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Bush visit to Ford, GM plants may smooth tensions

From todayreuters| March 21 , 2007

President George W. Bush will get a chance on Tuesday to smooth over hard feelings that arose last year when he twice postponed meeting with executives of U.S. automakers.

In a visit that will carry symbolism for struggling companies that were once a mainstay of the U.S. economy, Bush will tour Ford Motor Co. (F.N: Quote, Profile , Research) and General Motors Corp. (GM.N: Quote, Profile , Research) factories in the Kansas City area to get a glimpse of their latest hybrid cars and pitch his alternative-energy ideas.

Ford, GM and DaimlerChrysler AG's (DCXGn.DE: Quote, Profile , Research)(DCX.N: Quote, Profile , Research) Chrysler Group unit have shed thousands of jobs and shut plants to grapple with financial losses and eroding market share to Japan's Toyota Motor Corp. (7203.T: Quote, NEWS , Research) and Honda Motor Co.

Bush has made it clear the days of bailouts, such as the one for Chrysler in 1979, are long gone. But the auto giants remain eager for an audience to press concerns about overseas currency, mileage standards and health care.

They also want a large federal investment to help them advance alternative fuels and battery technology for electric cars.

The visit to Ford and GM plants gives the companies a chance to showcase their products and air their views.

While seeking to ease tensions, Bush also will promote a top domestic goal of cutting U.S. gasoline use by 20 percent over a decade by increasing vehicle mileage standards and encouraging alternative fuels -- like ethanol -- and gasoline/electric hybrid technology.


"The U.S. auto companies are a smaller part of the economic landscape every year," said Erich Merkle, economist with automotive consulting firm IRN Inc. "There is very little Bush can do to help them."

But he said the firms hope Washington will not "kick them when they're down" through mileage standards the industry views as unrealistic.

Bush hosted the auto executives in November but that was after two attempts to meet earlier last year ran into scheduling problems. The postponements prompted the head of the United Auto Workers union and Michigan politicians to accuse Bush of ignoring industry woes.

The companies and their workers also were irked when Bush said Detroit should take responsibility for its problems and make "relevant" products.

The Ford, GM and Chrysler chief executives are expected to meet Bush again in Washington, possibly next week.

Critics of U.S.-based auto companies have said they were short-sighted in chasing profits from less fuel efficient sport utility vehicles, vans and pickups while gasoline prices were low in the 1990s. When oil prices climbed, they had a hard time competing with rivals' more efficient vehicles.

Local UAW President Jim Stoufer, who represents workers at the Ford plant Bush will visit in Claycomo, Missouri, called such criticism an oversimplification and said trade policies put U.S. companies at a disadvantage.

Detroit companies say they are at an disadvantage because the Japanese yen is undervalued. The Bush administration has distanced itself from the dispute, saying markets should set currency values.

On fuel-efficiency, Bush favors a 4 percent annual increase in the federal mileage requirement for cars to reach a target of 34 miles per gallon by 2017. Auto companies say that would not cause a meaningful drop in U.S. oil consumption and would burden them with billions in costs.


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