Copyright 2000 The Baltimore Sun Company
THE
BALTIMORE SUN
May 21, 2000, Sunday ,FINAL
SECTION: BUSINESS ,1G
LENGTH: 1288 words
HEADLINE:
Truck rules bring threat
GM says new goals for fuel efficiency may hurt van
plant
'Jeopardizes our business'
Debate on standards has automakers
defending SUVs; Auto industry
BYLINE: Ted Shelsby
SOURCE: SUN STAFF
BODY:
New congressional consideration of an increase in fuel-efficiency
standards for cars and light trucks poses a new threat to the already
doubtful future of General Motors Corp.'s van assembly plant in Southeast
Baltimore.
Raising the fuel standards known as Corporate Average Fuel
Economy (CAFE) "jeopardizes our truck business," said William H. Noack, a GM
spokesman. "It jeopardizes our business in Baltimore; in Janesville, Wis.;
Wentzville, Mo."
David C. Prange, manager of the Baltimore van plant,
declined to elaborate on the plant's future other than to point out that it is
part of the truck group, and the fuel economy of the Chevrolet Astro and GMC
Safari vans are pretty close to the CAFE limit.
Any increase in the
federal fuel standards, Prange said, would put the 65-year-old Broening Highway
assembly plant and the vans made here at a competitive disadvantage.
GM
has already announced that it will end the second shift at the Chevrolet Astro
and GMC Safari plant in July, with the elimination of up to 1, 200 jobs, and has
committed to making the Astro and Safari only until the third quarter of 2003.
Beyond that, the plant's future will depend on consumer demand for the
vans, which have not undergone a major redesign since their introduction in
1984, or a GM decision to make another vehicle here.
GM is more
concerned about the impact of an increase in CAFE standards on its fast-selling
sport utility vehicles and pickup trucks.
The issue pits the auto
manufacturers, who are trying to safeguard their biggest cash cows, against
concerns about oil supplies, air quality and global warming. Since 1995, a rider
on the transportation appropriations bill has frozen CAFE standards at an
average 27.5 miles per gallon for an auto maker's new passenger cars and an
average of 20.7 miles per gallon for its light truck fleet.
Some members
of Congress want to increase the light truck standards to match that of the
automobile. They could also raise the car standards.
" The whole idea of
boosting CAFE limits makes the auto industry want to throw up," said David E.
Cole, director of the University of Michigan's Office for the Study of
Automotive Transportation.
"It disconnects them from their customers."
Light trucks, with their big, gas-guzzling engines, are extremely
popular, Cole said. They account for one of every two new vehicles sold in this
country and have a high profit margin.
"Auto companies have to reward
their shareholders," Cole said. "And they have to build vehicles their customers
want if they are going to stay in business."
Lance Roberts, a spokesman
for the Washington-based Alliance of Automobile Manufacturers, said CAFE
standards force automakers to build vehicles that motorists don't want to buy.
The Alliance represents 13 automakers, including the domestic Big Three, most of
the Japanese auto companies and some European manufacturers.
Roberts
said the Alliance would rather see dollars invested in research into advanced
fuel technologies that could produce a quantum leap forward in fuel economy than
trying to squeeze a mile or two a gallon from the existing automotive fleet.
Rather than increase CAFE standards, the trade group advocates a federal
tax credit of up to $2,000 to encourage motorists to buy
alternative vehicles such as the Honda Insight, powered by a gasoline-electric
hybrid engine.
As an indication of the public's lack of interest in
alternative fuel vehicles, Mark L. Kemmer, a GM government relations
representative, said the company has sold only 900 of its electric- powered EV-1
car and S-10 small pickup trucks since they were introduced three years ago.
In contrast, Chevrolet sold nearly 62,000 full-size Silverado pickup
trucks last month alone.
Seven of the 10 top selling vehicles in the
U.S. last month were light trucks, including SUVs, pickups and vans."They are
what our customers want," said Noack, adding that few consumers buy GM's
46-miles-to-the-gallon Chevrolet Metro, despite a $1, 200
rebate.
Cole, of the University of Michigan, said the automakers are
protective of their light truck production because they generate high profits.
While GM, Ford and Daimler-Chrysler make a tiny profit or even lose
money on each sale of their small, high-mileage cars, they make "multi thousands
of dollars" on each SUV rolling off the assembly line, he said.
Furthermore, Cole said, an increase in CAFE standards would hurt
domestic manufacturers and benefit imports.
That's because the law has
allowed foreign manufacturers, which traditionally have built smaller, more
fuel-efficient vehicles, to bank fuel economy credits for future use.
Toyota, for example, would be able to "cash in" credits it has
accumulated in the past and use them over a period of three years to sell its
full-size pickup, the Tundra, even if it did not meet the new fuel standards.
At the same time, Cole said, the domestics would be forced to cut back
on production of some of its larger, more popular, less efficient SUVs, so that
the average fuel economy of its entire truck fleet would meet the new standard.
The Sierra Club has taken the lead in the lobbying efforts to boost the mileage
of light trucks.
Congress paid little attention to light trucks when the
CAFE laws were first passed, according to Daniel F. Becker, director of the
environmental group's Global Warming and Energy Program.
At that time,
he said, trucks comprised only about 20 percent of the vehicle fleet and were
primarily work vehicles. Today they are used like cars and represent 50 percent
of the fleet.
Becker said "the biggest step that the U.S. can take to
save oil and curb global warming is to make our cars and sport utilities go
farther on a gallon of gas by raising miles per gallon standards."
He
said improved standards would also save more oil than the U.S. imports from the
Persian Gulf or could expect to get from drilling in the Arctic National
Wildlife Refuge and offshore California combined.
Closing the loophole
in the law that allows trucks to meet a significantly lower mileage standard
than cars "would save close to a million barrels of oil a day" and cut gasoline
prices, Becker said. "That's the first step we should take."
The Sierra
Club is also pushing for a 6 percent increase in fuel economy per year over the
next decade."This is reasonable," Becker said. "The industry already has the
technology to do this."
He noted a recent study by the Union of
Concerned Scientists that claimed that Ford could boost the fuel economy of its
Explorer, the best- selling SUV in the country, from about 19 miles per gallon
to 34 with $935 in improvements to the engine, transmission and
aerodynamics.
A 60 percent increase in fuel economy standards to 44
miles per gallon for cars and 33 for trucks by 2012 would free the U.S. economy
from its vulnerability to another oil price shock, said Howard Geller, executive
director of the American Council for an Energy-Efficient Economy."Besides the
direct cost of importing oil and its contributions to our massive trade deficit,
we need to spend additional tens of billion of dollars per year to help defend
oil- producing nations and protect oil supply routes," Geller told the House
Committee on Resources last month.
He said new fuel economy standards
would cut emissions of carbon dioxide and other greenhouse gases, thereby
slowing global warming while saving consumers money at the gas pumps.
Perhaps the best way to increase the fuel efficiency of vehicles is to
follow the lead of European and Asian nations, said Cole."Increase the price of
fuel. But in this country that is not the politically popular thing to do."
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