Kokomo — It will take “clean, home-grown energy” for Indiana and the U.S. to compete globally, President Barack Obama told a crowd of automotive workers Friday in Indianapolis.
Obama promoted a necessity for an automotive industry based on fuel efficiency, a pillar of his clean energy agenda, at a time when gas prices have created a “headwind” for economic growth.
Friday was the first time Obama has traveled to Indiana since he visited Kokomo Nov. 23, 2010. The White House originally scheduled a visit to Indianapolis in April, but Obama canceled the trip to address the looming federal budget deadline.
The president spoke at Allison Transmission in Indianapolis, where he saw hybrid propulsion systems the plant produces. The company received a stimulus grant for the parts’ production.
Kokomo’s Delphi Electronics and Safety in 2009 received a federal grant, which it is matching, tied into the same pro-hybrid initiative. Delphi and Allison signed a contract for Delphi to produce electronic parts and energy storage devices in Kokomo that Allison buys for hybrid drive systems.
Linda Ferries, a spokeswoman for Delphi, said the company’s vice president of Electronic Controls Product Business Unit, the department that oversees the grant-funded production, was among the group touring the Allison plant.
Obama throughout his speech Friday pointed to Allison as an example of what types of innovations he says Indiana and the U.S. need to invest in.
“Right here in these vehicles, right here in these transmissions, this is where the future is,” he said.
The president decried gas prices in Indiana, where the cost of fuel earlier this week reached a record-breaking statewide average of $4.25 per gallon.
“It hasn’t been that long ago since I’ve seen these numbers roll up,” he said. “... It’s rough. It’s a huge strain on a lot of people. But if we can transition over to new technology, then that is what’s going to make the difference.”
He highlighted his initiatives to encourage fuel-efficient vehicles, including his push for the federal government’s vehicle fleet to be 100 percent hybrid by 2015 and his proposal for consumers who buy electric vehicles to receive $7,500 tax rebates.
Oil companies, he said, also deserve to lose their “unwarranted” subsidies.
“Now, if you’re already paying them at the pump,” he said, “we do not need to pay them through the tax code.”
Sean McAlinden, vice president of research and chief economist for the Center for Automotive Research in Ann Arbor, Mich., said many of Obama’s agenda items for clean efficiency are decent ideas, but there is too much emphasis on hybrid and electric vehicles.
There are many more practical ways for vehicles to become more fuel efficient, McAlinden said.
“What Obama’s advisers forget,” he said, “when you get into the really high fuel economy levels, the 50 miles per gallon, the 60 miles per gallon range, you really don’t save that much money.”
He compared the Toyota Prius to the Toyota Corolla. The hybrid Prius costs a few thousand dollars more, and the fuel efficiency is a difference of roughly 15 to 20 mpg.
“You can buy a lot of gasoline for $5,000,” he said.
Better investments could be in tires and other non-engine vehicle parts that also affect fuel efficiency, he said.
Obama’s visit to Indiana to speak to automotive workers came at the end of a week in which bailed-out automakers General Motors Co. and Chrysler Group reported profit and sales increases.
General Motors announced it tripled its first-quarter profit to $3.2 billion. Chrysler posted a first-quarter net income of $116 million, which was the company’s first profit since it emerged from bankruptcy in 2009.
The Indiana Democratic Party, in preparation for the presidential visit, issued a statement Thursday hailing the Obama administration for the automotive bailouts.
“President Obama carefully weighed the options and risks of providing loan packages to General Motors and Chrysler,” Indiana Democratic Party Chairman Dan Parker said in a press statement.
“In the face of calls from Republicans and pundits to sit back and let the American automotive giants go bankrupt, President Obama stepped in to ensure that Chrysler and General Motors not only survived, but that they streamlined for profits. Today, the President’s decision is paying off.”
McAlinden said the future strength of the major automakers will depend on their ability to adapt to demands for fuel efficiency.
Chrysler could especially face some risks, he said, because the company’s top-selling vehicles — the Ram pickup, Dodge Caravan and Jeep Grand Cherokee — all average about 20 mpg or less, depending on the models.
However, he said, Chrysler CEO Sergio Marchionne has made strides with introducing more fuel-efficient vehicles from his other company, Italian carmaker Fiat. While they aren’t electric or hybrid cars, they are smaller with better gas mileage, McAlinden said.
“We’ve still got to suck it up with Chrysler and wait a little while longer while the president talks about electric this and electric that,” McAlinden said.
Chrysler brought investments related to fuel efficiency to Indiana in 2010. The company is investing almost $1.3 billion in Kokomo, where it will manufacture more fuel-efficient, eight- and nine-speed transmissions.
Chrysler announced the largest portion of the investments, $843 million for the nine-speed transmissions, the same day Obama visited Kokomo.