Grants For Energy Efficient Trucks Raise Questions

Last Updated Jan 12, 2010 6:14 AM EST

The U.S. Department of Energy using money from the American Recovery and Rehabilitation Act (ARRA) or the "stimulus" bill awarded a group of grants to different truck and automobile manufacturers. The total awards were over $180 million and went to nine different entities. The funds will be used to look at making trucks and other vehicles more energy efficient and environmentally friendly.

Daimler Trucks North America (DTNA) which is the former Freightliner Corporation owned by Mercedes Benz since 1981 is one of the companies receiving a grant. The company is the largest truck manufacturer in the United States having purchased other U.S. truck and bus manufacturers as well as introducing German designed vehicle to the U.S.

It is estimated that the total spending of over $180 million will create 500 design and development jobs as the different companies invest in research of engine design and energy efficiency. If the designs come to fruition several thousand manufacturing jobs may be created as the new designs go into production and service. So in a best case scenario it is taking about $25,000 of U.S. taxpayer money to create a new job.

The move is controversial as DTNA alone has laid off thousands of workers over the past few years. The company like so many U.S. and foriegn manufacturers have built plants in Mexico to lower their production costs. The decline in the world's economy has also led to labor force reductions as production has been reduced to meet lower demand.

The development effort will be done at DTNA's Portland, OR facility. This means that the money won't necessarily affect their U.S. manufacturing workforce primarily centered in North Carolina. Long term the grants may lead to new products made in the U.S. that are more fuel and energy efficient but in the short run it doesn't seem they will affect the U.S. unemployment rate now hovering around ten percent. There is also no guarantee that the new designs won't be made in Mexico further affecting the U.S. work force.

This illustrates some of the ongoing issues with the ARRA funding. It is moving slowly through the Federal system. It is spread across a wide variety of products and ideas and development contracts like this may never lead to a large number of jobs especially in 2009 or 2010 when the bill was supposed to take affect.

  • Matthew Potter

    Matthew Potter is a resident of Huntsville, Ala., where he works supporting U.S. Army aviation programs. After serving in the U.S. Navy, he began work as a defense contractor in Washington D.C. specializing in program management and budget development and execution. In the last 15 years Matthew has worked for several companies, large and small, involved in all aspects of government contracting and procurement. He holds two degrees in history as well as studying at the Defense Acquisition University. He has written for Seeking Alpha and at his own website, DefenseProcurementNews.com.