GM jobs go as Obama lays down the law

AS NEW US president Barack Obama was announcing a tough new stance on car CO2 emissions yesterday, General Motors announced it would cut 2000 more jobs and halt production for several weeks at more than half its plants over the next six months.

GM is trying to reduce inventories to cope with a continuing slowdown in sales while also preparing a viability plan to safeguard its $US9.4 billion in federal loans.

But now it faces the prospect of meeting tougher fuel economy and emissions standards on a state-by-state rather than national basis.

The troubled car-maker said it would eliminate the second shifts at two plants from the end of March, resulting in 1200 workers being laid-off at its Delta Township SUV plant in Michigan and a further 800 at Lordstown, Ohio.

Although Lordstown produces two of GM’s most fuel-efficient vehicles, the Chevrolet Cobalt and Pontiac G5, demand has fallen away dramatically since the price of petrol has dropped. When fuel prices spiked last year, the plant added a third shift but in 10 weeks it will return to a single shift.

Left: Chevrolet Colbalt SS sedan.

With sales at a 26-year low, a further nine of GM’s 16 plants will have periodic shutdowns of “some weeks” over the next six months.

GM this month lowered its total 2009 industry sales forecast to 10.5 million vehicles, having predicted a figure of 12 million only last month. Last year, 13.2 million vehicles were sold in the US, down from an average of 16 million for the past decade.

Meantime, Japan’s top 12 car-makers will produce at least three million fewer cars this financial year (to March 31), with global number one Toyota accounting for half that total alone.

Business news service Jiji Press said the car industry downturn would cost 25,000 jobs in Japan and that further cuts might be necessary as the recession deepens.

Despite the American industry’s problems, president Obama’s first two executive orders since being sworn in made it clear that he is determined to wean America off oil and make it a world environmental leader.

The first order instructed the Department of Transportation to push ahead with tougher fuel economy standards and the second – as foreshadowed in GoAuto last week – controversially paves the way for the EPA to allow the states to enforce their own greenhouse gas emission rules for vehicles.

California has long had its own standards and has proposed a 30 per cent reduction in new vehicle emissions by 2016. At least 13 other states want to follow its lead, but the previous Bush administration blocked any attempt to break away from federal standards – a stance strongly supported by Detroit.

President Obama, however, made it clear that, while he will continue to support the auto industry, a new era has arrived at the White House and lower fuel consumption/emissions is the goal.

“As we move forward, we will fully take into account the unique challenges facing the American auto industry and the taxpayer dollars that now support it,” said Mr Obama.

“For the sake of our security, our economy and our planet, we must have the courage and commitment to change.

“We will make it clear to the world that America is ready to lead to protect our climate and collective security. We must pull together a truly global coalition.

“It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs.

“America’s dependence on oil is one of the most serious threats that our nation has faced. It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete.

“Year after year, decade after decade, we’ve chosen delay over decisive action. Rigid ideology has overruled sound science. Special interests have overshadowed common sense.

“Rhetoric has not led to the hard work needed to achieve results – and our leaders raise their voices each time there’s a spike on gas prices, only to grow quiet when the price falls at the pump.

“Instead of serving as a partner, Washington stood in the way. The days of Washington dragging its heels are over. My administration will not deny the facts. It will be guided by them.

“We hold no illusion about the task that lies ahead.

“I cannot promise a quick fix. No single technology or set of regulations will get the job done. But we will commit ourselves to steady, focused, pragmatic pursuit of an America that is freed from our energy dependence and empowered by a new energy economy.

“Let me be clear: Our goal is not to further burden an already struggling industry. It is to help America’s auto-makers prepare for the future.” While car-makers support the higher federal fuel economy standards scheduled to begin taking effect in the 2011 model year, they warn that individual state greenhouse gas rules would create market chaos.

The Washington-based Alliance of Automobile Manufacturers, which represents the Big Three plus Toyota and seven other car-makers, said they need a single federal-state solution rather than different standards for fuel economy from the Transportation Department, the EPA and the states.

And the National Automobile Dealers Association, which noted that nearly 1000 franchised dealerships closed last year, warned of “irreparable harm” if “a patchwork of state regulations” is enforced.

Of course, GM was careful not to inflame the Obama administration only three weeks away from seeking its next wad of federal bailout money, saying in a statement it is “working aggressively on the products and the advanced technologies that match the nation’s and consumers’ priorities to save energy and reduce emissions”.

“We’re ready to engage the Obama administration and Congress on policies that support meaningful and workable solutions and targets that benefit consumers from coast to coast,” said GM statement.

“We look forward to contributing to a comprehensive policy discussion that takes into account the development pace of new technologies, alternative fuels and market and economic factors.” Federal Energy Regulatory Commission chairman Jon Wellinghoff welcomed the President’s moves and said that regulators and the automobile industry must integrate electric vehicles into the national power grid as a matter of urgency.

“If you’re an automobile company, you’d better get on the bandwagon,” said Mr Wellinghoff. “If you don’t, you’re going to be left out of the band because there is definitely going to be a move toward electrification worldwide.”

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