The Future of the U.S. Auto Industry

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With visions of a U.S. auto industry that is innovative, competitive and far less dependent on oil, the Obama administration has pumped more than $12 billion to date into vehicle technologies, speeding up innovation in electric-drive, advanced combustion, sustainable biofuels, natural gas and fuel cells. The investment creates myriad opportunities for suppliers, engineers, research and design professionals, and a host of other workers.

On the retail side, where the nearly three-year recession has shriveled up credit for dealers, the National Automobile Dealers Association, National Association of Minority Auto Dealers and the U.S. Small Business Administration jointly developed a Motor Vehicle Dealer Loan Guaranty Campaign to inform small new-car and new-truck dealers about their eligibility for the SBA loan guaranty program. Of the country’s 19,000 franchised auto dealers, African-American and other minority dealers are among the hardest hit by the recession. Under 7(a) program, the SBA will guarantee loans made by local lenders to applicants who do not meet conventional bank requirements to obtain credit. Beneficiaries generally have up to seven years to repay working capital loans and 25 years for real estate and equipment loans.     

For those wishing to track new auto industry opportunities, a good place to start is the administration’s July 2010 report “Rebuilding the American Auto Industry,” which spells out where, to what and to whom federal dollars are going. Some examples:

• Department of Energy funds are helping to develop eight of the 20-or-so electric-drive models that automakers plan to introduce over the next two years. There’s a $1.6 billion loan to Nissan to build its 100-percent electric Leaf in Tennessee; a $528 million loan to Fisker Automotive to buy and reopen a General Motors plant in Delaware to build plug-in hybrids; a $465 million loan to Tesla Motors to buy and reopen a New United Motor Manufacturing Inc. plant in Fremont, Calif., to build all-electric sedans; a $16 million tax credit to THINK an electric-car startup, to set up shop in Indiana; and a $5.9 billion loan to Ford Motor Co. to re-equip factories in Illinois, Kentucky, Missouri, Michigan and Ohio to produce more fuel-efficient cars.

• Under the Recovery Act of 2009, grants went to 30 battery and component factories in 19 states, which will have the capacity to support 500,000 electric-drive vehicles a year by 2015. Michigan alone has 14 grant-funded projects. Some are at large battery factories like A123 Systems, GM, Johnson-Controls, Dow Kokam and Lucky Goldstar Chemical); others are at GM and Ford electric-drive component factories. The projects also include workforce training programs at the University of Michigan, Michigan Technological University and Wayne State University.

• More than a dozen projects are under way through the newly established Advanced Research Projects Agency-Energy to find breakthroughs in batteries. The agency was established in April 2009 as part of the federal government’s investment in research and development and science education.

• Funds are being made available to build the infrastructure to support electric, natural gas and other advanced vehicles; train mechanics, engineers and first responders who will service and build the infrastructure; and provide incentives to businesses and consumers to buy the new vehicles.

• The Energy and Treasury departments are using their Advanced Energy Manufacturing Tax Credit to put $7 billion into shovel-ready, alternative-energy projects in communities hurt by auto-plant closures. For example, Xunlight Corp., a Toledo, Ohio, producer of solar panels, received a $34.5 million tax credit for the production of a lightweight photovoltaic solar energy model.

• The Department of Labor provided more than $50 million in National Emergency Grants for training and other benefits for laid-off autoworkers in Delaware, California, Wisconsin, Missouri, Ohio and Michigan.  Another $75 million was set aside through the department’s competitive Recovery Act grants to train workers in auto communities for jobs in Green industries and health care.

• A proposed multi-agency initiative, on track to become effective by the end of 2010, will make $800 million available to help clean up and redevelop more than 90 shuttered auto-manufacturing sites in 14 states.