Bob King, chief of the United Auto Workers (UAW) is meeting with federal regulators and executives from the Detroit three automakers this week to discuss the potential impact of upcoming CAFE standards on union members' jobs. The meeting is being held at the UAW's Detroit office, unidentified sources told Reuters.
GM, Ford and Fiat-controlled Chrysler as well as staff members from the DOT and EPA. To meet the new standards, automakers have been forced to redesign their vehicles with lighter and more expensive materials.
The UAW is concerned the cost of materials may raise the cost of new vehicles, cutting into automakers' profits. The UAW wants to protect union members' jobs. "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," said Jay Baron, chief executive of the Center for Automotive Research (CAR). "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."
Automakers had to reach a CAFE average of 29.2 mpg in 2010 and in 2009 the Obama administration raised CAFE standards to a 35.5 mpg average by 2016. Now the Obama administration wants the 2017 through 2025 average to be set between 47 mpg and 62 mpg. Reuters reports that a source familiar with the plan told them that regulators are considering 56.2 mpg for the target.
CAR warns against setting the level at 56 mpg because vehicle prices would increase by an average of $6700 and recommends setting the CAFE standard at 47 mpg. Reuters says "the study has been criticized for overestimating the cost of the technology needed to boost fuel economy."
But the National Automobile Dealers Association and the U.S. Energy Information Agency echo CAR's concerns. NADA estimates that a 56 mpg CAFE standard would lose 222,000 jobs. And U.S. Energy Information Agency estimates U.S. light vehicle sales would fall 14 percent at a 62 mpg standard.
The UAW's concerns resemble those of the 15 Republican state governors last month who warned federal regulators against "overreaching" during a weak economy.
"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, a trade group that represents 12 automakers, including the major U.S.car manufacturers.