Ford CEO’s 1-Million Job Loss Warning Called Into Question

Ford CEO Mark Fields used a potential worst-case scenario as the premise for his statements last month that the federal fuel economy rule will cost the nation one million jobs.

Independent industry analysts and environmental groups have looked into Fields’ comments and found that the huge job loss was 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.

“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.

Fields and Ford executive chairman Bill Ford have been reaching out to Trump to quell conflict over Ford’s plan to further build factories in Mexico. Trump had made that move a major campaign issue last year.

The Ford CEO has also 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 to succeed based on low gasoline prices and consumer preferences for trucks and SUVs.

There was only report that Fields was making reference to during his NADA speech, a September report by the Center for Automotive Research (CAR) in Ann Arbor, Mich., according to a Ford spokeswoman.

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 that about 144,000 jobs could be created in the auto industry from the federal rules. For the potential million-plus job loss, only 322,000 jobs would be in the automotive sector, according to the study. The remaining 805,000 jobs lost would indirectly relation to vehicle manufacturing.

One other element of the study’s research assumptions is that gasoline would 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.

SEE ALSO:  Ford CEO Told Trump Fuel Economy Regs Jeopardize 1 Million Jobs

The International Council on Clean Transportation called the $6,000 estimate “grossly inflated” in a blog post.

The EPA has estimated the cost to add fuel-saving technologies will range from $894 to $1,565 per vehicle; and a study Baum and others conducted found that the additional compliance cost would be about $1,900 per vehicle, starting from a 2010 baseline.

CAR President Jay Baron defended the study after it was attacked by the EPA, noting that new technology doesn’t always lead to more jobs.

Critics argue that 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.

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