Fuel-miser vehicles may cost Ohio jobs

Fuel-miser vehicles may cost Ohio jobs
Wednesday, February 02, 2005

If hybrid vehicles and high-tech diesels become popular, thousands of jobs in Ohio, Michigan and Indiana could be lost because the fuel misers and their components are likely to be manufactured outside the United States, according to a study by the University of Michigan’s Office for the Study of Automotive Transportation.

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Fuel-miser vehicles may cost Ohio jobs
Wednesday, February 02, 2005
Christopher Jensen
Plain Dealer Auto Editor

If hybrid vehicles and high-tech diesels become popular, thousands of jobs in Ohio, Michigan and Indiana could be lost because the fuel misers and their components are likely to be manufactured outside the United States, according to a study by the University of Michigan’s Office for the Study of Automotive Transportation.

To counter the job losses, the federal government should offer foreign and domestic automakers tax incentives to use existing U.S. plants, the study recommends.

Hybrids use an electric motor to boost or temporarily replace a gasoline or diesel engine and provide good fuel economy and lower emissions.

The high-tech diesels are primarily built and used in Europe, where they have been well received for providing good fuel economy and performance that at least equals gasoline engines.

The most likely scenario in the Michigan study calls for consumers to have only modest interest in hybrids and diesels. In that case, by 2009 they will account for about 2.7 percent of the vehicles sold, up from 0.5 percent in 2003. That would mean about 350,000 hybrids and 93,400 diesels.

That would result in the loss of about 38,000 jobs nationwide, the report predicted. About 7,600 of those would be existing jobs. The 30,400 others would be new jobs created in Mexico, Europe or Asia instead of going to plants in the United States.

The worst-case scenario is that diesels and hybrids become so popular that 11 percent of all vehicles use them by 2009. That would require factors such as a significant increase in fuel prices or “generous” tax credits for buying a hybrid. That would result in about 1 million hybrids a year and 793,400 diesels.

In that case, about 207,000 jobs nationwide would disappear. The study estimates 41,400 existing jobs would be lost, while 165,600 other jobs would be created outside the United States.

Ohio would suffer if high-tech diesels become popular because the state makes so many conventional gasoline engines. Ford alone has about 4,300 workers at its Brook Park complex (in Greater Cleveland). Growth in hybrids would also hurt Ohio plants making traditional automatic transmissions, since hybrids use a different design.

“This report reinforces what we have been saying for years, that if the domestics do not step up, they are going to get left behind in the market . . . and that’s bad for U.S. jobs,” David Friedman, research director for the Clean Vehicles Program with the Union of Concerned Scientists, wrote in an e-mail.

Honda has three hybrid models sold in the United States. By the end of this year, so will Toyota.

All are built in Japan. Ford is the only domestic automaker with a true hybrid, the Escape. It is built in Kansas City, Mo. Ford said it plans other hybrids, including a Fusion midsize car. However, the Fusion will be built in Mexico.

Giving consumers a big tax credit for buying a hybrid could hurt U.S. jobs, which is why the report calls for a broader strategy, adding corporate tax incentives to encourage all automakers to build hybrids and electronic components in the United States, said Patrick Hammett, an associate director at the office for the study of automotive transportation.

Toyota is considering building hybrids in the United States, and tax help “would make a difference,” Dennis Cuneo, the senior vice president with Toyota Motor North America, said Tuesday.

General Motors and Ford declined to comment immediately.

The report was paid for by the National Commission on Energy Policy, described on its Web site as a bipartisan group working on a long-term strategy to strengthen the economy and protect the environment. It is paid for by groups including the Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation.

To reach this Plain Dealer reporter:
cjensen@plaind.com, 216-999-4830