Detroit's Big 3 Calls For Government's Aid
February 1, 2007
This year’s opening round of congressional hearings regarding global warming and alternative fuels has been bombarded with a bunch of controversial issues. Detroit’s Big 3 composed of GM, Ford Motor Co. and DaimlerChrysler AG, asked Congress to increase the fund allocated for alternative fuels research and other advances in automotive technology to limit America’s dependence on foreign oil.
The Big 3 was disappointed because its request for $500 million in federal funds over 5 years for research into advanced batteries was not mentioned during the State of the Union. It is not likely to be part of the president's budget request scheduled to be announced Monday.
General Motors Corp. earlier asked Congress to significantly increase federal support for the development of advanced powertrain technologies and also the promotion of alternative fuels. The clamor is also anchored on the need to improve vehicles efficiency. According to the automaker, the industry needs billions of dollars to make the vision a reality. Hence, it needs considerable help from the government. This help need not be in a form of stringent mandates but of tangible cash.
Momentum is mounting in Washington due to the compulsion requiring automakers to improve fuel efficiency of their vehicles. This requirement could cost them a fortune hence they are seeking support from the government. The mandates would also lead them to manufacture smaller and lighter cars and more hybrids. In addition, this might necessitate the dropping out of some market segments that are deemed unproductive. Manufacture of quality car parts like EBC rotors, modern engines and sophisticated accessories need a considerable sum more so is the discovery of advance auto technologies.
It can be recalled that President Bush, in his State of the Nation address, proposed that the automakers improve the efficiency of the vehicles by 4 per cent annually starting in 2009 for passenger cars and 2011 for light trucks. Also, the administration intends to cut gas consumption by 20 percent by 2017.
The mandate is expected to cost Detroit’s Big 3 an estimated $6.2 billion. The automakers find the proposal very aggressive. However, several proposals in Congress tend to be more aggressive, mandating a specific yearly increase. In connection with Bush’s proposal, the latter left the determination of the final increase to the National Highway Traffic Safety Administration (NHTSA), which would set the new figure with input from automakers.
At a Senate hearing on fuel economy, quite a rough road is anticipated. Congress, on one side, intends to impose stringent mandates while automakers, on the other side, despise them. Environmentalists and other groups want the Big 3 to take greater roles in reducing hazardous tailpipe emissions linked to global warming. Vehicles in the United States consume 1 of every 9 gallons of gas used and they account for 6 per cent of greenhouse gas emissions.
U.S. Sen. Gordon Smith, R-Ore., wondered whether Detroit's automakers would be cutting jobs and losing market share had Congress forced them to improve fuel efficiency standards years ago. "Are there autoworkers in Detroit who would be employed today if we had done this?" he asked at a Senate Energy and Natural Resources Committee hearing. "Maybe we need to help you help yourselves. It surely seems to me that we're not helping you by backing off from pushing you."
Beth Lowery, the GM vice president for energy and environment, told the panel that research into new technology is the answer. She argued the government should fund a major effort to boost research and development in battery technology and support manufacturing of advanced batteries. She added the government should expand funding of hydrogen and fuel cells, purchase more government vehicles that can run on alternative fuels and expand infrastructure of alternative fuels. "Well-crafted tax incentives can accelerate adoption of new technologies and strengthen domestic manufacturing," she further added.
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