Trump and the auto/light truck industry

[kscarbel2]

Trump meets with Detroit 3 CEOs as he demands more U.S.-built vehicles

Bloomberg/Reuters  /  January 24, 2017

President Donald Trump met Tuesday with the CEOs of the Detroit 3 automakers as he looks to persuade car manufacturers to keep production within the country.

"We have a very big push on to have auto plants and other plants -- many other plants," Trump said. "It's happening."

Before the meeting, he tweeted: “I want new plants to be built here for cars sold here!”

The heads of Ford, Fiat Chrysler Automobiles (FCA) and General Motors attended the meeting at the White House.

The meeting presents Detroit’s automakers with a key opportunity to weigh in on major issues the administration plans to tackle in its earliest days, including trade, regulatory and tax reforms.

“He looks forward to hearing their ideas, on how we can work together to bring more jobs back to this industry in particular,” White House press secretary Sean Spicer said.

Trump told the CEOs that environmental regulations are "out of control" and promised he would remove obstacles for manufacturers and oil companies. The president reiterated his desire to reduce regulations, which may indicate a willingness to scale back federal fuel-economy demands.

“I am, to a large extent, an environmentalist,” Trump told the auto executives. “I believe in it. But, it’s out of control.”

Automakers in recent weeks have urged the Trump administration to rethink aggressive fuel efficiency mandates.

Tuesday's gathering was the first time the CEOs of the big three automakers have met jointly with a U.S. president since a 2011 session with Barack Obama to tout a deal to nearly double fuel efficiency standards by 2025. 

Ford CEO Mark Fields discussed corporate tax reform, the need for “data-driven regulations” and trade policy initiatives that address foreign currency manipulation. GM CEO Mary Barra and Chrysler CEO Sergio Marchionne also attended.

Marchionne told reporters after the meeting that Trump did not give them specifics on what regulations he would cut. 

GM, Ford and FCA have all announced recent new jobs and investments in the U.S., but are still investing in Mexico. Fields said automakers wanted to work with Trump to create a "renaissance in American manufacturing."

"We're very encouraged by the president and the economic policies that he's forwarding," Fields told reporters, praising Trump's decision to withdraw from the Trans-Pacific Partnership agreement, which Fields said did not address intervention in currency valuations by trading partners. "As an industry we're excited about working together with the president," he said.

Barra said there was a "huge opportunity" to work together with the government to "improve the environment, improve safety and improve the jobs creation."

Trump met Monday with prominent American manufacturers including Fields and Elon Musk, the head of Tesla Motors, and said he would dramatically cut regulations and corporate taxes. But Trump said manufacturers would face tough penalties if they move production outside the country.

Cutting regulations

“We think we can cut regulations by 75 percent. Maybe more,” Trump said. “When you want to expand your plant, or when Mark wants to come in and build a big massive plant, or when Dell wants to come in and do something monstrous and special -- you’re going to have your approvals really fast.”

After the meeting, Fields said he was confident Trump was “very serious on making sure the United States economy is going to be strong and have policies -- on tax, regulatory or trade -- to drive that.”

Trump has openly agitated for U.S. automakers to keep jobs in the U.S. and cancel plans to build plants abroad.

“Car companies and others, if they want to do business in our country, have to start making things here again. WIN!” Trump tweeted on Sunday.

Executive reactions

Barra said it was a "very constructive and wide-ranging discussion about how we can work together on policies that support a strong and competitive economy and auto industry, one that supports the environment and safety.

"The U.S. is our home market and we are eager to come together to reinvigorate U.S. manufacturing. We all want a vibrant U.S. manufacturing base that is competitive globally and that grows jobs. It's good for our employees, our dealers, our suppliers and our customers."

Marchionne said: "I appreciate the President's focus on making the U.S. a great place to do business. We look forward to working with President Trump and members of Congress to strengthen American manufacturing."

He said, in total, FCA has committed investments of more than $9.6 billion in its U.S. manufacturing facilities and created 25,000 new jobs to date since 2009.

Flattening sales

With flattening U.S. auto sales and some excess capacity, U.S. automakers may be reluctant to agree to open new plants, which likely would not come online for several years.

Tuesday's meeting included the former Republican governor of Missouri, Matt Blunt, who heads a U.S. automaker trade association. Vice President Mike Pence, White House chief of staff Reince Priebus and other senior administration officials also attended the meeting. 

Barclays auto analyst Brian Johnson said he thinks "automakers will be willing to make a deal that would bring back jobs to the U.S. (whether by voluntary commitments or tariffs or border taxes is less clear) in return for a slower ramp of (fuel efficiency) targets and related state-level mandates.

While automakers are adding U.S. jobs they are also cutting U.S. small car production. On Monday, GM ended two shifts of production of small cars in Ohio and Michigan, cutting about 2,000 jobs.

[TeamsterGrrrl]

Trump is clearly in over his head... No sane automaker is going to invest billions in additional plants in a mature market like the U.S.!

[kscarbel2]

18 minutes ago, TeamsterGrrrl said:

Trump is clearly in over his head... No sane automaker is going to invest billions in additional plants in a mature market like the U.S.!

I still firmly believe that all geographically large, high-consumption countries should dictate that medium and high volume light vehicles be produced there. One can call it protectionist, but I call it a very reasonable request. China has such a policy, rightly so, and it has worked out reasonably well for all concerned.

The US is a mature market, but the sales volume is extremely high.

Small countries can't reasonably demand domestic production from every participating automaker, but the U.S. certainly can.

[kscarbel2]

Trump picks inconvenient time to push for new U.S. auto factories

Bloomberg  /  January 25, 2017

President Donald Trump is asking the Detroit 3 automakers to invest in domestic manufacturing at a bad time.

Car sales have gained for seven-straight years after the U.S. auto bailouts and the financial crisis, a streak that’s close to running out of gas. That’s a recipe for trouble facing companies wary of undoing the painful but necessary steps they took to shut dozens of factories across the country, before and during a more than $70 billion government bailout.

New assembly plants cost General Motors, Ford Motor Co. or Fiat Chrysler Automobiles about $1 billion -- the sort of investment companies look to avoid making as a market peaks. And while factories boost jobs, economic gains from building them are being undercut by automation and pressure to compete with lower-wage countries including Mexico.

“This is the nightmare scenario for auto companies, which are being asked to make huge capital investments right before a slowdown in sales,” said Dan Luria, an analyst who has advised the UAW. “It seems like hardly the time to spend billions on new plants.”

Trump dangled government concessions in a meeting Tuesday with the three automakers’ chief executives. Without providing details, the president promised in front of reporters to ease up on taxes and environmental regulations to entice them to build their first U.S. vehicle assembly plant in more than a decade.

Tone-setting tweet

Trump wrote in a tweet before the meeting: “I want new plants to be built here for cars sold here!” His desires may fall on deaf ears, according to Steven Rattner, who led former President Barack Obama’s auto task force.

“I don’t think there is any possibility -- having survived a near-death experience -- that the car companies will build plants that they don’t need, simply to indulge the president,” Rattner said in a phone interview. “This all comes at a strange time.”

Along with car-parts companies they used to own, the automakers shuttered more than 100 manufacturing sites in the U.S. from 2004 to 2010, according to the Center for Automotive Research. Many of those closings occurred as part of the Obama administration-led restructurings of GM and Fiat Chrysler.

Mary Barra, GM’s CEO, called the meeting with Trump “constructive.” Ford’s Mark Fields praised the president’s withdrawal from the Trans-Pacific Partnership trade agreement, which he said failed to address currency manipulation, “the mother of all trade barriers.”

FCA CEO Sergio Marchionne said he looked forward to working with the administration and Congress to strengthen U.S. manufacturing.

Lacking specifics

All three need more specifics before being able to determine whether building domestic factories will be worthwhile. The industry already struggles to make money on slow-selling passenger cars. It may have even more trouble if the president follows through on threats to tax imports from Mexico, where minimum hourly wages are less than one-sixth the average in the U.S.

“There are other things we don’t know about that are being talked about, in terms of tax reform and regulations,” said Michelle Krebs, a senior analyst for Autotrader. “Does that offset that? I don’t know.”

None of the CEOs who met with Trump on Tuesday promised to build a vehicle assembly in the U.S. Neither company has opened one since GM started production in 2006 at a Michigan factory now making Chevrolet Traverse, GMC Acadia and Buick Enclave SUVs.

“We’re going to make the process much more simple for the auto companies and everybody else that wants to do business in the U.S.,” Trump told reporters before sitting down with the CEOs. “I think we’ll go down as one of the most friendly countries, and right now, it’s not.”

Peaking sales

After the U.S. auto market’s 68 percent surge since 2009, sales will be roughly flat through 2020, researcher LMC Automotive said in a report last week. After setting a record with nearly 17.6 million vehicles last year, the industry will keep coming up short of that level through the end of the decade, LMC said.

The recession-era retrenchment has contributed to automakers now running plants profitably, said Jeff Schuster, LMC Automotive’s senior vice president of forecasting. But that may change as vehicle sales taper off and the industry plans expansions.

By 2020, auto plants will run at about 85 percent of their capacity, getting closer to the cutoff line where some factories start to lose money, Schuster said. They’re at around 90 percent now.

Consumers also may pay a price, even on U.S.-built cars, if imported parts are taxed. Each Toyota Camry, the nation’s best-selling car the last 15 years, probably would cost about $1,000 more, according to Jim Lentz, CEO of Toyota North America.

“If prices start going up, consumers are going to start slowing down their purchases of the car,” Lentz said. “They won’t be able to afford it. That’s going to have us adjust our production schedules, and it’s going to have a negative impact on employment.”

Toyota expansion

Toyota announced its latest U.S. expansion on Tuesday, investing $600 million and adding 400 jobs in Vice President Mike Pence’s home state of Indiana. This will boost output of Highlander SUVs, rather than passenger cars that are built almost exclusively in the south, where auto workers aren’t unionized. Trump earlier this month attacked Toyota’s plan to supplement Corolla output in Mississippi with a new plant in Mexico.

But as the industry automates, factories don’t create jobs like they used to, said Marina Whitman, a professor of business administration and public policy at the University of Michigan.

“The American auto industry last year produced more cars than it ever had before, but they did it with somewhere between one-third and one-half the number of workers that they had decades ago,” said Whitman, who was an adviser to President Richard Nixon and GM’s chief economist from 1978 to 1992.

She added: “The last thing the auto industry needs is more capacity.” [Agreed. So close your foreign plants that produce medium and high volume vehicles principally for the U.S. market, and relocate that production to the U.S., rather than “adding” production capacity.]

[TeamsterGrrrl]

Trump is pushing a losing economic plan, increasing capacity in the face of markets that aren't growing. He's pursuing the same strategy with pipelines, where the current glut of gas is making additional capacity questionable. Heck, I suspect the oil companies that contracted for the Dakota Access Pipeline's capacity are secretly thanking the protesters for delaying the pipeline and allowing them to get out of their commitments!

[kscarbel2]

So Trump asked the CEOs of General Motors, Ford and Fiat Chrysler Automobiles (FCA) to come to the White House on Tuesday for a meeting aimed at getting them to produce U.S. market light vehicles...........in the U.S.

Otherwise, he’s threatening a 35% tariff on goods sold in the U.S. but made in foreign countries.

Why weren’t representatives of Honda, Toyota, Nissan, Subaru, Hyundai and Kia, Volkswagen, Mercedes-Benz and BMW also invited to the party? The situation involves them just as much as GM, Ford and FCA. After all, Toyota and Honda are ranked no. 2 and no. 4 respectively in U.S. market sales.

One could ask, why was FCA in attendance and not the other foreign automakers?

FCA is owned by Italian automaker Fiat, and incorporated in the Netherlands.

And where were the representatives of the major parts suppliers who have outsourced more than 50% of their manufacturing in the last 20 years to foreign countries with cheaper labor?

Lastly but not least (drum roll here), where were the representatives of Daimler, Navistar and Paccar, and truck parts suppliers, who have relocated so much of their production to Mexico ???

[TeamsterGrrrl]

Shows how behind the times Trump and his administration are... They're still living in the 60s and think Chrysler, Ford, and GM are the American Big Three.

[Underdog]

Shows how behind the times Trump and his administration are... They're still living in the 60s and think Chrysler, Ford, and GM are the American Big Three.

Maybe you should be President... You seem to be the smartest in the room.

[mrsmackpaul]

35 minutes ago, Underdog said:

Maybe you should be President... You seem to be the smartest in the room.

Yep

[DailyDiesel]

International better ask Grandpa VW for some money to open a plant in the U.S. before Trump finds out their signature products of the LT and HX are built in Mexico!

[TeamsterGrrrl]

Trump will be out of office before he even figures out that IH exists. Remember, this is a guy who complained that he didn't see any Chevrolets in Germany, because he was too dumb to figure out that GM sold the Opel brand in Germany instead.

[kscarbel2]

Reuters  /  January 12, 2017

The CEOs of 18 major automakers and their U.S. units urged President Trump to revisit a decision by the Obama administration to lock in vehicle fuel efficiency rules through 2025.

In a letter sent late Friday and viewed by Reuters, the chief executives of General Motors, Ford Fiat Chrysler Automobiles (FCA), along with the top North American executives at Toyota, Volkswagen, Honda, Hyundai, Nissan and others urged Trump to reverse the decision, warning thousands of jobs could be at risk.

On Jan. 13, the head of the U.S. Environmental Protection Agency (EPA) finalized a determination that the landmark fuel efficiency rules instituted by then President Barack Obama should be locked in through 2025, a bid to maintain a key part of his administration's climate legacy.

As part of a 2012 regulation, EPA had to decide by April 2018 whether to modify the 2022-2025 model year vehicle emission rules requiring average fleet-wide efficiency of more than 50 miles per gallon through a "midterm review."

The agency in November moved up the timetable for proposing automakers could meet the 2025 standards.

The auto CEO letter asked Trump to reopen the midterm review "without prejudging the outcome" and praised Trump's "personal focus on steps to strengthen the economy in the United States and your commitment to jobs in our sector."

Days after Trump was elected, automakers quickly appealed to Trump to review the rules, saying they impose significant costs and are out of step with consumer preferences.

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, said Sunday, automakers are "seeking a restoration of the process -- that's all. This is a reset."

The chief executives of Ford, GM and Fiat Chrysler also raised the issue in a White House meeting with Trump last month.

The letter warned the rules could "threaten future production levels, putting hundreds of thousands and perhaps as many as a million jobs at risk."

Environmentalists say the rules are working, saving drivers thousands in fuel costs and shouldn't be changed. Luke Tonachel of the Natural Resources Defense Council, said lowering the standards would "cost consumers more, increase our dependence on oil and put Americans at greater risk from a changing climate."

Trump EPA nominee Scott Pruitt told a Senate panel he will review the Obama administration's decision.

In 2011, Obama announced an agreement with automakers to raise fuel efficiency standards to 54.5 miles per gallon. This, the administration said, would save motorists $1.7 trillion in fuel costs over the life of the vehicles, but cost the auto industry about $200 billion over 13 years.

The EPA said in July that because Americans were buying fewer cars and more SUVs and trucks, it estimated the fleet will average 50.8 mpg to 52.6 mpg in 2025.

[kscarbel2]

 

[kscarbel2]

Reuters  /  February 26, 2017

U.S. Transportation Secretary Elaine Chao said on Sunday she was reviewing self-driving vehicle guidance issued by the Obama administration and urged companies to explain the benefits of automated vehicles to a skeptical public [i.e. the public who never asked for self-driving cars].

The guidelines, which were issued in September, call on automakers to voluntarily submit details of self-driving vehicle systems to regulators in a 15-point “safety assessment” and urge states [i.e. California] to defer to the federal government on most vehicle regulations.

Automakers have raised numerous concerns about the guidance, including that it requires them to turn over significant data, could delay testing by months and lead to states making the voluntary guidelines mandatory.

In November, major automakers urged the then-incoming Trump administration to re-evaluate the guidelines and some have called for significant changes. Automakers called on Congress earlier this month to make legislative changes to speed self-driving cars to U.S. roads.

Chao, in her first major public remarks since taking office last month, told the National Governors Association: "This administration is evaluating this guidance and will consult with you and other stakeholders as we update it and amend it, to ensure that it strikes the right balance."

She said self-driving cars could dramatically improve safety.

In 2015, 35,092 people died in U.S. traffic crashes, up 7 percent and the highest full-year increase since 1966. In the first nine months of 2016, fatalities were up 8 percent.

Chao, noting research that 94 percent of traffic crashes were due to human error, said: "There’s a lot at stake in getting this technology right."

She said the Trump administration wanted to ensure it "is a catalyst for safe, efficient technologies, not an impediment. In particular, I want to challenge Silicon Valley, Detroit, and all other auto industry hubs to step up and help educate a skeptical public about the benefits of automated technology."

Companies including Alphabet Inc's self-driving car Waymo unit, General Motors, Ford, Uber, Tesla and others are aggressively pursuing automated vehicle technologies.

Chao said she was "very concerned" about the potential impact of automated vehicles on employment. There are 3.5 million U.S. truck drivers alone and millions of others employed in driving-related occupations.

She also said she would seek input from states as regulators develops rules on drones. "We will ask for your input as the (Federal Aviation Administration) develops standards and regulations to ensure that drones can be safely integrated into our country’s airspace," she said.

[kscarbel2]

Trump Administration Plans Reconsideration of Auto-Emission Standards

Bloomberg  /  March 4, 2017

The Trump administration plans to open the door to a possible reconsideration of greenhouse gas emission standards for cars and light trucks [medium/heavy trucks?] that has been sought by automakers.

The Environmental Protection Agency (EPA) in the final days of the Obama administration decided to lock in the emissions standards through 2025 that had been negotiated with the industry in 2011.

That decision will be withdrawn for reconsideration as early as next week.

It will be one of a series of actions taken by the Trump administration recently to reconsider or reverse Obama-era regulations opposed by industry.

On Thursday, the EPA effectively abandoned work to develop a rule clamping down on methane releases from oil and gas wells and the Department of Transportation (DOT) suspended work on a regulation requiring airlines to disclose fees for checking bags. Trump also just directed his agencies to rescind and rewrite an Obama-era environmental rule governing water pollution, after criticism from ranchers, farmers and developers.

Eighteen auto industry executives sent a letter to Trump last month, asking him to reinstate the review of fuel economy regulations. The EPA’s decision in January to end the review came more than a year before deadline, which automakers say prematurely ended a promised debate over standards that they argue are costly and could jeopardize employment amid low gasoline prices and limited sales of hybrids and electric cars.

The companies and then-President Barack Obama had struck a deal in 2011 to double average fuel economy of vehicles to 54.5 miles per gallon by 2025, with the caveat that a mid-term review would determine whether the standards for the final years of the program were feasible.

Just a week before Trump took office, the EPA said it had concluded its review more than a year ahead of schedule and the rules didn’t need to be changed.

Automakers disagreed, saying falling gasoline prices have squelched demand for the most fuel-efficient vehicles, making achieving the standards more difficult.

The plea from the executives came after Trump made the auto industry a major focus of his first days as president. After a Jan. 24 meeting with auto executives, Trump vowed to ease regulatory burdens to lure more car factories to the U.S., calling environmental rules “out of control.”

Mid-term Evaluation

The withdrawal could come as early as next week in the form of a joint notice from EPA and the Transportation Department. As a result, a “midterm evaluation” of the efficiency standards through 2025 would resume, potentially leading to relaxation of the standards sought by automakers.

If the EPA revisits the mid-term review, it won’t necessarily come to a different conclusion than the one reached in Obama’s final days in office. That decision was the culmination of an evaluation that began last summer with the publication of a more than 1,200-page Technical Assessment Report that examined costs, technology effectiveness and other aspects of the standards.

Association of Global Automakers spokeswoman Annemarie Pender said the trade group, which represents 12 automakers including Toyota, Honda, Nissan and Hyundai, has not received a formal response to its Feb. 21 letter asking the EPA to withdraw the decision.

Environmental Push

Earlier Friday, a coalition of environmental groups including the Sierra Club, Natural Resources Defense Council and Union of Concerned Scientists issued a joint statement urging the vehicle standards be maintained.

“EPA’s clean car standards are driving unprecedented reductions in carbon pollution and saving drivers money at the pump,” Natural Resources Defense Council President Rhea Suh said in a statement. “Strong standards have been a critical factor in the auto industry’s recovery from financial distress, so it makes no sense to reverse this progress. EPA should stay the course and look to the future, to protect our climate and the workers developing clean car technologies.”

To change the standards, EPA must produce a new rule to replace the current one including notice and comment and raising the potential of a court challenge by environmental groups.

[kscarbel2]

Trump orders fuel economy rule review

Reuters  /  March 15, 2017

President Donald Trump on Wednesday ordered a review of tough U.S. vehicle fuel-efficiency standards put in place by the Obama administration, handing a victory to auto industry executives and provoking criticism from Democrats and environmental groups.

In a move widely seen as a preamble to loosening fuel standards, Trump told an audience of cheering union workers, he would "ensure that any regulations we have protect and defend your jobs, your factories," and promised he would encourage growth in the U.S. auto sector.

"The assault on the American auto industry is over," Trump said, standing in front of a banner that read "Buy American-Hire American."

Trump added that the White House is "setting up a task force in every federal agency to identify and remove any regulation that undermines American auto production."

The backdrop and message underscored Trump's efforts to lock down support in industrial states such as Michigan that put him in the White House. Trump spoke at the site of the former Willow Run bomber factory in Ypsilanti, Michigan, which won fame for building an operational B-24 heavy bomber every 59 minutes during World War Two. Now, the site is being redeveloped as a testing ground for autonomous vehicles.

At a roundtable with industry leaders Trump made clear he expected automakers to hire more Americans in return, a theme that dominated his election campaign.

"We're going to do some wonderful work with you, but you're going to have to help us with jobs," he said.

Trump's event was attended by around 1,000 people, including automotive executives, United Auto Workers union President Dennis Williams - who sat next to Trump - and workers from Detroit's "Big Three" automakers: General Motors, Ford and Fiat Chrysler Automobiles NV (FCA). Automakers lined up examples of vehicles they build in the United States for the president to see.

Auto industry executives have said they are hopeful the Trump administration will pursue tax and regulatory policies that would benefit U.S. manufacturers.

Reopening the fuel efficiency rules put in place by Democratic President Barack Obama days before he left office is one of the top items on the industry's agenda. Automakers, through their lobbying groups, have said the Obama rules were too expensive and could cost American jobs.

"These standards are costly for automakers and the American people," said Environmental Protection Agency Administrator Scott Pruitt.

After one participant in Wednesday's meetings mentioned environmental concerns, Trump said he agreed but did not want an "extra thimbleful of fuel" to get in the way of growth.

In a meeting with top auto executives from U.S. and foreign automakers, Trump said the government needs to get out of the way of the auto industry building vehicles, a person who attended the meeting said.

Automakers are wary of being seen as out of touch with environmental concerns, or unwilling to invest in new technology. Ford, for example, used its Twitter account on Wednesday to highlight previously announced commitments to develop electric vehicles.

It could take a year for the review process to play out, and Wednesday's event was effectively a starting gun for intense lobbying efforts over how government policy will drive technology investment decisions in the auto sector.

Critics like Democratic U.S. Senator Edward Markey of Massachusetts said Trump's move could hurt consumers.

"Filling up their cars and trucks is the energy bill Americans pay most often, but President Trump's roll-back of fuel economy emissions standards means families will end up paying more at the pump," Markey added.

The president is not seeking to revoke California's authority to set vehicle efficiency rules even stricter than federal rules, including mandated sales of electric vehicles, as part of this move, a White House official said. The official did not rule out seeking to withdraw California's authority in the future. Pruitt, an ally of the fossil fuel industry, would not commit during his Senate confirmation hearing to allowing California to continue its own clean vehicle rules.

A group of 10 state attorneys general led by California and New York said on Wednesday they would fight attempts to weaken the rules.

California’s attorney general late Tuesday filed legal papers in a federal court defending the Obama administration’s decision to finalize the determination in January.

Barclays auto analyst Brian Johnson said in a research note that he expects the Trump administration review will lead to reductions in planned hikes in fuel efficiency standards after 2021.

The Obama administration's rules, negotiated with automakers in 2012, were aimed at doubling average fleetwide fuel efficiency to 54.5 miles per gallon by 2025, although the real-world mileage figures would be lower.

'THOUGHTFUL AND COORDINATED'

Automotive industry executives and lobbying groups were quick to praise the administration's announcement.

"The Trump administration has created an opportunity for decision-makers to reach a thoughtful and coordinated outcome predicated on the best and most current data," said Mitch Bainwol, chief executive of the Alliance of Automobile Manufacturers, an industry lobbying group.

Automakers have signaled they want the government to give manufacturers more credit toward achieving fuel efficiency targets for technologies such as "stop-start" systems that shut down a car’s engine at a traffic light.

Regulators should also look at whether ride hailing and vehicle-to-vehicle communications systems designed to prevent accidents and alleviate road congestion could be counted toward the industry’s greenhouse gas emissions goals, the automaker group proposed in comments to the EPA last year. The group represents a dozen automakers, including GM, Ford and FCA.

Under the 2012 agreement with the industry, the EPA was given until April 2018 to decide whether the standards were feasible under a "midterm review," but the agency moved up its decision to a week before Obama left office in a bid to maintain a key part of his administration's environmental legacy.

An EPA analysis indicated that compared with previous rules, the 2025 standards would result in savings of between $1,460 and $1,620 over the lifetime of a vehicle and payback for new technology required to meet the new standards of around five years.

The Obama administration said the rules would cost the auto industry $200 billion over 13 years, but save motorists $1.7 trillion over the life of the vehicles.

[kscarbel2]

EPA re-opens Mid-Term Evaluation Process for light-duty vehicle greenhouse gas standards 2022-2025

Green Car Congress  /  March 15, 2017

EPA Administrator Scott Pruitt and Department of Transportation Secretary Elaine Chao announced that EPA intends to reconsider its final determination issued on 12 January 2017 which recommended no change to the greenhouse gas standards for light duty vehicles for model years 2022- 2025. (Earlier post.)

The EPA will reconsider that determination in coordination with NHTSA as part of a renewed Mid-Term Evaluation process.

This process was established as a part of the 2012 final greenhouse gas emissions standards for model years 2017-2025, requiring EPA to determine no later than 1 April 2018 whether the greenhouse gas standards for model years 2022-2025 established are appropriate.

In coordination with EPA, the DOT’s National Highway Traffic Safety Administration (NHTSA) is evaluating its fuel economy standards for that period.

In accord with this schedule, the EPA intends to make a new Final Determination regarding the appropriateness of the standards no later than 1 April 2018.

[kscarbel2]

Calif. upholds Obama emissions rules, setting up clash with EPA over mpg targets

Automotive News/Bloomberg/Reuters  /  March 24, 2017

California approved light-vehicle pollution targets that the Trump administration has put on hold, setting up a potential face-off between federal and state regulators that could be expensive for automakers and a headache for consumers.

California Air Resources Board (CARB) members criticized the auto industry for asking federal regulators to reconsider light-vehicle emissions targets for 2022-25 established by the Obama White House in 2012.

The board on Friday then finalized vehicle pollution rules for the state, set a mandate for zero-emission sales over the same time period, and ordered its staff to start work on emissions targets for after 2025.

California regulators have a long history of independent efforts to reduce tailpipe pollution from cars and light trucks, and Friday's move signals the state is prepared to fight the Trump administration.

“We’re going to press on,” Mary Nichols, head of the California Air Resources Board, said during a meeting of the agency here.

The state’s rules on greenhouse gas emissions for light vehicles were written in cooperation with the Obama administration and created a single national standard for new vehicles through 2025.

Targets for the share of California light-vehicle sales that need to be powered by battery, fuel cell or plug-in hybrid powertrains are set for 15 percent by 2025, from about 3 percent today.

CARB’s vote to continue down the path of stricter emissions rules could lead to a showdown with Trump, who described environmental regulations in the U.S. as “out of control” when meeting the CEOs of General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV in January.

Nichols chastised the industry for seeking the review of federal standards that Trump agreed to reopen earlier this month.

“What were you thinking when you threw yourselves on the mercy of the Trump administration to solve your problems?” Nichols said during the hearing Friday. “What did you mean when you said you don’t want to question the overall thrust of the standards? Why do another review if the current program is basically OK?”

Pruitt’s review

EPA Administrator Scott Pruitt plans to review the state’s legal authority to enforce its own limits on pollution and carbon dioxide emissions.

Myron Ebell, the former head of Trump’s EPA transition team, told Bloomberg News last week that Trump’s Transportation Department may determine only the National Highway Traffic Safety Administration can regulate fuel economy and exclude the EPA and California from such rule-making.

“We tried very hard not to provoke or defy the national government and we’ve had a good past with the EPA,” Nichols told reporters following the hearing. “I don’t expect there to be a war on California. I was obviously disappointed when I heard Pruitt commenting that he might reconsider the California waiver.”

The Alliance of Automobile Manufacturers said ahead of the CARB meeting that EV's share of overall demand for new light vehicles has been roughly flat for years. The trade group representing automakers including GM, Ford and Fiat Chrysler asked the regulator to wait at least two years before considering the higher zero-emission vehicle targets for 2030.

The alliance hasn’t asked Trump to revoke the state’s right to set its own emissions standards, Steven Douglas, the group’s senior director of environmental affairs, said during the CARB hearing.

California divide

Trump has reinstated a review of national greenhouse gas limits that run through 2025, which California had agreed in 2012 to accept as interchangeable with its own.

Pippin Mader, a CARB engineer, said the state may have to return to insisting on compliance with its own standards if the Trump administration dials back those at the national level.

As a result of Trump’s decision, the EPA and NHTSA will spend another year evaluating the federal standards that call for cars to average more than 50 miles per gallon by 2025.

CARB defended its cleaner-car targets Friday as a necessary component of its plan to cut greenhouse gas emissions to 40 percent below 1990 levels by 2030.

Matching states

Nine states including New York and New Jersey have pledged to adopt the GoldenState’s targets. Zero-emission vehicles were 0.74 percent of sales in those nine states last year, according to IHS Markit. Automakers face penalties if they don’t meet the zero-emissions sales goals.

A provision that allows automakers to fulfill their obligations in New York and other matching states by selling cars in California is set to expire in October, putting pressure on automakers to increase zero-emission vehicle sales.

EV sales lag outside California because automakers barely advertise them there, and some don’t even sell certain models, according to Christine Kirby, acting assistant commissioner of the Massachusetts Department of Environmental Protection.

Most carmakers “have not tried to build the zero-emission vehicle market in the Northeast to the extent that is necessary,” she said.

Two tracks?

A two-track emissions regulatory system would leave consumers with potentially higher prices and could complicate their ability to move cars between states.

Board member Hector De La Torre compared a potential split between federal and state regulators to a divorce. "If a divorce is going to happen at some point, we are going to litigate that divorce strongly," he said.

A White House official, anticipating the California vote, told Reuters the Trump administration was committed to protecting jobs and providing consumers with affordable cars.

“We are disappointed that California has chosen to refuse our good-faith offer to work together with all relevant stakeholders on this important matter,” the person said.

California regulators said they would cooperate with federal regulators who are reviewing the federal tailpipe emissions standards. John Bozzella, president and CEO of the Global Automakers industry alliance, focused on the potential for cooperation, rather than the Board's criticism.

"I think we are where we want to be, which is working together," he said. "We're committed to a national program."

[TeamsterGrrrl]

California had it's own emission regs before the Feds did, combine that with the written authority given California by the Clean Air Act and they have a solid case to set their own standards. Trump's EPA may claim they can preempt California fuel economy standards, but all California has to do is call them "Greenhouse Gas Emissions Standards" to get around that Fed overreach. As it stands now, no one has successfully challenged California's imposition of their emissions standards on out of state trucks and trailers (gotta have an '07 or newer truck and aero kit on 53' trailers), so if any maker built a non-California compliant truck, it could never go to California or the 9 other states that follow their standards.

[kscarbel2]

Trump blasts German automakers' U.S. sales and threatens barriers

Bloomberg  /  May 26, 2017

BERLIN -- German carmakers found themselves at the receiving end of renewed attacks by President Donald Trump, who reportedly chided them for selling too many vehicles in the U.S., contributing to a lopsided German trade surplus that's hurting the U.S. economy.

"The Germans are bad, very bad," Trump told EU officials in a closed-door meeting, Der Spiegel reported. "Look at the millions of cars that they sell in the U.S. Terrible. We're going to stop that."

Trump's top economic adviser acknowledged that the president said Germany is "very bad" when it comes to flooding the U.S. with cars, but insisted it wasn't a dig at one of the U.S.'s most-important allies.

"He said, 'They're very bad on trade,' but he doesn't have a problem with Germany," Gary Cohn, director of the National Economic Council, said. "He said his dad is from Germany. He said, 'I don't have a problem with Germany, I have a problem with German trade'."

Trump has repeatedly criticized Germany's high trade surplus with the U.S. In a Bild newspaper interview in January, he threatened BMW with a 35 percent import duty for foreign-built cars sold in the country.

"If you go down

Fifth Avenue

everyone has a Mercedes-Benz in front of his house," he told Bild, while lamenting the lack of Chevrolets in Germany. General Motors has withdrawn the brand from Europe for some years.

German carmakers such as Daimler, Volkswagen Group and BMW have responded to the attacks with a mix of defiance and mollification. BMW CEO Harald Krueger, one of a small group of business leaders to accompany German Chancellor Angela Merkel on her first trip to visit Trump at the White House, has defended the importance of free trade and noted that BMW's biggest plant worldwide is in Spartanburg, South Carolina -- making the manufacturer the biggest exporter on a net basis from the U.S.

Representatives at Volkswagen and Daimler declined to comment on the remarks reported by Der Spiegel. A BMW spokesman wasn't immediately available.

The German trade surplus rose to a record 253 billion euros ($284 billion) last year, and the U.S. trade deficit widened in January to the most since March 2012.

In addition to drawing Trump's ire, the German imbalance has sparked criticism by European Union leaders including French President Emmanuel Macron.

While Merkel has yet to address Trump's criticism publicly, her government was quick to respond. "Germany's position on the issue of trade balances and surpluses is well known," German government spokesman Georg Streiter told reporters in Berlin. "A surplus is neither good nor evil. It's the result of supply and demand."

[kscarbel2]

A savvy plan for the Trump era

Automotive News  /  May 29, 2017

Automation allowed Gentex to close global plants

ZEELAND, Mich. — The Trump administration has a vision for U.S. manufacturers: It wants them to rely less on overseas factories and to hire and train more American workers.

Easier said than done? Well, Michigan automotive mirror-maker Gentex Inc. offers a glimpse of what the future might look like in the Trump era. The supplier has figured out a way to move production from overseas to the American Midwest — and things are working out just fine.

In recent years, Gentex closed its two foreign plants in low-wage Mexico and China and consolidated all production into a single factory complex in western Michigan. The Zeeland plant now produces self-dimming mirrors, garage door openers and everything else in the Gentex product catalog for global markets.

This is the sort of business model the new president is pressing manufacturers to adopt. But Gentex designed its plan not for political reasons, but for purely competitive ones as its products become more complex. And for champions of the push to create U.S. automotive jobs, Gentex has sobering news: Making modern car parts in America today is going to take a whole lot of robots.

Factory automation is what made it possible for Gentex to move production from overseas to the Midwest.

"It's a tricky product," says Steve Downing, Gentex CFO, as he inspects the company's 2-year-old assembly line that makes one of the industry's most advanced rearview mirrors. "Any scratches or smudges, or even the shipping, can damage these mirrors. Cleanliness is key."

In one corner of the Zeeland complex, a white-gowned worker loads glass pieces onto an assembly line that produces the "full-display mirror" for Cadillac — a rearview mirror with built-in video displays. Despite her production training, there is a trash can next to her workstation filled with glass shards, lingering evidence of a once-high reject rate that bedeviled Gentex when it launched production here in 2015.

Having put all of its eggs into one U.S. basket, Gentex heavily invested in automation to perform as much of the product line's delicate work as possible.

"In a perfect world, we would want to automate the whole thing," Downing said. "But the cost is a gamble. The question is, do you have the confidence to put your money where your mouth is? CFOs kill a lot of these deals. I've got to trust that there's a payback."

A new landscape

Gentex earmarks a significant chunk of its revenue — generally 6 to 8 percent of sales — for its capital budget, which covers the cost of automation. The company designs its own tooling and produces its own chemicals and coatings on-site.

To date, Gentex has not eliminated any of the 4,000 Zeeland workers it has had since emerging from the 2008 recession. More products are being made now in Zeeland, including garage door openers, backup cameras and sensors for self-dimming headlights. As the company adds automation, workers are reassigned to other tasks.

But the landscape of the factory is clearly changing.

A typical production line is staffed by just five or six workers who feed mirror components from racks, monitor equipment and conduct backup visual inspections. Only a decade ago, 20 to 30 gowned workers would assemble mirrors along a long production line in a clean room, according to Downing.

Finicky

It's a finicky process to assemble the glass, frame, coatings, chemicals and light sensors that comprise these mirrors, which cost five to 10 times more than a conventional auto-dimming mirror.

That's why Gentex consolidated production in one location. Defects in the highly engineered mirrors are costly, so it made sense to put the work under the watchful eyes of several hundred Michigan engineers.

The company's Michigan wages average $14.50 an hour, which it supplements with a quarterly profit-sharing bonus of 13 to 18 percent of wages.

By contrast, suppliers in Mexico typically pay just $2.61 an hour, according to a Center for Automotive Research report published last year. But Gentex shut down production of its HomeLink garage door openers in Mexico after it purchased that operation from Johnson Controls Inc. in 2013.

The Mexican plant had aging equipment, and Gentex concluded it would be impossible to boost output without hiring more workers. Instead, the company installed new production equipment in Zeeland.

Now, 40 U.S. workers are needed on a line that once required 100. The business unit is 20 percent more productive, Downing says.

The Gentex factory in China also fell victim to a cost-benefit analysis. At the insistence of several customers — including SAIC Motor and Beijing Automotive — Gentex set up a plant in Shanghai to handle final assembly of self-dimming mirrors.

Gentex shipped glass and circuit boards to China, where workers would unpack the components, assemble them and repack them for shipment to customers.

But that, too, was inefficient. Gentex argued it could ship the finished products cheaply from Zeeland, but China's state-owned automakers insisted on local production. During the global recession, Gentex finally got permission to shut down its Shanghai factory.

"Desperation is a beautiful thing," Downing quipped. "It allowed us to force our Chinese customers to tell us the truth. We asked them: 'Do you care more about localization or low prices?'"

Gentex was able to negotiate discounts of 30 to 40 percent on goods shipped from the U.S. to China, since shipping companies were eager to fill half-empty cargo containers. That made it profitable to ship mirrors from Zeeland, even though they were subject to China's import tariff.

Job killers

Gentex has an advantage over other suppliers that might feel the pressure to repatriate manufacturing work, according to Jay Baron, president of the Center for Automotive Research in Ann Arbor, Mich. Highly engineered products and new technologies come with a higher price tag to customers and yield bigger margins. But for more mundane parts with high labor content, locales such as Mexico and China will retain a competitive advantage, Baron says.

"Things like cut-and-sew seat covers and wire harnesses are relatively low-tech," Baron said. "Those products don't change a lot, and they are labor intensive."

Baron and others believe such labor-intensive products will simply never return to U.S. factories.

Moreover, analysts believe U.S. auto-sector employment will continue to decline as factories become more efficient.

According to a 2015 study by Michael Hicks, economics professor at BallStateUniversity in Muncie, Ind., automation is by far the leading cause of manufacturing job losses.

Manufacturers of vehicles and transportation equipment increased their productivity per worker by 64 percent during the study's 10-year period, Hicks found. But the sector saw the elimination of 716,500 jobs during the period — and productivity gains directly accounted for nearly 86 percent of the losses.

"Employment in manufacturing has stagnated for some time, primarily due to growth in productivity," the report concluded.

More business

Despite its devotion to automation, Gentex has not laid off U.S. workers because sales have kept growing. Last year, Gentex revenues totaled $1.68 billion, up from $1.01 billion in 2012.

The full-display mirror adopted by Cadillac is in test production for four other customers.

But it is far from certain how that will translate into more jobs.

Recent advances in robotics are making automation more common among suppliers, a development that will likely make the companies need fewer workers — even as the Trump administration campaigns for manufacturing jobs growth.

Robot-makers such as Fanuc and ABB Robotics are introducing "collaborative" robots that can operate side by side with human workers on an assembly line, rather than being segregated in more expensive automation areas, in safety cages or behind plexiglass shields.

Gentex itself is testing ABB's collaborative robot — dubbed YuMi — in its Zeeland plant.

If other companies emulate Gentex's "build-it-here" strategy, there may be more robots to come — but not necessarily more American jobs.

.

[kscarbel2]

For thousands of U.S. auto workers, downturn comes fast

Automotive News  /  June 21, 2017

LORDSTOWN, Ohio -- Wall Street is fretting that the U.S. auto industry is heading for a downturn, but for thousands of workers at General Motors factories in the United States, the hard times are already here.

Matt Streb, 36, was one of 1,200 workers laid off on Jan. 20 -- inauguration day for President Donald Trump -- when GM canceled the third shift at its Lordstown small-car factory here. Sales of the Chevrolet Cruze sedan, the only vehicle the plant makes, have nosedived as U.S. consumers switch to crossovers, SUVs and pickup trucks.

Streb is looking for another job, but employers are wary because they assume he will quit whenever GM calls him back. "I get it," said Streb, who has a degree in communications, "but it's frustrating."

Layoffs at Lordstown and other auto plants point to a broader challenge for the economy in Midwestern manufacturing states and for the Trump administration.

The U.S. auto industry's boom from 2010 through last year was a major driver for manufacturing job creation. The fading of that boom threatens prospects for U.S. industrial output and job creation that were central to President Trump's victory in Ohio and other manufacturing states.

"This is about economics, not what Trump says," said Robert Morales, president of UAW Local 1714, which represents workers at GM's stamping plant at Lordstown. "Even if Trump went out and bought 10,000 Cruzes a month, he wouldn't get the third shift back here."

Last week the Federal Reserve said U.S. factory output fell 0.4 percent in May, the second decline in three months, due partly to a 2-percent drop in motor vehicles and parts production.

Mark Muro, a senior fellow at the Brookings Institution, has compiled data from government sources that show the auto industry punching higher than its weight in job creation in recent years -- accounting for between 60 percent and 80 percent of all U.S. manufacturing jobs added in 2015 and 2016.

In the first quarter of this year, the auto industry accounted for less than 2 percent of the 45,000 manufacturing jobs created.

"There's no argument with the idea that auto has been pulling the manufacturing sled up the mountain for the last three or four years," Muro said. "If you take auto out, you’re left with a very tepid outlook indeed."

Long-term auto layoffs could threaten the economies of communities and states directly affected, although after decades of boom and bust, many communities in the auto manufacturing heartland have diversified.

In Ohio's MahoningValley, which was battered by the collapse of the once-dominant steel industry, the boom in drilling for shale gas helps offset job cuts at auto plants.

Lordstown Mayor Arno Hill says the town salted away money during the boom to pay down its debts and new businesses are coming in, including a $900-million power plant being built in town that will burn cheap natural gas produced in the region.

GM makes up 40 percent of tax receipts versus 85 percent in the early 1990s, he said.

"GM is still the brightest star in the MahoningValley, but luckily we have diversified our economy," Hill said. "There is pain for the laid-off workers, but it won't hurt us as bad it used to."

Lordstown's workers have taken steps to blunt the impact of layoffs, with help from GM.

Matt Streb's wife is due to start work soon after getting a degree, while he hopes to return to a former job as a mailman. In the meantime, GM gave advance notice of job cuts so he saved extra money and has drastically cut his spending.

"The auto industry is cyclical and has always had its ups and downs," Streb said. "This is just another Lordstown downturn."

Stalling sedan sales

The recent decline in U.S. auto sales is still minor compared to the dramatic collapse during the 2007-09 financial crisis, when demand for new vehicles plunged to its lowest levels in decades.

However, the days when auto assembly and parts plants throughout the Midwest were running flat-out because of high demand for nearly every type of vehicle are over. Recent sales trends show consumers becoming more selective, shunning older models and especially smaller cars.

For much of the boom that ran from 2010 through to a record year in 2016, when 17.55 million new vehicles were sold, the share held by cars has declined versus "light trucks" -- or pickup trucks, SUVs and crossovers.

After peaking at 51.32 percent of all sales in 2012, passenger cars fell to 40.4 percent of light-vehicle sales in 2016. That decline equates to the output of seven or eight vehicle assembly plants.

Through the first five months of this year, car sales fell 11 percent, even as light-truck volume rose 4.7 percent.

To avoid profit-sapping discounts, and reverse a decline in prices of used vehicles, automakers are ordering more and deeper production cuts.

GM has laid off more than 5,000 workers so far this year -- including 1,000 at its Fairfax plant in Kansas that makes the Chevrolet Malibu midsize sedan. GM has also laid off 1,100 workers at a plant in Lansing because it has ended production of the GMC Acadia crossover there.

More GM workers will be hit with temporary layoffs this summer. The Lordstown plant will shut up shop for five weeks this summer, much longer than the usual two-week summer vacation closure.

Many laid-off GM workers are finding temporary employment at other sites or taking permanent transfers to plants like its Arlington, Texas, factory where production of large SUVs continues unabated. However, those temporary postings require workers to relocate hundreds of miles from home.

Randy Freeman, president of UAW Local 652, which represents workers at GM's Grand River plant in Lansing, Mich., which produces Cadillac sedans and the Chevrolet Camaro, says he has been pleased by GM's efforts to rehire workers and relations with the automaker "are on an upward swing."

The threats to U.S. workers building sedans are not likely to ease, barring a spike in the price of gasoline. Ford Motor Co. signaled its long-term pessimism about small-car demand in the United States by announcing plans on Tuesday to shift production of the Focus compact car model to China. The Michigan plant that builds the Focus currently is expected to switch to building pickup trucks and SUVs in 2018.

At GM's Lordstown and Lansing Grand River plants, UAW representatives say they are focused on improving quality in the hope that GM will pick their plant when it's time to find a location for producing a new truck or SUV.

At Lordstown, for instance, union officials tout the fact the plant has just won a quality award for local innovation on a part that helps the Cruze run better.

"We're working hard to make the best product we can," said Glenn Johnson, president of UAW Local 1112 at Lordstown, "so we can raise our hands and say to GM 'look at what we can do.'"

[kscarbel2]

Trump pledges to protect 'Made in America' products

Reuters  /  July 17, 2017

WASHINGTON -- President Donald Trump promised on Monday he would take more legal and regulatory steps during the next six months to protect American manufacturers, lashing out against trade deals and trade practices he said have hurt U.S. companies.

Trump climbed into an American-made fire truck parked behind the White House, took a swing with a baseball bat in the Blue Room, and briefly donned a customized Stetson cowboy hat in front of cheering manufacturing company executives from all 50 states gathered to hear him praise their products.

"I want to make a pledge to each and every one of you: No longer are we going to allow other countries to break the rules, steal our jobs and drain our wealth," Trump said.

He was speaking to a trade show -- albeit one with a protectionist bent -- organized by the White House to spotlight his efforts to revive the flagging manufacturing sector.

Trump's remarks came as the administration laid out priorities for revising the North American Free Trade Agreement with Canada and Mexico. Trump is also reviewing options to restrict steel imports. Both trade priorities have major implications for the U.S. auto industry.

Trump did not give details about what his administration would do to protect manufacturers, but he railed against tariffs charged by other countries and unfair trade practices.

"That includes cracking down on the predatory online sales of foreign goods, which is absolutely killing our shoppers and our shopping centers," he said.

"If you look at what is going on with shopping centers and stores and jobs and stores, it’s been very, very tough for them. They’ve have had a very hard time, closing at numbers and records that have never been seen before," he said.

It was unclear what Trump meant by stopping "predatory online sales," and the White House did not immediately respond to a request for more information on that subject.

Trump spoke in front of a panoply of iconic American-made products: Gibson guitars, Maryland crab pots, a Delaware-made NASA space suit and Cheerwine soda.

"Your drivers are very good," Trump said to a representative of Ping, the Arizona-based maker of golf clubs, noting that he had golfed with British pro golfer Lee Westwood, who is a fan.

He discussed sales of Sikorsky helicopters -- "I have three of them!" he said, lifted horseshoes made with Nucor Corp. steel, and strolled past vacuum-sealed Omaha steaks.

He told the manufacturers that he was working for a "level playing field" for their wares.

"But if the playing field were slanted like a little bit toward us, I'd accept that also," Trump said.

[kscarbel2]

Proposed U.S. border tax killed by Republicans

Automotive News  /  July 27, 2017

Republican leaders in Washington, D.C., conceded on Thursday that a border-adjusted tax doesn’t have support to be part of negotiations to overhaul the U.S. tax code, a move that is sure to make U.S. and Canadian auto executives happy.

The controversial border adjustment tax was meant to discourage U.S. companies from manufacturing products overseas and then importing them back into the United States for sale.

The decision is a major victory for large importers who lobbied aggressively against the proposal, including a coalition that included automakers such as Toyota Motor Corp.

A statement Thursday from the so-called Big Six -- House Speaker Paul Ryan, R- Wis., House Ways and Means Committee Chairman Kevin Brady, R-Calif., White House economic adviser Gary Cohn, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell, R-Ky., and Senate Finance Committee Chairman Orrin Hatch, R-Utah -- said due to unknowns associated with the border-adjusted tax, the group “had decided to set this policy aside in order to advance tax reform.”

"And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base," according to the statement.

Ryan and Brady had been telling Republicans prior to the statement’s release that the controversial border-adjusted tax on imports would no longer be part of tax-legislation negotiations, according to four people familiar with the ongoing discussions.

Canadian Automotive Parts Manufacturers’ Association President Flavio Volpe believed the debate over a border adjustment tax ended a long time but he’s still happy to hear it’s official.

“It’s interesting timing…less than a month before we begin debating NAFTA. It’s a good signal,” Volpe told Automotive News Canada. “If you remove the anxiety around it being on the table as part of NAFTA, or you remove it from the table as being part of a future tax reform package, you don’t have to model into a trade deal between the three countries.”

A border tax could have severely hurt the Canadian auto industry, he said.

“I don’t think anyone believe threats of 20 or 30 percent were anything but political but threats of 3.5 percent or something in that order would have crippled a lot of the segment,” Volpe said.

The border-adjusted tax, which would replace the current 35 percent corporate rate with a 20 percent levy on companies’ domestic sales and imported goods, had been a centerpiece of the House GOP tax plan endorsed by Brady and Ryan. It was estimated to generate more than $1 trillion over a decade, which would help pay for tax cuts promised by Republicans.

The concept had been under attack by retailers and other industries that rely on imported goods, who mounted a campaign saying it would raise prices for working Americans on everyday goods.

In January, Linamar CEO Linda Hasenfratz told an audience at the Automotive News World Congress in Detroit that a border tax would be detrimental to business.

“The prospect of trying to put some trade barriers up between those countries is extremely troubling,” she said at the time, noting that the average automotive part crosses a border seven times in North America before it ends up in a consumer’s driveway.

“Can you imagine adding a border tax seven times to these products that are passing back and forth between our borders?” asked Hasenfratz. “It would add enormous cost that no one can bear.”

[kscarbel2]

EPA review seeks array of data

Automotive News  /  August 1, 2017

EPA expands testing for CAFE midterm review

TRAVERSE CITY, Mich. -- The EPA will expand its real-world testing of automotive powertrains as it begins to compile data for the new review of the agency’s 2025 model year fuel economy and greenhouse gas standards.

Speaking Tuesday at the CAR Management Briefing Seminars, Christopher Grundler, director of the EPA’s Office of Transportation and Air Quality, said the review will incorporate test data to a greater extent than ever.

The review is due by April 1 and could change the 50.8 mpg fleetwide average fuel economy goal enacted Jan. 13 in the final days of the Obama administration.

Some feel the fuel economy standard was rushed through without proper vetting in order to secure the outgoing president’s legacy on the environment. In March, the Trump administration ordered the EPA to reopen the midterm review.

Grundler said engineers working at the EPA’s Ann Arbor, Mich., emissions lab will tear down and benchmark a greater number of powertrains this time, including a diesel engine, a 10-speed transmission, a downsized and turbocharged engine and Toyota’s new 2.5-liter four-cylinder that had a thermal efficiency rating at 41 percent.

There will be another new twist this time, he revealed: The EPA will buy consumer data that quizzes new-vehicle buyers on such things as their satisfaction with their real-world fuel economy.

As part of the drive to collect new data, Grundler said, EPA officials are working with automakers, suppliers, the California Air Resources Board (CARB) and government agencies in Europe and China.

“We are also stepping up our work to test vehicles once they are in customers’ hands. We’re developing new screening methods to ensure these engines are behaving in the real world in a correlated manner when we test them in the laboratory, so we no longer have defeat-device cases to pursue,” said Grundler.

In February, the Alliance of Automobile Manufacturers, representing the Detroit 3 and several import brands, asked the Trump administration to reopen the review of the 2025 model year standards. Automakers felt the adoption of the goals was rushed to cement Obama’s legacy on the environment. Former EPA administrator Gina McCarthy finalized the 2025 model year standards on Jan. 13, some 15 months before April 1, 2018, the latest date the EPA could accept, reject or adjust the 2022-25 model year standards.

That April 1, 2018, date has been restored.

EPA researchers are gathering new data that will help determine if fleet average fuel economy should stay at 50.8 mpg or be rolled back.

The original standard called for the equivalent of 54.5 mpg by the 2025 model year, but surging demand for less fuel efficient pickups and SUVs lowered the 2025 fleet average to 50.8. The standard is written to be adjustable to take into account the mix of vehicles sold.

Grundler said the EPA is ensuring that its testing methods are uniform across all its labs and that the data are certified by other labs as being accurate. He also said the EPA is working to streamline and simplify the confusing labyrinth of rules, regulations and laws that govern fuels.

“The midterm review is another golden opportunity for us to rethink how well the regulations are working and to improve them,” Grundler said. “You have heard me say from this exact podium that with all the changes going on in this business, we in the public sector ought to be willing to rethink and change the way we do business and how we are approaching this, and I still believe that.”

One change this time is that the EPA is buying consumer data from a company that surveys new-car buyers, although Grundler did not identify the company. However, he cited examples of questions that were similar to the consumer fuel economy questions normally asked on J.D. Power’s Initial Quality Survey.

“We pledged that this will be a robust, transparent and inclusive process, and the main goal is to allow more time to gather more information, more up to date information and to allow us more time to coordinate with NHTSA and what we are doing,” he said.

Grundler’s message this year did not focus on CO2 levels, which were the centerpiece of his presentation at the seminars last year.

“Elections do have consequences and politics are changing and will continue to change. That’s part of American democracy,” he said. “But one thing is constant, and that’s the mission of the Environmental Protection Agency, to protect public health and the environment because that is rooted in the law.

“Our job remains to provide the best technical advice, scientific advice and what the law says to our political leadership.”