Big Three See Little To Cheer In State Of Union

As Ford Motor Co. reported the worst loss in the company's history, $12.7 billion for the year--the cost of downsizing--President Bush may have added to the company's woes this week. For in his State of the Union Address, Bush asserted that he will push for higher fuel efficiency standards, but made no mention of government support for new power train technology such as ethanol and hydrogen fuel cells.

This is bad news for the Big Three for reasons that are obvious to anyone looking at sales volume. Truck sales are the backbone of Ford, General Motors and Chrysler Group. President Bush said he would seek a 20% reduction in gasoline use in the U.S. by 2017.

Michigan's lawmakers--including Joe Knollenberg, (R-Bloomfield Hills), Mike Rogers, (R-Brighton), and the powerful John Dingell (D-Dearborn)--are bemoaning a lack of assistance from Washington in getting oil companies to meet automakers halfway when it comes to ethanol and lower-sulfur diesel, both of which shave oil company margins.

On his Web site, Dingell said the White House "has gotten far too comfortable with placing unreasonable burdens on some Americans at the expense of all of us." And while he applied that theme to soldiers in Iraq and the President's desire to "disguise a tax break as a major new health care initiative," he made sure to apply that theme as well to the President's fuel economy statement, with a nod to GM's ethanol program.

"Vehicles that run on [biodiesel, ethanol and other renewable fuels] are being produced in record numbers--right here in America," he said, on the Web site. "I agree with the President that we need to ... increase their availability ... but the President also needs to put pressure on the oil industry," to increase availability of alternative fuels. Currently E85 is available in only a handful of states.

Complaints that Washington is asking for sacrifice from Detroit without supporting the Big Three are not new and have grown more strident as the Administration has rebuffed CEOs of the Big Three. All are dealing with turnaround efforts, and last year sought policy changes that would allow them stronger currency positioning in the U.S., some leverage with regard to their pension burdens, and research and development support toward new technology.

Toyota served up a statement yesterday from Jo Cooper, group vice president, government and industry affairs, in support of the President's proposal, described as: "An ambitious vision to promote fuel conservation and strengthen our nation's energy security," - and its own hybrid-vehicle program as part of that solution.

Toyota, which makes hybrid versions of its Camry, Highlander, Lexus GS and RX vehicles, and of course, the Prius, plans to double the number of hybrids it offers by 2010, with emissions levels 75% lower than in 2005.

What Toyota is seeking is an extension of the federal tax credit hybrid vehicle buyers get--up to $3,150 per buyer--which is supposed to apply to those automakers' selling fewer than 60,000 hybrids per year. Toyota has surpassed that.

Meanwhile, GM has tried to hitch its future to hydrogen, holding out the potential for zero emissions and cheap supply. Jim Sanfilippo, consultant with AMCI, Detroit, said the President's speech--with its emphasis on emissions reductions but not a commitment to hydrogen--lacked direction and initiative.

"Every single President, from 1974 to the current--any time you hear their energy policies--it has come out specious and anemic," he said. "In the post-Nader world it has become habit to blame automotive companies--to make them the villains -- but the great irony is that it's the car companies who, with the hydrogen economy, are driving the greatest engineering and social change on the globe.

"If you grew up in the fifties," he added, "you remember Mr. Kennedy's mission statement, that we would land a man on the moon in nine years, from scratch. That was arguably a more difficult accomplishment [than moving to a hydrogen economy].

One day we'll wake up and see that China has become the first global hydrogen economy, not us."