Auto Outlook: Green auto jobs become political football

By AL SWANSON, United Press International  |  Oct. 2, 2011 at 4:00 AM
share with facebook
share with twitter
1 of 2
| License Photo

The bipartisan compromise reached in the Senate last week to end the possibility of a U.S. government shutdown is good news for the auto industry.

Republicans in Congress demanded expenditures for the Federal Emergency Management Administration, which helps communities recover from natural disasters, be offset by cuts in other programs, including a $25 billion clean-technology car loan initiative to industry.

The deal -- which provides stopgap funds to run government operations until Nov. 18 -- provides FEMA with badly needed monies without any cuts in federal clean energy programs.

Michigan Sen. Debbie Stabenow cheered on House Democrats who fought cuts in a U.S. Energy Department program that provides loans to companies to retool to make more fuel-efficient vehicles.

The program has granted loans to a half-dozen companies to help save or create as many as 40,000 jobs, The Detroit News reported. Nissan North America received $1.4 billion to produce advanced-technology batteries and its all-electric Nissan Leaf compact in Smyrna, Tenn.

Ford, Chrysler and the United Auto Workers lobbied to keep the green vehicle loan program. Ford credited a $5.9 billion loan it got from the program for saving 33,000 jobs by allowing it to convert 11 engine, transmission and assembly plants in Kentucky, Ohio, Illinois and Missouri, USA Today reported.

Other beneficiaries included Severstal Dearborn, which is in line to receive $730 million to manufacture advanced super-strong, high-tech steel, electric carmakers Fisker Automotive, $529 million, and Tesla Motors, $465 million, and Vehicle Production Group, $50 million.

Democrats said $1.5 billion left unspent in the Advanced Technology Vehicle Manufacturing loan program could create 10,000 more jobs, the News said.

"Michigan has a jobs disaster for the last 10 years. Why in the world would the Republicans want to zero in on a program that's actually creating jobs?" asked Stabenow, who wrote the 2007 legislation creating the loan program during the Bush administration. "We need the kind of disaster assistance that's currently being provided as we retool plants in Michigan."

Fiat-owned Chrysler LLC Chief Executive Officer Sergio Marchionne has said the automaker hopes to receive a $3 billion loan from the Federal Financing Bank after more than 18 months of negotiations.

"This is a win for everyone," said Senate Majority Leader Harry Reid, D-Nevada, after the Senate voted 79-12 Monday night to approve a bipartisan compromise. He said he couldn't imagine Republicans would try to target the clean auto loan program again.

The House, which was in recess last week, still must approve the deal, and that's not certain because of Tea Party opposition.


GM partners with China on electrics

General Motors Co. Chairman Steve Girsky last month said the Detroit automaker was joining forces with a Chinese partner to develop and build electric vehicles.

The deal with Shanghai Automotive Industrial Corp. is GM's second with an Asian automaker to develop electric vehicles after announcing a partnership on electrics with LG Group of South Korea in August, The Detroit News said.

Central government planners in China want to put 1 million fuel-efficient hybrids and 500,000 all-electric plug-in vehicles on the road by 2015, and 5 million by 2020.

"The co-development of this new electric vehicle architecture demonstrates the broad range of benefits made possible by the strong partnership between SAIC and GM," said Tim Lee, president of GM International Operations. "For almost 15 years, our two companies have forged some of the industry's most successful joint ventures."

GM, which owns 49 percent of SAIC, expects to invest $5 billion to $7 billion in China by 2016.

Girsky said GM had no plans to build the technologically state-of-the art plug-in hybrid Chevrolet Volt in China or import the Chinese made electrics to North America, the News said.


New life for Saab

The Dutch parent company of Sweden's Saab has won its second bid for time to come up with a business plan to save the embattled automaker. But Saab may have to shrink if it is to survive long enough to secure funds from willing Chinese investors.

"During the coming weeks, Saab Automobile will identify areas throughout the whole organization where efficiencies can be gained," Swedish Automobile N.V. said in a statement after a court granted the company protection from its creditors in late September.

The ruling, similar to a Chapter 11 bankruptcy in the United States, gives Saab three months to come up with a reorganization plan but the company can request an extension, The Wall Street Journal said.

Saab, whose 3,700 employees haven't been paid for August, won the new lease on life from the Court of Appeal in Gothenburg after a regional judge had said he didn't think the automaker was likely to survive.

"The purpose of the voluntary reorganization process is to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions by Pang Da (Automobile Trade Co.) and (Zhejaing) Youngman (Lotus Automobile Co.).

"The Swedish Company Reorganization Act says that an application shall not be approved unless there is reasonable cause to assume that the purpose of the reorganization will be achieved. In today's (Sept. 21) decision, the Court of Appeal has found that such conditions exist, thereby overturning an earlier ruling by the District Court in Vanersborg, Sweden."

Translation: Saab is likely to get a lot smaller as it waits for regulators in Sweden and China to approve a Chinese cash infusion that could eventually see jobs shift to China.

Swedish Automobile also announced a cost-cutting initiative to streamline work and reduce organizational structure to cut its fixed and variable costs this year, MarketWatch said. No details were given before Saab meets with its creditors in late October but the automaker said, "As a result of this initiative, headcount reductions cannot be ruled out."

Pang Da and Zhejaing Youngman Lotus offered a combined $355 million during the summer for a more than 53 percent stake in Saab. Saab's management meets Nov. 11 to discuss restructuring its board of directors.

The decision means IF Metall, Unionen and Ledarna, the Saab unions that went to court seeking the carmaker's bankruptcy, may have to join creditors that are owned some $210 million and wait to get paid.

Saab shut down production last spring after unpaid vendors refused to extend credit and a vehicle has not rolled off the assembly line at the plant in Trollhattan since April.

Related UPI Stories
Trending Stories