07 June 2007

Those poor, poor car companies

Auto makers test political clout with energy debate

Detroit's Big Three auto makers are making a concerted effort to slow the push to raise fuel-economy standards, in a test of the industry's weakened but still considerable political clout. The ceos of General Motors, Ford and Chrysler met with lawmakers in Washington yesterday amid an escalating energy debate that is playing a central role in the 2008 presidential election. The companies are weighing in as they struggle under the weight of deep losses in North American operations and falling market share. As early as next week, the Senate will debate a bill requiring auto makers to build cars and trucks that achieve a fleet-wide average of 35 miles per gallon by 2020, a considerable jump from the current corporate average fuel economy standard, known as CAFE, of about 25 mpg. After that, the bill mandates 4% annual mileage increases for several years after. Detroit's auto makers and Toyota have said such a drastic increase will be costly and could force companies to build cars Americans aren't willing to buy. One Bush administration estimate put the cost of 4% annual in mileage standards between 2010 and 2017 at US$85-billion for the Big Three.

In private meetings yesterday with lawmakers, GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Tom LaSorda told Congressional leaders that a 35 mpg fleet-wide target isn't cost-effective or technologically achievable, according to people familiar with the matter. Instead, the industry lobbied for lower targets and asked for government investment in biofuels and advanced batteries for plug-in hybrids, these people said. Stopping the momentum could be difficult. Democratic senator Byron Dorgan criticized the auto industry for running ads in newspapers saying that Congress is looking to force consumers to drive smaller cars. He said instead of running those ads, Detroit should be working with Congress on raising fuel-efficiency standards. Wagoner said auto makers have raised fuel-economy as required under the 30-year CAFE program. “Thirty years later, we've done our part.” US dependence on foreign oil has grown nevertheless, he told senators, including presidential candidates Hillary Clinton and Joe Biden. Still, Wagoner acknowledged the momentum toward tougher mileage standards, saying “my sense is there will be increases in CAFE, but we hope they will be responsible levels.” The auto maker hasn't outlined its specific desire for such legislation, but allies in the Senate are scrambling to push softer legislation, while also pushing Detroit's call for government subsidies to develop further-out technologies, such as batteries and hydrogen fuel cells. In prepared remarks delivered to senators, Wagoner pointed to a Japan trade ministry announcement last week that it will spend US$1.7-billion, to help develop that country's next generation cars and fuels to cut emissions of carbon dioxide, the main gas blamed for global warming. Other proposals include a potential amendment by Levin and newly drafted legislation in the House. Levin's plan would allow auto makers to avoid fuel economy regulations altogether if they demonstrate they intend to build vehicles that would get far better mileage than required by CAFE, such as gasoline-electric hybrids and flex-fuel vehicles capable of running on E85, a blend of 85% ethanol and 15% gasoline.
(Globe and Mail 070607)

No one should feel any reason to give the Big Three any concessions on what we all know needs to be done. They have shit in their own bed and it is their responsibility to clean up after their own mess of greed and mismanagement that they have let run amok for the last 15 years. Their CAFE standard is only 25mpg? Pul-leaze - it wouldn't have been a big step to get to 35 if they had even been trying to be good corporate citizens for the past decade. But no, they needed to get around the standards because upgrading and new technologies would hit the bottom line, so what did they do? Build and market big behemoths that don't even apply to the same standards, market them as personal vehicles, and voila! Instant fat profits with no regard required for emissions standards or anything. Easy, squeezy, right? Well, now that they have to pay for their consequence-free existence over the past fifteen years, they are fighting tooth and nail to slow down what they in part created -- an environment where stricter regulations are mandatory. They've flooding the N.A. market with their gas-guzzling products and now they're not selling at the pace they were anticipating because the price of fuel is up and consumers are looking for more efficient options, so now the Asian and European manufacturers who have been building these lines of vehicles well for the past decade already have the upper hand and are severely kicking the asses of the Big Three.

They've shot themselves in the foot, let them look after it themselves. There shouldn't be any pandering to the Big 3 at all. But there will. Who am I kidding? Isn't the statistic like, one out of every five or six jobs in North America is directly or indirectly linked to the automotive manufacturing sector? You can just imagine where this is all going. The Big 3 might be wounded right now, but that will only make them more resolute to push their political clout around even more forcefully than they have in the past. Idiots. They deserve squat.

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