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Downturn Will Test Obama’s Vision for an Energy-Efficient Auto Industry

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DeepModem Mom Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-21-08 04:12 PM
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Downturn Will Test Obama’s Vision for an Energy-Efficient Auto Industry
NYT: Downturn Will Test Obama’s Vision for an Energy-Efficient Auto Industry
By MICHELINE MAYNARD
Published: December 20, 2008


(Carlos Osorio/AP)
Barack Obama addresses the Detroit Economic Club in May 2007.

President-elect Barack Obama leveled a stern warning at General Motors and Chrysler last week after the federal government promised them billions to help them survive: “The auto companies must not squander this chance to reform bad management practices.” Once he takes office, the bailout will give him a tool to prod the industry to change, but it will also test his resolve as he pushes it in new directions.

Mr. Obama, after all, has been thinking out loud about the future of the American automobile industry for years, well before his presidential campaign began. He co-sponsored two bills in 2006, during his second year as a United States senator — one to raise fuel economy standards, and the other to encourage the use of alternative fuels. His writings and speeches on the auto industry suggest a keen interest in finding ways, including new technology, to improve the fuel efficiency of the cars and trucks that Americans drive.

But with Detroit in a fragile financial state, it is unclear how many compromises he will have to make in pursuing his agenda for the auto industry, as he juggles other priorities like providing a stimulus program for the broader economy. The United Automobile Workers union, which backed Mr. Obama, will want a say in the changes he envisions for the automakers. And the car companies, which have long lead times to develop products, will need sales of big trucks and sport utility vehicles, which may pick up again as gas prices fall, to bring in much-needed revenue.

By all accounts, Mr. Obama’s personal interest in the industry stems from his interest in environmental issues, and he has a ready resource about how the industry operates in Martin Nesbitt, a close friend who worked in financial planning at G.M.

Mr. Obama delivered his clearest prescription to the automobile industry in May 2007, when he appeared at Cobo Convention Center in downtown Detroit before an audience of 2,000 auto industry executives. In a speech to the Economic Club of Detroit, Mr. Obama said the Big Three had done little to lessen the nation’s dependence on foreign oil and needed to improve their vehicles’ fuel efficiency....He added, “For years, while foreign competitors were investing in more fuel-efficient technology for their vehicles, American automakers were spending their time investing in bigger, faster cars. And whenever an attempt was made to raise our fuel efficiency standards, the auto companies would lobby furiously against it.” He suggested initiatives similar to the legislation he had introduced in Congress, and which he emphasized in his campaign. They included a 4 percent annual increase in the Corporate Average Fuel Economy standards, equal to about one mile per gallon a year, and incentives for the companies to develop more fuel-efficient cars.

Mr. Obama said he would provide up to $3 billion to Detroit auto companies and their suppliers to retool their factories in order to produce smaller, more fuel-efficient vehicles. Still, with gasoline prices falling again, it is unclear whether consumer demand will shift so dramatically to small cars....

http://www.nytimes.com/2008/12/21/business/21obama.html?adxnnl=1&ref=todayspaper&adxnnlx=1229893230-fOEH6U8UuSjZ%20AUGSWR/0A&pagewanted=all
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