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GM ANNOUNCES DEEP CUTS AS LAWMAKERS LINK JOBS, OIL, COMPETITIVENESS
Ford CEO Calls for Retooling Industry, Reducing Oil Dependence
Washington, DC (November 22, 2005) -- General Motors' announcement yesterday that it will eliminate 30,000 jobs and close nine U.S. plants over the next three years -- on top of Ford's announcement Friday of 4,000 -- highlights the major problems facing American automakers. Soaring oil prices are hammering sales of the large gas-guzzlers that have been Detroit's bread and butter for more than a decade, at the same time legacy healthcare costs are further sapping their strength. Blue and white collar workers alike are paying the resulting price.
In Washington, lawmakers are finally beginning to come together around a real set of solutions.
A growing bi-partisan movement is advancing answers for Detroit through legislation that would reduce our dangerous dependence on oil, help cut healthcare legacy costs, and spur innovation to ensure that Detroit isn't left behind in the race to produce the next generation of clean, efficient cars and trucks that markets all over the world are demanding.
And today Ford Motor Company CEO Bill Ford is visiting the White House, where he will call on Washington to help reinvigorate the American automotive industry by lending a hand retooling industry to produce those very vehicles. Updating factories, providing worker training and boosting consumer sales incentives are the keys to a brighter future for the American auto industry, Ford told reporters at the National Press Club this morning.
"I believe that with the right investments, America -- and the American manufacturing sector -- can win," Ford told the Press Club audience. "It can maintain its leadership stature in the world. And we can reduce our dependence on foreign oil. All at the same time. But we can't get there alone."
Will 2006 See Toyota Overtake GM?
As gas prices have risen over the past year, Detroit has seen the market for large SUVs and pickups shrink drastically. For example, Ford's Expedition and Explorer, and GM's Yukon, Trailblazer and Hummer H2, have all posted 50 percent sales drops since last October. Damage would have been worse had the companies not resorted to deep price cuts and massive rebate schemes, according to NRDC analysis.
In the third quarter this year, GM reported $1.1 billion in losses (after $1.2 billion in the second quarter) and Ford reported $284 million in losses (after losing $907 million in the second quarter). Meanwhile, Toyota has just announced 2006 production targets that would make the company the world's largest automaker, overtaking GM.
While Toyota continues to produce its share of pickups and SUVs, the company has also been the global leader in fuel efficient hybrid technology, which can boost fuel economy performance by 25-50 percent. And overall its fleet mix is far more efficient than the U.S. manufacturers.
Congress Finally Stepping Up to Help Detroit, Reduce Oil Dependence
Last week, two pieces of legislation were introduced by prominent bi-partisan legislators that would reduce our nation's dangerous dependence on oil, help Detroit cut costs, and spur American automotive innovation to ensure a major part of the U.S. economy stays competitive.
- The Fuel Choices for American Security Act would cut America's oil dependence by 2.5 million barrels a day within 10 years, permanently closing a dangerous and costly gap in our national security by diversifying our fuel supply.
Sponsors include Senators Bayh (D-IN), Brownback (R-KS), Coleman (R-MN), Graham (R-SC), Lieberman (D-CT), Lugar (R-IN), Nelson (D-FL), Obama (D-IN), Salazar (D-CO) and Sessions (R-AL); and Representatives Kingston (R-GA), Vice Chair of the Republican Leadership Conference, Saxton (R-NJ), Engel (D-NY) and 22 other sponsors in the House of Representatives.
The legislation is based on a blueprint by the Set America Free Coalition, an organization uniting diverse interests from opposite ends of the political spectrum -- including defense and national security groups, conservative religious organizations, and conservationists NRDC -- around the need to reduce our oil dependence.
- The other legislation, the Health Care for Hybrids Act, introduced last Thursday by Senator Obama (D-IL) and Rep. Inslee (D-WA), offers the U.S. auto industry relief from high healthcare costs while boosting investment in competitive technologies. In exchange for the federal government covering a percentage of retiree health care costs, automakers would reinvest a portion of their savings into developing and producing fuel-efficient vehicles, such as hybrids, advanced diesels and other clean energy technology.
University of Michigan and NRDC Report Predicted GM Plant Closings
This July, NRDC released "In The Tank," a report highlighting the vulnerability of Detroit to an oil price spike, making special note of job loss risks from plant closings or lost shifts and calling for quick action to preserve those high-wage opportunities. That report identified three of the nine GM plants targeted for closure this week.
The study authors conclude that rippling effects of such prices through the economy would reduce annual vehicle sales by as much as 3.0 million units, and that the Big Three U.S. manufacturers would absorb two-thirds of the lost sales due to their heavy dependence on gas-guzzling vehicle lines. Total pre-tax profits in the industry as a whole would drop by as much as $17.6 billion.
The Natural Resources Defense Council is a national, nonprofit organization of scientists, lawyers and environmental specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has more than 1 million members and online activists nationwide, served from offices in New York, Washington, Los Angeles and San Francisco.
Related NRDC Pages
In the Tank: How Oil Prices Threaten Automakers' Profits and Jobs
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