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Page last updated at 09:01 GMT, Thursday, 21 August 2008 10:01 UK
Petrol price rise hits US voters

By Iain Mackenzie
Newsbeat US reporter

Americans are abandoning 4x4s and trucks because of the rising prise of petrol. Big US car companies like Ford and General Motors (GM) are suffering as a result. Newsbeat visits the town of Moraine, Ohio, ahead of the US elections later this year to see how the presidential candidates are coming across in a town where people face losing their jobs as GM prepares to close its plant.

Sima Kotecha explains why Americans are abandoning 4x4s.

Arriving in Moraine, Ohio, we go to collect our hire car from the airport.

I'd called ahead to ask for an American vehicle, knowing we were going to be conducting interviews at one of the auto workers' unions.

Fellow journalists had told me stories of being refused admission to union halls elsewhere in the States because they turned up in a Japanese car.

In a way that would seem strange to Brits, and impossible now given the state of the UK car industry.

Americans have always been fiercely patriotic in their choice of transport.

They just decided they were going to cut production. People just weren't buying the SUVs that we build

Michelle Cole, worker at GM's Moraine factory

More often than not, that meant an oversized Sports Utility Vehicle (SUV) or flatbed truck.

Cheap petrol made it possible for almost everyone to drive a two-tonne chunk of the American dream.

But times are changing.

Hard times

Spiralling fuel prices are leading drivers to ditch their 4x4s in favour of more economical, usually imported vehicles.

While motorists across the States complain of feeling 'the pinch', the consequences for the town of Moraine are more acute.

This suburb of Dayton, population 7,000, is home to one of General Motors' vehicle assembly plants.

More than 2,000 people work here, building SUVs and trucks.

However, a downturn in sales has forced GM to take drastic action.

It plans to close the Moraine facility by 2010, along with two other plants.

The GM plant in Moraine is closing in 2010 along with two others
Some workers have already taken redundancy deals.

Among them is Michelle Cole. She said: "They just decided they were going to cut production. People just weren't buying the SUVs that we build.

"For me it was the right decision because my husband and I both work there."

GM's not the only car manufacturer that is suffering.

Earlier this year, Ford announced losses of almost $9bn (4.8bn) over a three-month period.

'Less generous'

As well as closing plants, US vehicle manufacturers are scaling-back or removing their generous vehicle leasing schemes in a bid to save money.

Don Pascoe is President of Serra Chevrolet, a dealership in nearby Miamisburg.

He said: "About 50% of our customers do get a discount by virtue of being an employee or family member of General Motors and that's translated into about half of our customers taking lease programmes.

"Now that the lease programmes have changed significantly - Chrysler, for instance, getting out of the lease business entirely, General Motors reducing the incentives they put on those - that business is essentially gone."

Meanwhile, Moraine's wider economy is suffering too.

Among the fast food outlets and strip malls that surround the GM plant are scores of vacant commercial properties.

Many have closed in the past year.

Ice cream shop sign
People are eating fewer ice creams after the global economic downturn
Among those remaining is Dixie Dairy Dreem.

The small drive-thru ice cream parlour has been serving cones and milkshakes since 1952.

Owner Ron Enderle says things have been quieter of late.

He said: "If they're not working, they don't have money to spend on ice cream. That's one of the first things to go. The extras.

"In the case of our lunchtime traffic, we're probably down 50% on our business."

Election issues

In an election year, the plight of the US car industry touches on several key political issues issues.

Both Barack Obama and John McCain have spoken of the need to invest in alternative energy technologies.

The Republican candidate is offering a $300m (161m) prize for anyone developing a significant new battery technology.

His Democratic rival wants tax breaks for car companies to retool their existing plants to build fuel efficient vehicles.

Such a move would, in theory, help plants like Moraine.

Some observers reckon the industry could have done more to avoid its current woes.

"The Japanese and the Koreans were ahead of the curve and have been producing the Prius and other vehicles and beat us to the market," said Gaylen Turner, chair of the local branch of the IUE-CWA union.

Moraine is north of Cincinnati and has just under 7,000 people
"The workers get frustrated because they think, 'Why can't we do that?' because the people we've given our lives to just don't react fast enough."

It's a charge General Motors refutes, saying: "The automotive market is changing at an unprecedented rate and we are working aggressively to change with it."

While the US companies work to catch up with their Japanese and European counterparts, many of their potential customers are putting price before patriotism.

"If I'm looking for a vehicle and gas if $4 (2.10) a gallon, am I gonna look at an SUV that has a three year warranty that is costing maybe $100 a week to fill up? Or am I going to look at the Japanese product or something smaller?" said former Moraine worker Michelle Cole.

"For people right now, money is tight. When they go to buy, they're gonna buy what is most economical for their family."

The harsh reality is that for Americans to make the savings they want, towns like Moraine are making the supreme sacrifice.

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