Automakers could see 60K fewer jobs with Trump’s plan — EPA

Source: Zack Colman, E&E News reporter • Posted: Wednesday, August 8, 2018

Speaking to a crowd of Michigan autoworkers in March 2017, President Trump declared, “The assault on the American auto industry is over.” With that, he suggested that strict car rules on fuel consumption were threatening their jobs.

It turns out that the president’s own administration thinks that autoworkers might be better off under the tough rules established by former President Obama.

The Trump administration said its proposal to weaken fuel efficiency targets could result in a reduction of labor equivalent to 60,000 jobs compared with the current standards. The figure was tucked into the 978-page EPA and National Highway Traffic Safety Administration proposal released last week.

Labor unions and some auto manufacturers are criticizing the administration for going too far. Many of those unions have blue-collar members who helped elect Trump in key states throughout the Rust Belt. Even some unions that backed Trump’s protectionist trade policies have come out in opposition to his plan to freeze efficiency standards at 30 mpg through 2026.

“We’re concerned that we know these standards are improving globally, and if we aren’t careful, we’ll allow other countries to capture this new technology investment, and they’ll get a lot of the jobs that go with that,” said Roy Houseman, legislative representative for the United Steelworkers, which has backed the president’s steep tariffs on imported steel and aluminum.

Ratcheting down the fuel efficiency rules is one of Trump’s biggest environmental decisions. The White House sees it as delivering on a campaign promise to his base in Michigan, Ohio and other states that helped catapult him into the presidency. His populist rhetoric and his distaste for free-trade policies were popular in the Midwest, especially among workers in the auto industry.

But many of those unions have been critical of the administration’s fuel efficiency plans. The United Auto Workers, the sector’s largest union, didn’t specifically comment on the plan. Instead, it referred E&E News to comments from former President Dennis Williams, who retired on June 15.

Asked earlier this summer whether he supported softening the standards, Williams said: “No, I don’t. I looked at that. We had an agreement during the Obama administration, all the companies agreed to it, we agreed to it, the environmentalists agreed to it. I don’t think that we ought to be rolling back the standards. I think we ought to use some common sense here.”

The Motor & Equipment Manufacturers Association, a trade association whose membership includes auto suppliers, referred E&E News to comments it submitted to the government last year. The group said, “Major changes to the stringency of these standards would result in significant ramifications on supplier jobs as well as long-term business and technology investments.”

A slowdown in jobs might be driving those concerns. The administration’s employment projection says the industry could see 60,000 fewer job-years by 2030, under the administration’s preference to freeze vehicle fuel efficiency standards at 2020 levels. A job-year is equivalent to a single person working for one year.

Employment would still increase between 2017 and 2030 under Trump’s plan, but 4 percent less than with the Obama targets.

The White House did not respond to a request for comment. EPA referred E&E News to NHTSA.

“Under the preferred alternative, at least a million more new vehicles would be manufactured and sold, and that will result in positive labor impacts on the automotive sector,” a Transportation Department spokesperson said in a statement. “The model was not designed to predict actual labor impacts. The analysis doesn’t even focus on U.S. labor. The labor data were intended to be illustrative of potential impacts on a very narrow range of economic activity.”

EPA and NHTSA proposed changing the standards because they said the current levels required fuel-saving technology that made cars prohibitively expensive. The agencies argued that consumers might forgo purchasing new vehicles and remain in outdated, less safe models.

Many of the benefits in the administration’s calculations come from avoiding on-road fatalities and reducing regulatory burdens. Economists and vehicle experts, however, have questioned some of the administration’s assumptions (Climatewire, Aug. 6).

But the Obama administration made its own assumptions on the broader economic effects from its standards, too. NHTSA and EPA said in the proposal that it can’t be assumed that U.S. manufacturers would supply all the jobs and parts for meeting the more stringent standards or that the requirements wouldn’t result in relocation of jobs.

The agencies suggested that consumer savings from buying more affordable vehicles would boost auto sales. That in turn could result in additional fuel efficiency technology that “may not otherwise be produced or deployed were it not for regulatory mandate.” But the administration also acknowledged that freezing the standards would depress the auto manufacturing sector.

“While the increased sales slightly increase estimated U.S. auto sector labor, because producing and selling more vehicles uses additional U.S. labor, the reduced outlays for fuel-saving technology slightly reduce estimated U.S. auto sector labor, because manufacturing, integrating, and selling less technology means using less labor to do so,” NHTSA and EPA said in their analysis.

That underscored what many economists, technology advocates, auto companies and unions have said — that restricting the incentives to innovate could crimp manufacturing and hand market share to foreign competitors.

“I think it’s important that the administration listen to the key stakeholders, listen to those who actually have to manage in this global environment because automakers are all global,” said Carla Bailo, executive director with the Center for Automotive Research.

Bailo acknowledged that the fuel efficiency increases were “steep” between 2021 and 2025 under Obama’s rules. Given that, it might have been appropriate to “relax” the levels, which is another option available to the government as it reviews the Obama-era standards.

But Bailo also said that “global context” matters.

Ignoring the auto market’s global nature might actually mean the Trump administration’s employment estimate is too optimistic, said Zoe Lipman, director of the vehicles and advanced transportation program with the BlueGreen Alliance, a partnership between labor unions and environmental groups.

The issue is that new technology drives investment, Lipman noted. If the United States doesn’t keep pace, those dollars will flow elsewhere to upgrade facilities where companies are building vehicles to meet ever-increasing global standards in big markets like China.

The BlueGreen Alliance and the Natural Resources Defense Council said in a 2017 report that 1,200 factories across 48 states employ 288,000 workers who make component parts and technologies related to fuel efficiency. The top three states were Michigan, Ohio and Indiana, all of which Trump carried in the 2016 election.

“This estimate on jobs impacts doesn’t take into account what happens if, as a result of stepping away from the standards, the U.S. misses the boat on the next generation of technology,” Bailo said. “That would have even more of an impact.”