"Why Fuel Mileage Standards Will Benefit The Auto Industry And Create Nearly 700,000 New Jobs"
by Mindy Lubber, via Ceres
Any day now, the Obama Administration will adopt the latest mileage targets for passenger cars and trucks sold in America: an average 54.5 miles per gallon (mpg) by the year 2025.
U.S. automakers are not just sitting around waiting for the official announcement, nor are they waiting 13 years to start delivering gas-sipping vehicles. Under the previously adopted 2012-2016 standards, they are already offering buyers a wider selection of more fuel-efficient vehicles than ever before.
Automakers and suppliers recognize that better fuel economy equals better sales, better profits and more jobs. Their recent hires and investments reflect this:
- Ford is accelerating development of its hybrid and electric vehicles by bringing the design and production of key components in-house, a $135 million investment.
- Ford has already doubled the size of its team working on forward-looking energy technologies – over 1,000 engineers and technicians – and plans to double size of that team again by 2015.
- Honda plans to hire 300 more workers next year at its Greensburg, Ind., plant, which is slated to start producing the Civic Hybrid.
- Volkswagen is adding a third shift at its Chattanooga, Tenn., plant, to boost production of its fuel-efficient Passat.
- Continental, a supplier of fuel-efficient turbo chargers to Ford’s 2014 Focus, is steadily pursuing electrification technologies and sees them as a “long-term investment.”
These represent just a handful of examples of how a shift toward efficiency and advanced technology is driving job creation, investment and innovation across the country.
Top consumer experts back the standards, saying not only that American drivers will benefit financially from more fuel-efficient cars, but also that they want and will buy these higher mileage cars, trucks and SUVs. When July sales numbers were released earlier this month, car company executives observed that consumers paid close attention to the fuel economy of vehicles they purchased. “Fuel economy continues to be a top consumer purchase driver across our lineup,” Ken Czubay, Ford’s head of sales and marketing in the U.S., told the New York Times.
Both within and outside of the auto sector, the confluence of policy, consumer demand and automaker investment will boost employment and the economy as a whole. As automakers hire the people that will design and build more fuel-efficient vehicles, their efforts will spur both employment and sales. At the same time, a significant share of consumer spending will shift from fuel to a wider range of goods and services, spreading shared benefits across the economy.
A Ceres commissioned report, More Jobs Per Gallon, produced by independent analyst Management Information Systems Inc. found that the 54.5-mpg rule would create nearly 484,000 new jobs nationwide and over 43,000 jobs in the auto sector. Another analysis, Fuel Economy Focus: Industry Perspectives on 2020, done in collaboration with Citi Investment Research, found that in 2020, under the new standards, suppliers and automakers – especially the Detroit Three – could expect increased profits and sales.
Automakers—particularly American ones—have been caught flat-footed on fuel efficiency in the past. In 2008, while automakers plodded along with the same old gas-guzzling models as the price at the pump hit record highs, American consumers scrambled for more fuel-efficient vehicles and left the gas-guzzlers to collect dust on the showroom floor.
This time, things are different. Automakers are already working toward achieving the 54.5-mpg standard. They recognize the benefits of a level playing field and of producing a platform that can meet global standards, thereby reducing their fixed costs. Automakers know that offering buyers a wide range of cars and trucks that go farther on a gallon of gas is good for sales and profits in the United States and around the world.
And when the rubber meets the road on the 54.5-mpg standard, they better be ready—or they’ll be left behind.
Mindy Lubber is the President of Ceres and Director of the Investor Network on Climate Risk.