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Economic development > 39. Auto Recovery Office

Unless the Secretary of Labor can demonstrate how the Auto Recovery Office has uniquely assisted auto communities, Congress may wish to consider prohibiting the Department of Labor from spending any of its appropriations on the Auto Recovery Office and instead require that the department direct the funds to other federal programs that provide funding directly to affected communities.

Why This Area Is Important

 

In 2008 and 2009, the Department of the Treasury (Treasury) committed $62 billion in Troubled Asset Relief Program funding to General Motors (GM) and Chrysler to help the companies restructure. Anticipating the possible effects of the companies’ restructuring on communities that relied heavily on these companies and their suppliers for employment and economic investment, in June 2009 the President issued Executive Order 13509 establishing the White House Council on Automotive Communities and Workers (the Council)—composed of over 20 members, including the heads of all domestic cabinet agencies and key White House offices—to coordinate a federal response to issues affecting these communities and others that rely on GM, Chrysler, or other auto companies and suppliers.[1] The staff and the funding for the Council were housed within the Department of Labor’s Office of Recovery for Auto Communities and Workers (Auto Recovery Office).

As GAO reported in May 2011, GM and Chrysler restructured their operations from 2008 through 2010 in part by closing or halting production at 22 plants[2] (16 GM and 6 Chrysler), and communities in which these plants were located experienced economic challenges in addition to those they already faced. GAO visited six of these communities and found that unemployment in all of them increased after the plants closed. Staff of the Auto Recovery Office have tried to help communities address these challenges by serving as a listening post and federal liaison to agencies and programs that might assist them, but it is not clear whether the office provided communities with assistance that they otherwise would not have received. Nevertheless, the Department of Labor received funding for its management expenses, which it allocated to the office in fiscal years 2011 and 2012. The office spent approximately $1.2 million in fiscal year 2011. The Auto Recovery Office does not receive a direct line item appropriation, but rather negotiates an annual spending plan with the Secretary of Labor based on projected needs and historical data, and officials told GAO that they expect the same will occur for the fiscal year 2013 budget.



[1]Executive Order No. 13509, 74 Fed. Reg. 30903 (June 23, 2009).

[2]In September 2011, GM announced that it planned to reopen its Spring Hill, Tennessee, plant where it had previously halted production.

What GAO Found

 

 

Since the Auto Recovery Office was established, it has not accomplished half of the responsibilities set forth in executive orders, and has not been able to demonstrate the results of its efforts to assist auto communities. In July 2011, the President issued Executive Order 13578 to continue assisting auto communities and workers.[1] While this executive order revoked the previous one establishing the Council, it contains essentially the same responsibilities, but with the Secretary of Labor performing them instead of the Council. These responsibilities include (1) working among executive departments and agencies to coordinate a federal response to issues that impact auto communities and workers; (2) conducting outreach to nonprofits, businesses, local governments, and others that could assist in bringing to the President’s attention concerns, ideas, and policy options for enhancing efforts to revitalize auto communities; (3) advising the President on the potential effects of pending legislation; and (4) providing recommendations to the President on changes to federal policies and programs to address issues of special importance to automotive communities and workers.

As GAO reported in May 2011, the Auto Recovery Office’s efforts were focused primarily on the first two of these functions—coordinating the efforts and support of federal agencies to ensure a coordinated federal response to issues that affect auto communities and workers, and conducting outreach—and this continues to be the case. As part of their coordination efforts, the Council members and Auto Recovery Office staff visited auto communities around the country, met with local officials to understand the key challenges facing each community, and connected them to the appropriate federal agencies and resources. A specific Auto Recovery Office staff member was assigned to each auto community and state to serve as a point person for each auto community. These staff members responded to their assigned communities’ needs, such as by providing technical assistance or identifying contacts, and continued to connect the communities to resources and individuals as appropriate.

Although officials in communities GAO visited in 2010 and 2011 acknowledged the efforts of Council members and Auto Recovery Office staff, they also reported securing much of the assistance they received following plant closures without those efforts. For instance, officials told GAO that much of the federal assistance they received was targeted to individuals recently laid off from auto plants and delivered through Department of Labor resources outside the Council and Auto Recovery Office, such as the Workforce Investment Act Dislocated Workers Program and Trade Adjustment Assistance.

In August 2011 a new executive director joined the Auto Recovery Office, filling a position that had been vacant for almost a year. The new director and staff have visited eight communities, including communities and officials identified by the office in the past as well as new individuals. They are also planning to visit additional communities where office staff noted that automotive plant closures have been announced, such as Shreveport, Louisiana and St. Paul, Minnesota. The office staff stated that they continue to provide technical assistance to auto communities and have also participated in webinars and other events related to auto community interests, such as events hosted by the Mayors Automotive Coalition, and RACER—the environmental trust established to remediate old GM plants. However, while the Auto Recovery Office has continued its efforts, it still has not fulfilled its other two responsibilities—advising the President on pending legislation and making recommendations to the President on changes to federal policies and programs—for which it was established. Auto Recovery Office officials told GAO that they plan to make policy recommendations to the White House in fiscal year 2012.

Further, as GAO also reported in May 2011, neither the Council nor the Auto Recovery Office systematically tracked, measured, or assessed their assistance to auto communities and GAO recommended that they do so. GAO has reported in the past that federal agencies engaged in collaborative efforts need to create the means to monitor and evaluate their efforts so that they can identify areas for improvement.[2] However, since the Council and Auto Recovery Office did not keep an inventory of assistance that they had provided or funding they had helped communities secure, analyze the inventory for trends, or publish the results of their analysis, it was difficult to identify that assistance. In their response to GAO’s May 2011 report, the Department of Labor noted the challenges in developing a set of metrics that measures activities such as facilitation and process and that the more traditional measures of performance-based results are being tracked by the agencies that are responsible for administering the actual delivery of services.

Since then, the office has provided some additional examples of assistance provided to specific communities, for example noting that its staff helped Kokomo, Indiana, secure Economic Development Administration funding to hire a “recovery coordinator” to support a regional economic development strategic plan, and helped Kokomo negotiate with Chrysler to receive over $25 million in personal property taxes the company owed the county. The office plans to publish some of these examples on its website. In addition, the office reported that it is in the process of developing measures to assess its work, including “assessments of needs of affected communities” and “strategic collaboration/recovery plans tailored to affected communities.” However, the Auto Recovery Office still does not have a process to systematically inventory and analyze all assistance provided to auto communities, without which it cannot ensure that it has identified all relevant areas for improvement or made the appropriate recommendations, including to the President, as it was tasked to do.

Finally, Auto Recovery Office officials told GAO the office’s unique role is to serve as an ombudsman between auto communities undergoing economic and social distress and federal initiatives that could be of value to those communities, and that they see a need for this role continuing as long as auto factories are marked for closure. However, there are other efforts within the executive branch to assist economically distressed communities. For example, the White House’s Office of Domestic Policy is overseeing the Strong Cities, Strong Communities program, which also involves multiple agencies collaborating to assist communities facing economic challenges. This program has selected six communities to receive technical assistance, and at least one—Detroit—is an auto community that the Auto Recovery Office has also assisted.



[1]Executive Order No. 13578, 76 Fed. Reg. 40591 (July 6, 2011).

[2]GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).

Actions Needed

 

Though the Auto Recovery Office has made progress toward tracking its assistance to auto communities, it still has not implemented three of GAO’s prior recommendations, making it difficult to identify the office’s assistance or benefit to auto communities. GAO recommended in May 2011 that the Secretary of Labor

  • direct the Auto Recovery Office to (1) document the office’s achievements to date, including its assistance to various auto communities; (2) establish a process for measuring the office’s results; and (3) determine when and how the specialized assistance provided by the office can be transitioned to existing federal programs.

In addition, in the absence of documented results, Congress may wish to

  • consider prohibiting the Department of Labor from spending any of its appropriations on the Auto Recovery Office and instead require that the department direct the funds to other federal programs that provide funding directly to affected communities.

How GAO Conducted Its Work

 

The information contained in this analysis is based on findings from the products listed in the related GAO products section as well as additional work GAO conducted. GAO interviewed the Auto Recovery Office to obtain updated information on its activities and accomplishments. GAO also reviewed existing documentation related to the data and interviewed Auto Recovery Office staff. GAO determined that the data were sufficiently reliable to describe the Auto Recovery Office’s spending.

Agency Comments & GAO Contact

 

GAO provided a draft of this report section to the Department of Labor for review and comment. The department provided written comments and agreed with GAO’s recommendations. In its comments, the department reiterated that the Auto Recovery Office is the only executive office that deals specifically with the needs of auto communities, and thus it is more effective than other federal programs at helping communities address the complex effects of automotive industry restructuring. The department notes that Strong Cities, Strong Communities, the initiative GAO cites as an example of other interagency efforts to assist economically distressed communities, was not designed to deal with issues unique to automotive communities, and therefore GAO should not suggest that it replace the Auto Recovery Office. In the report, GAO does not suggest that this initiative replace the Auto Recovery Office, but rather highlights that other executive efforts exist to help communities facing economic challenges, regardless of the cause of these challenges. The department also provided additional examples of auto communities the office is assisting, which GAO incorporated as appropriate. Finally, the department writes that the Auto Recovery Office has fulfilled its responsibilities to advise the President on pending legislation, in part by participating in administrative review of pending legislation, preparing portions of the President’s budget, and engaging with the National Economic Council’s Office of Manufacturing Policy to inform policy decisions affecting proposed manufacturing legislation. While GAO recognizes that the Auto Recovery Office is involved in executive branch discussions regarding policies that could affect auto communities, the tasks the department cites, such as preparing the President’s budget, are tasks in which all executive agencies engage. Outside of these typical agency tasks, the department did not identify instances in which the Auto Recovery Office formally advised the President. More importantly, the Auto Recovery Office has not fulfilled GAO’s recommendations to track and measure its assistance, without which neither GAO nor Congress can identify what the office has done or accomplished with the funding provided to date. Given the challenges auto communities face, it is important to maximize federal assistance to these communities. As such, GAO suggested the department, if unable to demonstrate the results of the Auto Recovery Office’s efforts, redirect funds from the office to other departmental programs. As part of GAO’s routine audit work, GAO will track agency actions to address these recommendations and report to Congress. All written comments are reprinted in appendix IV of the PDF version of this report.

For additional information about this area, contact A. Nicole Clowers at (202) 512-8678 or clowersa@gao.gov.

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