Back in the 1930s during the Great Depression, humorist Will Rogers once cracked that Americans are the only people in the world to drive themselves to the poor house. This time around, many will make the trip in new cars, based on media reports of laid-off workers signing over severance checks to auto dealers in the recent scramble for "Cash for Clunkers" subsidies.
The US Car Allowance Rebate System (CARS) was so popular it blew through its first $1 billion in rebates in just a week, prompting Congress to toss in another $2 billion pulled from a program to finance renewable-energy projects. By Aug. 25, it ended out of funds although originally scheduled for July 1-Oct. 31.
Obviously, the program was extremely popular, especially among automakers that industry-wide sold nearly 1.3 million new cars and pickups in August, the most since May 2008 and the first year-to-year increase since October 2007. It also pumped a good amount of money into local and state governments through sales taxes and fees.
But the same newspapers reporting the auto industry's rebound also reported weak back-to-school sales even in states featuring sales tax holidays. Apparently kiddies will ride to school in daddy's new car dressed in last year's old clothes. If economic recovery takes on a W-shape instead of the anticipated V, some households will be holding debt for the balance of new vehicles they otherwise would not have purchased if not for the CARS stimulus.
Moreover, the Cash for Clunkers program did not accomplish its nominal goals to lower carbon dioxide emissions, reduce US dependence on imported oil, and improve urban air quality, said the National Center for Policy Analysis, Dallas. "Although there is evidence that removing older cars from the road will cut air pollution, the numbers indicate that any reduction in CO2 emissions or oil consumption would be minimal and expensive," said Todd Myers at NCPA. According to a recent report by that group, the cost of reducing emissions under the CARS program is more than eight times the cost on the European carbon market.
With few hybrids and other alternatives yet available, most vehicles purchased through CARS are gasoline-fueled. H. Sterling Burnett, NCPA senior fellow, said, "It would have been more effective if the rebate could be applied toward the purchase of any vehicle with better fuel economy, including used cars. Many people with low incomes are unable to afford a new car, even with a rebate."
Back to work
Because of the boost in auto sales through CARS, Ford and General Motors said they plan to bring back some of the thousands of workers laid off in recent years. The administration of President Barack Obama estimates the program will save 42,000 jobs in this year's second half. During his campaign, Obama talked of establishing millions of new "green" jobs as the US is weaned from fossil fuels. A large chunk of his stimulus spending is aimed at creating those new jobs, but few if any are yet available.
On the other hand, Marathon Oil Corp. hired two of the first 15 former automotive designers graduated from Talascend's Global Training Academy in Troy, Mich., after they were retrained as petrochemical piping designers and certified by the Society of Piping Engineers and Designers. Other graduates have interviewed with AMEC Paragon, Houston, the Americas operational center for AMEC's oil and gas division; SBM Atlantia, the deepwater floating production arm of SBM Offshore NV; and Spectrum Engineering Inc., Houston.
The academy was opened in February by Talascend, an international engineering resources organization in association with Macomb Community College, Michigan's largest provider of certificates and associate degrees. "It's been a long cold winter for the automotive industry, and there are a great many people looking for a way out," said Jacob DuCharme, one of the graduates hired by Marathon.
"While the oil and gas industry struggles to find the engineering staff it needs to fill critical vacancies on projects, talented and experienced engineers are without opportunities in the automotive sector. With the right training, these engineers can play a vital part in moving both industries forward," said Jason Dawson, academy president. The American Petroleum Institute estimates the US petrochemical industry will be short 6,000 engineers in 2010 because of retirements and the "pull of the information technology sector in the 1990s."
