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Big changes ahead for North American carmakers under Obama

WASHINGTON - Major changes are in store for the profoundly ailing North American auto industry following U.S. President Barack Obama's directive Monday that carmakers will soon be required to build more fuel-efficient cars and trucks.

WASHINGTON - Major changes are in store for the profoundly ailing North American auto industry following U.S. President Barack Obama's directive Monday that carmakers will soon be required to build more fuel-efficient cars and trucks.

"For the sake of our security, our economy and our planet, we must have the courage and commitment to change," Obama said in his first formal event in the elegant East Room of the White House.

"It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs."

Obama ordered the Department of Transportation to get moving on new fuel-efficiency guidelines for the auto industry in time for 2011 models, and to start implementing a 2007 law requiring a 40 per cent improvement in gas mileage for cars and light trucks by 2020.

George W. Bush's administration failed to write any regulations to enforce the new law.

And in another break from a controversial Bush policy, Obama ordered the Environmental Protection Agency to re-examine whether California and other states should be allowed to enforce tougher auto emission standards than those imposed by the federal government.

"Washington stood in their way," Obama said, referring to about a dozen states that tried to come up with more rigid tailpipe emission standards.

Two years ago, the Bush administration's EPA denied California's request, a move that pleased the auto industry but sparked a litany of investigations and lawsuits from Democrats and environmental groups who claimed politics, not scientific evidence, fuelled the decision.

The automakers fought vehemently against allowing states to enact tougher requirements, arguing it would be near-impossible to tailor their product for different jurisdictions with varying tailpipe emissions standards.

But now, once the agencies act on Obama's instructions, carmakers will be forced to quickly retool to begin producing and selling cars and trucks that are cleaner and get better gas mileage.

The developments put both the Canadian industry and the federal Conservative government in a difficult spot.

The Tories had been hoping for a single North American standard with the United States, even though B.C., Quebec and Manitoba have been working to set their own emission standards.

Permitting different jurisdictions to set their own standards is lunacy, Canadian auto industry expert Dennis DesRosiers said Monday.

"Allowing states to regulate fuel efficiency is a path to chaos; it doesn't solve anything. What Obama did is allow 50 different North American standards when what we need is one standard for all of North America."

Now all North American automakers will have to aim at meeting the toughest requirements in the U.S. - those in California. That could be prohibitively expensive for the Big Three.

"If you heed California standards, then you're going to need perhaps US$100 billion to meet those standards, and this is an industry that is struggling day to day just to survive, never mind to meet those kinds of requirements."

Such complaints from automakers will apparently fall on deaf ears in the new Obama administration.

"They knew this was coming," said Ray LaHood, a former Republican congressman from Illinois who is now Obama's secretary of transportation.

Obama issued his directives on the same day General Motors announced it was cutting 2,000 jobs in Ohio and Michigan due to slow sales.

All three of the big North American automakers have been pilloried for failing to embrace fuel-efficient technologies like their Asian and European competitors have for years.

During hearings on Capitol Hill late last year into an auto industry bailout package, the automakers' chief executives - who flew to D.C. separately in private jets - were told by Republicans and Democrats alike that their problems were of their own making.

Yet before Obama had even officially issued his directives on Monday, top Republicans were complaining that the timing was all wrong.

"Our nation's automakers are struggling - drastically restructuring and shedding jobs just to stay afloat," said Antonia Ferrier, a spokeswoman for House Minority Leader John Boehner.

"And now they are being forced to spend billions of dollars to comply with California's emissions standards, instead of using that money to save American jobs."

At the White House, Obama countered that automakers will be helped, in the long run, by the push to move them into the 21st century.

"We must help them thrive by building the cars of tomorrow," he said, adding his directives are meant "to ensure that the fuel-efficient cars of tomorrow are built right here in America."

Reid Detchon, executive director of the non-partisan Energy Future Coalition, said Obama's announcement signals a new era in American environmental policy.

"Granting the California waiver would mean that half the country's new-car market will come under tough new emissions requirements," Detchon said.

"This step would set a new standard for automakers throughout the country and spur the introduction of new technology like plug-in electric hybrids."

 
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