Industry Takes Fuel-Economy Debate to Middle America

The auto industry takes the debate over stricter fuel-economy requirements to the nation’s heartland today, with hopes of building support for legislation it considers the most reasonable and least likely to cost thousands of jobs.

Auto workers, business leaders and elected officials are holding a demonstration in Chicago in support of a bill from Rep. Baron P. Hill (D-IN) and Rep. Lee Terry (R-NE) that calls for a corporate average fuel economy standard of 35 mpg (6.7 L/100 km) for passenger cars and at least 32 mpg (7.4 L/100 km) for light trucks by 2022.

United Auto Workers union members from a Ford Motor Co. plant on the city’s south side and a Chrysler LLC plant in nearby Belvidere plan to deliver petitions in support of Hill-Terry to local congressional offices, including perhaps those of Sen. Barack Obama (D-IL), a leading presidential candidate and harsh critic of Detroit auto makers.

Hill-Terry, however, faces opposition from an energy bill passed earlier this summer by the Senate. The bill includes a CAFE proposal that directs the National Highway Traffic Safety Admin. to set standards for each class of vehicles that, combined, would reach a 35-mpg average by 2020.

That represents an increase of 40% over current standards. The bill also allows NHTSA to declare the goal too costly, if “clear and convincing” evidence exists.

Chicagoland Chamber of Commerce President Jerry Roper, a scheduled speaker at the rally, calls the Senate bill “too extreme.”

“We need incremental steps. A politician just throwing a number out there isn’t going to work,” he tells Ward’s. The Senate bill “could cost thousands of jobs in Illinois at a time when Illinois can’t afford to lose one job,” he says.

GM argues light trucks and SUVs perform specific tasks that passenger cars do not – namely work.

The union group also warns in a statement that the Senate bill would “radically reduce consumers’ vehicle choices and raise sticker prices by thousands” or dollars.

In particular, supporters of Hill-Terry say the Senate bill does not go far enough in separating cars from light trucks. Citing a recent study by the investment bank Lehman Brothers Inc., Hill-Terry advocates say the Senate bill would cut the production of large pickups and SUVs by 60%.

In addition, a recent study from the U.S. Department of Transportation says by separating the two segments, the Senate bill would negatively affect the economy by $114 million. Some industry estimates peg the cost per vehicle at upwards of $7,000.

“The biggest problem is that many of the proposals being discussed have one single standard for cars and trucks,” says a spokesman for the Alliance of Automobile Manufacturers, which backs Hill-Terry.

The standard in the Senate bill is based on wheelbase multiplied by track width. “If that’s the case, you’ll have the same standard set for passenger cars and light trucks, when the vehicles do two different tasks,” he says.

For example, Chrysler’s 4-wheel-drive Jeep Liberty midsize SUV has a smaller footprint than the Chrysler Sebring passenger car. By basing a CAFE standard on footprint, the Senate bill would require the Liberty to achieve the same fuel-economy standard as the Sebring.

But the Liberty tows 5,000 lbs. (2,267 kg), compared with a towing capacity of 1,000 lbs. (453 kg) for the Sebring. Additionally, the Liberty boasts 32.5 cu.-ft. (0.9 cu.-m) of cargo space, while the Sebring only can accommodate 13.6 cu.-ft. (0.4 cu.-m). And unlike the Sebring, the Liberty has off-road capabilities.

“There are very different attributes besides wheelbase and track width that are important to a vehicle’s characteristics,” the spokesman says. “And anything that makes vehicles more expensive or limits their capabilities could be devastating to not only manufacturers but also consumers who rely on those vehicles for their way of life.”

General Motors Corp. argues the same point, adding trucks and SUVs perform specific tasks – namely work. “Everybody is for great fuel economy, but people aren’t aware of what it will cost in terms of performance,” a GM spokesman says.

The Hill-Terry bill won the bipartisan backing of 163 House lawmakers earlier this month to kill a rival bill from Rep. Edward J. Markey (D-MA) and Rep. Todd Russell Platts (R-PA) that would have raised CAFE to 35 mpg for both cars and light trucks by 2019.

The showdown in the House came after auto dealers fanned out across Washington to support Hill-Terry and the UAW rallied members to write letters to their representatives criticizing Markey-Platts.

Backers of Markey-Platts, which included many Democrats and most environmental groups, now have thrown their support behind the Senate bill.

That includes House Speaker Nancy Pelosi (D-CA), a vociferous critic of Detroit auto makers. She promises a pitched debate next month when the House addresses the topic as part of global-warming legislation introduced by Rep. John Dingell (D-MI).

– with Byron Pope