The growing popularity of fuel-efficient vehicles in the United States may benefit the environment but could potentially have severe consequences for manufacturing jobs, according to a study recently released by the University’s Office for the Study of Automotive Transportation.
The market for hybrid and clean-diesel cars in the United States could increase by nearly 1.8 million vehicles in eight years or less, the study reports. Because most of these vehicles and their components are manufactured in Europe and Japan, the increased sales of such vehicles could cause the United States to lose upwards of 200,000 jobs in the future, said Michael Flynn, director of OSAT.
“We’d lose jobs in two ways: Current jobs would be lost, and we would not gain extra jobs,” Flynn said.
The expected rise in imports of these environmentally friendly vehicles may cause the loss of nearly 69,000 jobs in Indiana, Ohio and Michigan combined, he added.
“The argument is that we need to incent — it makes economic sense to get the manufacturing of these vehicles and their components into the country,” Flynn said.
The study interviewed people in the automotive industry and examined different scenarios in which the hybrid and diesel markets in the United States could grow by 3 to 11 percent by 2009, Flynn said. These growth rates depend on the strength of consumers’ preference toward fuel-efficient cars, which could depend on factors such as oil prices.
In order to provide an incentive for manufacturers to produce hybrid cars and their components in the United States, the study determined that a tax credit would be an appropriate measure in decreasing job losses.
“This tax credit is not only revenue-neutral or even better, but it could save one of every four U.S. jobs put at risk from imports of these newer power trains and vehicles,” said Daniel Luria, vice president at the Michigan Manufacturing Technology Center, in a written statement.
Economics Prof. George Fulton said he is optimistic about the outlook of the hybrid vehicle market.
“(Michigan is) the center of automotive design and manufacturing,” he said. “I think they are already making adjustments.”
Fulton emphasized that it is important to plan for the long term, and the market itself will make adjustments.
“If you save a few jobs in the near term, it’s not a good long-term strategy,” Fulton said. “You have a short-term disequilibrium, and then you have adjustments to that.”
The study, titled “Fuel-Saving Technologies and Facility Conversion: Costs, Benefits, and Incentives,” was conducted by OSAT, which is part of the University’s Transportation Research Center. The Michigan Manufacturing Technology Center, though not affiliated with the University, collaborated on the study with OSAT.
The National Commission on Energy Policy and the Michigan Environmental Council sponsored the study.