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Why China is Stepping Up its Presence in Detroit Auto Industry

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Photo Credit: Rebecca Cook/Reuters

Photo Credit: Rebecca Cook/Reuters

While the US automotive industry continues to rebound after its near collapse from the financial crisis few years back, China is quietly expanding its presence in the Detroit-based market. Encouraged by the low price of real estate and the high level of advanced engineering talent, dozens of Chinese auto companies and suppliers are opening plants and offices in and around the Motor City, where they hope to one day sell cars to US buyers.

So far, the emphasis has been on the supply chain, but automotive experts and Michigan Gov. Rick Snyder (R) hope that continued investment in the area will lead to much more, and they envision Chinese companies playing a big role in helping the city flourish after it emerges from its Chapter 9 bankruptcy restructuring, which got under way this year.

“They [the Chinese firms] want to be more global over time, so they need to look at North America. And if they’re looking at North America, this is the place to come,” Governor Snyder told reporters earlier this year.

Snyder is opening the door wide to China. In September he made his third economic development trip there in three years to court investors in all sectors, but mostly automotive. To date, he said, Chinese companies have invested about $1 billion in his state, 95 percent of which is related to the auto industry. Michigan companies exported 22 percent more goods and materials to China in 2012 than in the previous year. Although not all of the activity from China is auto-related, Snyder says he expects to see more Chinese involvement in the auto sector.

“Detroit is the value place in the United States, in Michigan, and potentially the world in terms of a great value opportunity,” Snyder said. “Come in and invest now, because there’s going to be a great upside.”

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EPA Taking Aim at Auto Emissions, Sulfur In Gas

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Photo Credit: AP

Reducing sulfur in gasoline and tightening emissions standards on cars beginning in 2017, as the Obama administration is proposing, would come with costs as well as rewards. The cost at the pump for cleaner air across the country could be less than a penny or as high as 9 cents a gallon, depending on who is providing the estimate.

An oil industry study says the proposed rule being unveiled Friday by the administration could increase gasoline prices by 6 cents to 9 cents a gallon. The Environmental Protection Agency estimates an increase of less than a penny and an additional $130 to the cost of a vehicle in 2025.

The EPA is quick to add that the change aimed at cleaning up gasoline and automobile emissions would yield billions of dollars in health benefits by 2030 by slashing smog- and soot-forming pollution. Still, the oil industry, Republicans and some Democrats have pressed the EPA to delay the rule, citing higher costs.

Environmentalists hailed the proposal as potentially the most significant in President Barack Obama’s second term. The so-called Tier 3 standards would reduce sulfur in gasoline by more than 60 percent and reduce nitrogen oxides by 80 percent, by expanding across the country a standard already in place in California. For states, the regulation would make it easier to comply with health-based standards for the main ingredient in smog and soot. For automakers, the regulation allows them to sell the same autos in all 50 states.

The Obama administration already has moved to clean up motor vehicles by adopting rules that will double fuel efficiency and putting in place the first standards to reduce the pollution from cars and trucks blamed for global warming.

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How Obama Will Bankrupt the Auto Industry (and Taxpayers)

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On this lovely, but exceedingly hot, Sunday afternoon, with computer-in-lap, I am enjoying the benefits of wireless Internet technology as I sit in the passenger’s seat of my five-year old SUV purchased from CarMax. My husband and I enjoy road trips just about as much as we enjoy the steamy-hot cups of java that we sip along the way. For the majority of the Bush 43 years, a cup of Starbucks cost more than a gallon of gas, but now both are essentially the same, meaning this road trip will more than likely be the last we can afford to take – until America puts a Republican president back in the Oval Office.

Proponents of President Obama’s new vehicle cafe standards might argue that his policy makes it affordable to get back out on the road in this day of almost $4.00 per gallon of gasoline. While vehicles that sip gasoline like we sip our coffee on road trips sounds enticing, do not be fooled; this sipping will come at a cost quite unaffordable to most Americans.

Consider the $40,000 Chevy Volt that was declared the Motor Trend 2011 Car of the Year for its advanced engineering that allows the car to run as a series hybrid, parallel hybrid, or as an electric vehicle. Sounds nice – until you realize the car’s price tag is higher than the average per capita income of $39,000, and the cost of electricity is on the rise.

General Motors may indeed deserve credit for Volt’s technology, but GM’s partnership with Motor Trend’s publisher, Source Interlink, calls into question if the Volt received the award standing on its own four wheels, or “Government Motors” had a little help from its Uncle Sam – and now must convince taxpayers that our “investment” was worthwhile, as well as set the stage for the next phase of this administration’s back door approach to “Cap and Trade.”

The administration assumes its new cafe standards of 54.4 miles per gallon by 2025 will somehow spur economic growth when auto makers begin to crank up the assembly lines to make automobiles most of us cannot afford. In the first two months of this year, out of 268,308 Chevrolets sold, the Volt accounted for one-fifth of 1 percent, or 602 — indicating that most American’s are not interested in the 4 cylinder sardine can on wheels — even if it is the “car of the future” as described by Obama.

Read More at Floyd Reports  By Susan Stamper Brown, Floyd Reports