Marco Rubio’s Push to Keep Automotive Jobs in the U.S.
In a significant move aimed at reinforcing American manufacturing, a group of Republican legislators, led by Sen. Marco Rubio, R-Fla., are gearing up to introduce pivotal legislation. This legislation is specifically designed to disallow automakers from tapping into a plethora of federal incentives, consequently deterring them from offshoring domestic manufacturing.
The Putting American Automakers First Act
Known as The Putting American Automakers First Act, this bill is the brainchild of Rubio together with original cosponsors Sens. JD Vance, R-Ohio, and Eric Schmitt, R-Mo. Scheduled for introduction early next week, the act will pose a ten-year ban on automakers from any participation in twelve federal incentive programs if they transfer production, manufacturing, or final assembly of their products overseas. Interestingly, the bill surfaces just weeks following the ratification of new contracts between the largest U.S. autoworker union and the so-called “Big Three” American automakers.
“Despite recent negotiations leading to significant victories for autoworkers, the balance of power favors the automakers,” Rubio expressed in a statement to Gitty Gazette News Digital. He elaborated, “They retain the potential to weaken these agreements by relocating production to nations offering cheaper labor. Our proposed legislation aims to provide a robust incentive for automakers to preserve jobs within the confines of America, thus enabling workers to partake in the profits they’ve actively contributed to.”
Impact on Clean Energy Incentives
The New Clean Vehicle Credit, Commercial Clean Vehicle Credit, and Used Clean Vehicle Credit, along with the Clean School Bus Program and Clean Heavy-Duty Vehicle Program, are among the twelve initiatives that Rubio’s legislation targets. These programs have historically offered substantial savings to consumers and businesses, significantly reducing the costs of electric vehicles (EVs), which continue to display a price premium over their gas-powered alternatives.
Under the New Clean Vehicle Credit, established by the 2022 Inflation Reduction Act, Americans could be eligible to save as much as $7,500 when purchasing an EV that meets specific material and sourcing standards. Cox Automotive’s data from July 2023 demonstrates that, considering the credits, the average transaction price for EVs stood at $53,469, in contrast to the $48,334 average price tag of gas-powered vehicles.
A Shield Against Outsourcing Post-Labor Negotiations
Furthermore, Rubio’s proposed bill intends to forestall automotive manufacturers from relocating their production facilities abroad in the wake of recent labor negotiations involving the United Auto Workers alongside Ford, General Motors, and Stellantis. Experts and Republicans alike have cautioned that workers could suffer due to the predicted expenses of these agreements coupled with the EV sector’s current challenges.
“I certainly stand with the UAW in their pursuit of higher wages. However, there’s an unignorable issue: the hasty shift towards electric vehicles,” stated Vance in September. “While China still dominates the EV supply chain, the Biden administration consistently funnels billions into this industry annually,” he added. Vance also criticized what he views as the current administration’s policies that seem to boost gasoline costs, purportedly for environmental causes, but which he argues are, in truth, benefitting the world’s most polluting economy at the cost of auto workers in states like Ohio, Pennsylvania, and Michigan.
Economic Implications for Automakers
This Thursday, Ford announced projections indicating the new UAW agreement—arrived at after nationwide strikes at various auto plants—will levy a cost of $8.8 billion throughout the contract’s duration, set to conclude in 2028, as reported by CNBC. A day prior, General Motors disclosed their contract is estimated to exceed $9 billion in costs.
In the meantime, while there’s a gradual uptick in EV sales, automakers haven’t yet seen a proportionate return on investment. Ford’s forecasts earlier this year predicted the company’s EV division would incur a startling loss of $4.5 billion in 2023 alone and had earlier pared down its plans for a multibillion-dollar EV battery plant in Michigan.
Conclusion
The proposed Putting American Automakers First Act champions the retention of automotive production jobs in the U.S. and seeks to leverage economic incentives to discourage offshoring. Should the legislation pass, it will likely redefine the landscape of automotive manufacturing and reinforce the quest for a more sustainable and domestically-focused automotive industry. As automakers navigate the complex waters of evolving technologies and market dynamics, the role of federal incentives in balancing economic and environmental priorities continues to be a subject of vibrant discussion.
