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."