UAW holding talks with Detroit 3 on new fuel-economy rules

UAW holding talks with Detroit 3 on new fuel-economy rules
Union aims to protect factory jobs

Automotive News | July 12, 2011 – 3:31 pm EST
UPDATED: 7/12/11 6:04 pm ET

DETROIT (Reuters) – The United Auto Workers, including its chief Bob King, is hosting executives from the big U.S. automakers this week to discuss future fuel-economy standards and their potential impact on union members’ jobs, several sources said on Tuesday.

The meetings to discuss the new corporate average fuel efficiency (CAFE) standards for 2017 through 2025 are taking place Tuesday and Wednesday at the union’s downtown Detroit headquarters, said people familiar with the meetings, who asked not to be identified.

In addition to King and other UAW officials, the meetings will include vice presidents from General Motors, Ford Motor Co. and Chrysler Group LLC, which is managed by Fiat, the sources said.

The sources initially said staff members from the Department of Transportation and the Environmental Protection Agency, jointly working to develop the new standards, also would attend, but later said that was not the case.

GM, Ford and Chrysler declined to comment on the meetings. Regulators and UAW officials could not be reached.

The push to boost fuel efficiency has forced automakers to redesign their vehicles and use lighter but more expensive materials. These efforts are likely to raise the cost of vehicles and may pinch automakers’ margins.

The interest of the UAW, which opens labor talks with the big U.S. automakers this month, is simple — protect jobs, said Jay Baron, chief executive of the Center for Automotive Research.

“As you go to a high level of CAFE, the demand for vehicles will go down and therefore production in the U.S. will go down,” he said. “If the government forces too high a level of fuel economy, beyond what the average consumer wants to pay for, that will be a problem.”

The union’s concern about the impact of the new CAFE standards on jobs echoes those raised by 15 Republican state governors last month. The governors urged federal regulators to take into account jobs and the weak economy in formulating the standard, warning against “overreaching.”

Companies and trade groups are sensitive to the economy, especially after Friday’s dismal report that showed job growth ground nearly to a halt in June.

“The administration needs to take extra special attention in preserving jobs as we improve fuel economy,” said Gloria Bergquist, a spokeswoman with the Alliance of Automobile Manufacturers. The trade group represents 12 automakers, including the big U.S. companies.

Federal officials have been meeting regularly with the automakers regarding the CAFE standards for 2017 and beyond.

In 2009, the Obama administration raised CAFE standards, requiring automakers to boost the average fuel efficiency of their vehicles to 35.5 miles per gallon by 2016.

Regulators are now considering lifting CAFE standards to 56.2 miles per gallon for the 2017 to 2025 time period, according to a source familiar with the plans. The Obama administration has publicly said it is targeting a range between 47 mpg and 62 mpg.

The CAFE standard in 2010 was 29.2 mpg.

Transportation Secretary Ray LaHood last month declined to say whether the U.S. government would consider sharing the cost of vehicle development with automakers and consumers. He said current talks with companies have focused solely on finding the right standard.

CAR, which recommends a new CAFE standard of 47 mpg, estimated that setting the level at 56 mpg would cause prices per vehicle to jump by about $6,700. The study has been criticized for overestimating the cost of the technology needed to boost fuel economy.

The National Automobile Dealers Association estimated that at under a 56 mpg standard the industry would lose 220,000 jobs, while another report by the U.S. Energy Information Agency estimated U.S. light vehicle sales would fall 14 percent at a 62 mpg standard.

The UAW has been losing membership since its peak in 1979, when it had nearly 1.5 million members. Last year was the first time the UAW gained members in six years.

The UAW had 376,612 members at the end of last year. That is still a fraction of its 2004 membership of about 655,000.

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