanke also criticized developing economies -- most notably China's --- for undervaluing their currencies to the detriment of developed economies.

"The strategy of currency undervaluation has demonstrated important drawbacks, both for the world system and for the countries using that strategy," he said during a banking conference in Frankfurt, Germany.

His message coincided with another small rise in GM stock, increasing for the second day it traded after an early drop.

Last week, GM posted its best financial quarter in 11 years.

The company's initial performance has many on Wall Street wondering if the century-old car company is again a safe bet.

Obama credited "tough decisions" by GM's leadership with leading the automaker's comeback.

GM and fellow Michigan-based auto giants Ford and Chrysler have created more than 75,000 jobs in recent months, the president said.

"Just two years ago, this seemed impossible," said Obama. "We are finally being able to see some of these tough decisions that we made, in the midst of crisis, pay off."

Obama said that "American taxpayers are now positioned to recover more than my administration invested in GM."

The U.S. Treasury Department, which took a 60.8 percent stake in GM in return for the $50 billion bailout that saw it through bankruptcy, sold 75 percent of the common shares put up for sale Thursday.

That means the federal government -- and, in effect, taxpayers -- got back at least $11.8 billion.