Last Monday the Obama administration disclosed the nation's first fuel-economy rules for trucks and buses. These rules are to be established in 2014 which will require engine manufacturers to start heavy research and development on fuel efficiency and pollution controls. Starting in 2018 these engines will be required to reduce fuel usage and carbon-dioxide emissions by 20%.
A major player in the auto industry for engines is Cummins Inc. They believe that they will be able to achieve the goal of meeting the rules by budgeting research and development spending at 4% of sales. In addition to their own budgeting, the US Department of Energy provided Cummins with $54million to help pay for the research and development. However, Cummins faces the new challenge from car companies building their own engines rather than buying from Cummins. This creates competition within this specific group of the industry.
This article is very important as it covers how the US is now responding to the need of a more fuel-efficient auto industry. In addition it also includes how companies use certain business tactics to benefit more. This is illustrated in the truck manufacture's, Paccar and Navistar, strategy to build their own fuel-efficient engines rather than buying from Cummins. To me this is article is very important as it shows the US is now taking important steps to creating a cleaner environment and how the Auto industry responds to it.
http://online.wsj.com/article/SB10001424052702303891804575576570268041664.html
Patrick Mehlert
I think that Obama is getting very involved in business. This could be interesting down the road and how it will affect his re election because this will no doubt increase the price of cars.
ReplyDelete