Ford CEO Mark Fields used a potential worst-case scenario as the premise for his statements last month when he claimed new federal fuel economy rules would cost the nation one million jobs.
Independent industry analysts and environmental groups looked into Fields’ comments and found huge job losses were just one potential — and unlikely — consequence in a September report by the Center for Automotive Research, Automotive News reported.
Fields made the claim while speaking last month at the National Automobile Dealers Association convention in New Orleans. He didn’t reveal which studies he was citing, though a Ford spokesperson stated Fields made reference to a one report by the Center for Automotive Research (CAR) in Ann Arbor, Mich., which it published in September.
“The point that we made, as a group, on regulations and fuel economy and one national standard, we were not advocating for getting rid of the standards,” Fields said. “We think having one national standard for fuel economy is really important. And we said, various studies have said up to 1 million jobs could be at risk if we’re not given some level of flexibility on that and aligning with market realities, so that really resonated with him,” Fields said in New Orleans.
Fields was referring to a meeting he’d just attended with General Motors CEO Mary Barra, Fiat Chrysler Automobiles CEO Sergio Marchionne, and other automotive executives at the White House on Jan. 24.
The Ford CEO has been vocal over previous Environmental Protection Agency head Gina McCarthy’s sudden decision last month to finalize the 2025 fuel economy rules. Fields and other auto executives think the second phase of the policy is too strict and unrealistic based on low gasoline prices and consumer preferences for trucks and SUVs.
The CAR study presented one possible scenario from the federal fuel economy rules where 1.13 million jobs could be lost. The study used inflated data and ruled out other potential realistic scenarios, analysts have said.
“It’s a particular case taken with a particular set of assumptions that ends in an extreme result,” said Alan Baum, principal of automotive forecasting firm Baum & Associates.
Another scenario in the study finds about 144,000 jobs could be created in the auto industry from the federal rules. For the potential million-plus job loss, 322,000 would be in the automotive sector, according to the study. The remaining 805,000 jobs lost wouldn’t be directly related to vehicle manufacturing.
One other element of the study’s research assumes gasoline will stay at $2.44 per gallon as the national average in 2025. Field’s job-loss forecast is also based on the assumption that adding clean technologies —such as electrification, fuel cells, or 10-speed transmissions — will average $6,000 more in costs for new vehicles; in other scenarios explored in the CAR report, the study predicted cost increases of $2,000 and $4,000 per vehicle.
The International Council on Clean Transportation called the $6,000 estimate “grossly inflated” in a blog post.
The EPA has estimated the cost of adding fuel-saving technologies will range from $894 to $1,565 per vehicle. Baum’s study and others found the extra compliance cost would be about $1,900 per vehicle, starting from a 2010 baseline.
CAR President Jay Baron defended the study after the EPA attacked it. He noted new technology doesn’t always lead to more jobs.
Critics argue there are enough holes in the CAR report to make its conclusions debatable.
“It’s a bit distressing to see something thrown out there that a CEO of a major manufacturer should know is not a credible study,” said John German, senior fellow with the International Council on Clean Transportation.
A version of this article originally appeared on HybridCars.com.
Whose little brother/son-in-law *is* this Fields (Finkelman) guy to have gotten so far so fast?
“Fields and other auto executives think the second phase of the policy is too strict and unrealistic based on”…. the fact all we’re good at are trucks and that’s only gonna get more so.
Fields found his mark and knows how to play him.
Regarding what the EPA estimated, won’t matter much as there are rumors they are going to dismantle it. So if Trump believes clean tech will double, triple, quadruple the price of cars… so be it, you can’t question someone’s “beliefs”.
sportyaccordy – agreed. Fields is preaching to the choir. He knows that the difference between a sh!thead and a brown-noser is depth perception.
“Papa, tell me again about 2004-08, when Ford and GM and Chrysler put all their eggs in the giant-SUV basket and nothing bad ever happened to them because of it.”
They put all their eggs in the SUV basket because that was (and is) where the profits are. Shareholders require a return on their investment, workers and their unions require generous pay and benefits, governments insist on high corporate taxes, and so profits are actually a good and necessary thing. GM, Ford, and Chrysler could have put more resources into small cars, which would have sold better when fuel prices jumped, but that still wouldn’t make them a profit if they are unprofitable to begin with.
That the SUV basket was (and is) where the profits are is a reflection of the regulatory environment; it’s not an immutable fact. Japanese and European auto makers managed to make money selling smaller, fuel-efficient cars out of necessity, while the domestics didn’t because they didn’t need to – and they made extra sure they wouldn’t need to by pushing back against CAFE standards, fuel tax increases, carbon taxes, etc. Unfortunately for them, the US market can’t ignore the rest of the world forever. One of the times it couldn’t was in 2007, when fuel prices spiked due to world events right before a recession hit. Nobody knows when the next one will be, all we know is that it will happen.
Pretending that we can keep building 18mpg SUVs forever is a great way to make sure that, the next time it _does_ happen, Ford and GM will be going hat in hand to Washington once again.
Yes, and consumer preference for oversized vehicles was partly driven by saturation advertising from the bloated three conditioning the public to want ever-bigger trucks and suv’s. Then, with a straight face, they say they’re just selling what the customers want.
That the SUV basket is where the profits are is a reflection of market demands. Consumers don’t give a crap about CAFE, they want crossovers.
And all 3 domestics have had success with small cars at some point either here or abroad. The Focus is a top seller across the globe and has been for decades. Chrysler hail mary’d the K-car platform and did pretty well with the Neon. GM has Vauxhall. Again it’s the market- demand for small cars isn’t super strong so there’s not a lot of room for competitors, and it’s pretty much impossible to take down segment leaders. Without the volume of a Civic it’s impossible to make the investment to build a car that can challenge or beat one.
Not to mention the union obligations.
Sure, American autoworkers lost their job, because over the past four decades foreign car makers proved to be better in making appealing, fuel-efficient cars, eroding away Detroit’s market share in U.S. car sales. So I’d say that it is exactly the opposite of what Fields is saying.
Of course much of the media is criticizing Fields and suggesting his figures are way too pessimistic and/or biased by self-interest, but then just accept the optimistic figures of environmental groups who naturally can be expected to have detailed and reliable information on the costs to provide various fuel saving technologies. I also suspect the scenario that predicts tougher CAFE standards will create 144,000 new auto industry jobs is not mentioning that those jobs are mostly “value creating” environmental compliance lawyers and accountants. Perhaps they are using the same assumptions as those that say the broken windows from those Berkeley “anti-fascist” demonstrations are a net positive for the economy because they “create” jobs for the window repair and private security force industries.
Gotta love a good straw man
No,no. He’s right. If it hadn’t been for fuel economy regulations and emissions forcing “Detroit” to modernize their operations, they’d still be building cars the old way, with old equipment, and lots of employees who would be laid off when sales dropped and rehired when sales increased, with the savings going to the stockholders, just like the ’50s and ’60s.
It was that pesky OPEC that threw things off-kilter in the ’70s, but gas prices would have stabilized eventually. Even now, 30-cent gas in 1963 would be about $2.45 inflation adjusted, and the higher prices than that today are due to increased road taxes.
Just think: we could have continued our 1950s Golden Age indefinitely, with V8 powered full size RWD Electras, Imperials, and Ford LTDs, with a few Falcons, Ramblers, and Studebakers for the thrifty set.
I agree with your basic premise but it was Japan Inc. which forced Detroit to change its processes and products. OPEC had a serious impact but without Japanese alternatives the public would have by and large stuck with whatever Detroit came up with in response.
I’d just like to point out that the price of gas is one of the major factors in calculating “inflation” since increases and decreases in gas tend to be reflected in other costs as well.
You don’t think there will be any jobs for engineers etc. to design the new technologies?
Sure, except that the “optimistic figures” didn’t come from an environmental group, it came from the same CAR study Fields cited. Regardless of the studies credibility, Fields was simply cherry picking the worst case scenario from it. He was simply telling his audience, Trump, what they wanted to hear, gaining some goodwill and probably lining his company up for more profits. Fields is an incredibly smart businessman.
‘technologies —such as electrification, fuel cells, or 10-speed transmissions — will average $6,000 more in costs for new vehicles’
It looks like having to fix a 10 speed tranny will cost more than the blue book on the vehicle when it’s 10 years old.
Nobody ‘fixes’ tranmissions any more. It’s remove & replace. Send the core to a rebuilder who has the volume to justify building a clean room. Even now, if a ten year old transmission gets crunchy, most people scrap the car. Maintenance of any sort costs more than most people can afford.
It is sad when Tesla has put the fear of their market domination in the heads of every big three decision maker….and the response is to completely eliminate the framework in which Tesla has constructed….at this point… a very promising and environmentally friendly business model.
The stubbornness with which these companies can chase numbers is reflected in their beyond incredibly trite parade of initial quality awards or car/truck of the year fluff…their inflexibility will be their doom…
Ford is better at securing more government vehicle contracts and refreshing their truck lines with new grill options….their new car designs are as derivative as their business model is obsolete.
Here’s a crazy idea. Maybe a business leader saying he believes a regulation is hurting his business is actually telling the truth? If a CEO really believed a new regulation would help his business, why wouldn’t he support it?
The whole purpose of CAFE was to force automakers to build cars they didn’t want to. Why are we now pretending that CAFE is NOT doing just that.
The new 54.5 mpg is a joke that is going to be either cancelled or put off indefinitely as it’s simply unrealistic.
“Maybe a business leader saying he believes a regulation is hurting his business is actually telling the truth?”
Based on historical precedent, he’s exaggerating.
Businesses always claim the sky is falling when new regulation is proposed, and then when it actually hits the competent ones figure it out and the world keeps turning.
Remember all the dire consequences the big banks predicted about Dodd-Frank? Those same banks were banking record profits last year, so it seems that perhaps their claims were unfounded.
Six months ago there was wide acknowledgement in the automotive and science publications that 54.5mpg wasn’t going to happen – mostly because whoever came up with the number assumed a 67/33 ratio of cars to “trucks” but the number has shifted to 50/50. So I think the EPA fixated on that number just to give themselves more room to bargain.
It’s equivalent to 36 mpg in terms of the EPA mileage test. Too high for a fleet average in the near future, but it’s not waaay out there. Bring it down a bit and I think it will be a healthy requirement. After all, we the public have to assume that we’ll be called upon to give the Big 3 loans or another bailout next time they start crashing. Forcing them to build decent small cars reduces our exposure.
The more things change. From the Nixon library. Henry Ford II and Nixon discussing safety and emission regulations in 1971
https://www.nixonlibrary.gov/forresearchers/find/tapes/complete/airbag_488-15.pdf
[Unintelligible] we see the price of a Pinto, which now sells for nineteen hundred and nineteen dollars going something like fifty percent in the next three years with inflation part of it, but that’s not the big part of it. It’s the safety requirements, the emission requirements, the bumper requirements. Now, us, what we’re really talking about? We’re talking about trying to put some sense into the Trans-, to DOT and how they go about doing their business. Now, they’ve been in business for, since ’66, supposedly. And, uh, they’ve had problems, we understand that. But, uh, the cost-effectiveness of what they ask us to do has got to be important. And, uh, they, uh, they are asking us to do things that, uh, in our opinion, are driving our people up the wall because they don’t know what to do, and, secondly, they ask us one thing this week and then they cancel that and send us out another direction the next week. They’ve got bumper standards for ’73; they’ve got different bumper standards for ’74; they’ve got, uh, air bag standards. All of these things, uh, the only thing that we want to try to, to, to talk to you about this morning is the fact that these things are all going to cost money. If these prices get so high that people stop buying cars…
President: Ford:
Conv. No. 488-15#7 (cont.)
…they’re gonna buy more foreign cars; you’re going to have balance-of-payments problems….
Right. I’m convinced….
Granted, the foreign [unintelligible] have got to do the same thing, but they’re doing it at a wage rate that’s half [unintelligible].
I know, I know. Sure. Uh, what is, uh, let’s talk a moment about the procedures. How do they come in? Do they have hearings on these sort of things at the DOT?
And then they issue an order and it’s [unintelligible] in the executive register. That’s about all I know about it. Now, you understand, I haven’t approved any policy on it…
Oh,sure.
…yet, but I’m gonna to take a look.
Well, [unintelligible] you directly, Mr. President. They do, they, they have a, a rule-making procedure. And they promulgate these, and the law ha-, gives us sixty days to respond to a rule they put out. After that sixty days they hear from everybody, foreign manufacturers, the Big Four here, and then they put out a standard. Then you have sixty days to decide what you want to do about that. And once it becomes a standard, uh, we’re approaching one right now.
I’m sure we all wish we were still driving Pintos or not driving at all:) Though I still long for a 71 Lincoln Mark III.
“…Independent industry analysts and environmental groups…”
Which has exactly the same credibility as Fields: A big fat Zero.
The combintorial explosion of effects of a change in fuel economy standards, results in effects on “jobs numbers” that are so far beyond what any of the above self promoting hacks could ever hope to predict, that even if they all got together for a giant Kumbaya, and spent the rest of their little lives doing nothing but “studying” the matter, they still wouldn’t do any better than just pull some random number out of their behind.
At least there’s a bunch of jobs at Tesla that may (again, I’m just pulling stuff out of my rear…) not ever have existed without the standards. As for the rest of the jobs, in isolation more expensive cars mean fewer cars means fewer jobs, but more complex cars means more labor input per car. Etc., etc… And self promoting hacks with microphone access are still just self promoting hacks. And, ditto for hacks with internet access….
Long range economic impact forecasts are very difficult to get right. So you have a bunch of people doing this murky analysis and most are approaching it under the influence of different special interest groups. Then “News Flash” along comes a CEO and he cherry picks the results that best fit his case.
The free market had just as much influence on fuel economy as government standards. Every manufacturer had to compete in the market place. As fuel prices go up and down, customers buy vehicles they can afford and afford to drive. The system will work just fine without government interference.
I’d have more confidence in his claims if the auto industry didn’t make similar dire claims about every piece of mandatory safety and emissions technology ever.
They also claimed that they couldn’t *possibly* make a profit if they had to put seat belts in every car.
Chicken littles.
As an engineer, I welcome regulatory changes because (at least in my industry) they provide excellent job security while also driving genuinely worthwhile ends. Even if business slows nobody wants to lay off their tech guys because they know that they have like 5 years to get compliant with the next round of regs or they won’t have anything to sell.
Apropos of nothing, but someone needs to get that man a tailor. He looks like a crowd fluffer at some ’80s megachurch.
Btw, for everyone back slapping about how Fields is totally right and meeting a 54mpg fleet average is completely impossible, I got two words for you. “Kia Niro”.
Why the everloving fuck isn’t Ford or GM producing a $22k hybrid crossover that doesn’t look like ass?
Statistics show that 99.999% of all public figures/bodies (whether companies CEO’s, governmental departments,political parties, charities, activists, environmental organizations, the media etc etc) cherry pick data from dubious (and biased) sources to try to validate their viewpoint.
It seems to be getting worse and worse and I’m not sure where it will all end…..
@St.George – media, Universities, and the courts are valuable entities. They tend to hold the claims of politicians and other such manipulators of reality up to the harsh light of day.
We are seeing attempts to destroy the validity of those pillars of society. That destruction is typical of any totalitarian regime.
Where will it end?
Unfortunately,it never ends well for the populace.