09 May 2009

According To NBC, Green Cars Are Saving Michigan

Story from Business and Media Institute

We were told all throughout the 2008 presidential campaign and on up into the debate over the stimulus that the way out of the current economic malaise is through growing a green economy. “NBC Nightly News” is still on message.

On the May 6 broadcast of “Nightly News,” anchor Brian Williams explained that Ford Motor Company (NYSE:F) didn’t accept federal bailout money, but all the while it has been producing green cars – as if the two were related.

“We have a report tonight on the car industry,” Williams said. “The Ford Motor Company has its own challenges ahead, but they are rightfully proud of being the only one of the Detroit big three not to accept taxpayer bailout money. Ford announced today it's retooling a plant that made big gas guzzlers in order to produce smaller, greener cars. And this comes at a time that other automakers are cutting production and thousands of jobs.”

However, Ford’s success has little to do with the green cars, but instead its success with its restructuring plan, as a May 6 Reuters story pointed out.

“Ford Motor Co remains on track in its restructuring and has sufficient liquidity to fund the plan which includes conversion of plants and investment in future products, company executives said,” Soyoung Kim and Chelsea Emery wrote for Reuters. “Ford, the only U.S. automaker not operating under bailout funds, also has continued to consolidate its dealer network, but sees no need for the type of aggressive culling rivals GM and Chrysler plan, Chief Executive Alan Mulally told reporters.”

CNBC Detroit correspondent Phil LeBeau touted Ford’s new plant which will build these beloved green cars.

“Working on the principle that less may be more, Ford is spending a half billion dollars retooling a plant that once made gas-guzzling SUVs, turning it into one that will churn out green, fuel-efficient cars,” LeBeau said.

However, LeBeau saved the best for the end and noted this gamble on green was contingent on other factors, specifically the price of gas.

“But with the American demand for compact cars and the success of electric models, dependent on gas prices, analysts say Ford’s bet on going green and small is not a sure one,” LeBeau explained.

“Smaller cars have smaller price tags,” auto analyst Efraim Levy said. “So therefore, you have less room to make the profits and if the car’s not successful, the losses are even more painful.”

Still, the new Ford plant was greeted as a welcome sign for workers in a beleaguered local economy, but just a drop in the bucket when the plant has only 3,200 workers while unemployment rates are over 12 percent in Michigan.

“In Michigan, an automaker retooling and keeping jobs is long overdue good news,” LeBeau continued. “This decade, the state has lost 700,000 jobs, with unemployment spiking 5 percent in the last year to a national high of 12.6 percent. Facing those numbers, the 3,200 people who will work at Ford’s rebuilt plant are relieved.”

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