Ford: Transforming The Automotive Industry And The Detroit Region
Following is the text of remarks as prepared for delivery by William Clay Ford, Jr., Executive Chairman and Chairman of the Board, Ford Motor Company, at the Mackinac Policy Conference of the Detroit Regional Chamber, Mackinac Island, Michigan, on Thursday, May 31, 2007.
National Energy Policy: Right now in this country we have no overall framework to bring all the interested parties together as we make major decisions about our collective future. We need a convening forum of auto and energy companies, utilities, NGOs, government agencies, universities and other stakeholders to develop a comprehensive and cost-effective plan of action. We need a national energy policy, with a commitment to building the infrastructure and the tax policies to encourage national investment in clean technology.
Climate Change and Energy Security: We need a more holistic legislative approach to climate change and energy security, one that employs cost-efficient and economy-wide mechanisms for reducing carbon emissions and fuel consumption.
State of Michigan: The State of Michigan has a unique opportunity to once again be a world leader in the development of new technology. We have the assets to transform ourselves into a leading research and development center, including the intellectual capital, a skilled workforce and a first-rate higher education system.
Support of Michigan Business Tax Plan: A good first step would be to pass the Michigan Business Tax plan now. This plan promotes a more competitive tax structure for manufacturers in Michigan. It broadens the base of business taxpayers by including out-of-state companies who sell their products and services in Michigan but don’t invest here. It also encourages the retention of research and development in Michigan through tax credits.
Support of Road to Renaissance: DetroitRenaissance announced a plan to transform our regional economy called the “Road to Renaissance.” I believe it has the organization, resources, detailed planning and vision to succeed. The Road to Renaissance and Detroit Renaissance are part of a larger effort to transform metro Detroit called “One D.” One D brings together six major civic organizations in an effort to get all of the communities in Southeastern Michigan working together.
I want to thank the Detroit Regional Chamber for inviting me to speak to you today. The work of the Chamber, and of this conference, has never been more critically needed by our community.
The future we have discussed and debated for years is finally here. The only question that remains is whether or not we will rise to its challenges. I am hopeful that we can and will be able to. What I would like to talk about today is how.
Let’s start with some history. When I say the future has arrived, I am sure everyone here knows exactly what I’m talking about. For years, in forums such as this one, we have talked about the rising tide of global competition and what it would mean to our region.
I spoke at this conference four years ago, when both the Detroit Regional Chamber of Commerce and Ford Motor Company were celebrating 100 th anniversaries. In my remarks, I outlined the major contributions that the domestic auto industry had made to the prosperity and quality of life in our state.
I urged that we not take these contributions for granted. I warned that the relentless onslaught of foreign competition would have an impact far beyond the auto industry. I also talked about the need to address the social and environmental trade-offs traditionally associated with the automobile industry before someone tried to do it for us.
Unfortunately, my concerns were well founded. Collectively, we didn’t move fast enough. Much of what I warned about then is happening now.
Our industry is restructuring, causing plant closings, layoffs, rising unemployment and a falling tax base. At the same time, legitimate concerns about global warming, energy security and the cost of gasoline have created a rush toward arbitrary and poorly conceived solutions.
Clearly, it is up to automakers to address the challenges we face, and that’s what we are doing. But the issues confronting us are bigger than any one industry, and they impact everyone in Detroit, and the State of Michigan. It doesn’t matter if the leak is in someone else’s part of the boat, we are all going to sink or float together.
Pointing fingers and assigning blame for what’s happened would be counterproductive. As I said, we are all in this together. However, I do want to mention one cause for our current problems that is too often overlooked or ignored. That is the tremendous success we all enjoyed for so long.
For more than 100 years, the auto industry centered in this region put the world on wheels. We gave people from all walks of life the freedom of personal mobility, helped create the middle class and brought greater prosperity to millions.
Nowadays, we call good wages, pensions, and health care benefits “legacy costs,” and act as if they were something we did wrong. But I am proud of all the things we were able to do for the average worker.
The problem is the world has changed and we haven’t. The last time I addressed this conference, most people understood the nature of the challenges we faced, at least in theory. But it is hard to embrace change when you have been successful for as long as we were.
The good news in all the bad news we’ve suffered lately is that everyone finally understands the urgency of the situation. We no longer have to speculate about the consequences of inaction – we see them every day.
These days many people also are finally concerned about the environment, and the consequences of rising CO 2 emissions. I am encouraged by that.
When I joined Ford Motor Company nearly 30 years ago, I was asked to stop associating with environmental groups. Of course I didn’t, so in many parts of the auto industry I was viewed as some kind of crazy radical.
When I talked about the environment 20 years ago, or even five years ago, many people in our industry thought I was eccentric or naïve. But in the past few years we demonstrated the business case for environmental stewardship with breakthrough initiatives such as the Ford Rouge Center, which is the world’s largest brownfield reclamation project, and Ford Escape Hybrid, the world’s first hybrid-electric SUV. I’m proud that I encouraged these projects, my only regret is that we didn’t move further, faster.
Today, with climate change, soaring gas prices and billions of potential new customers waiting in developing markets, people finally understand that environmental sustainability is the critical issue for our future growth and prosperity.
Our new President and CEO, Alan Mulally, is passionate about protecting the environment. He also understands the business value of stewardship, having turned Boeing around by producing fuel-efficient jets. We recently appointed a Senior Vice President of Sustainability, Sue Cischke, who is responsible for our long-range sustainability strategy.
I’ll talk more about what we are up to in this area in a moment.
If everyone understands the challenges we face and feels the sense of urgency needed to address them, then the only question left to answer is how do we do it?
I don’t presume to have all the answers. But I do think there is a connection between the economic and environmental concerns I have outlined. And I believe the best solutions are those that address them both and involve us all.
So where do we start?
The first point I would make is that no one person, company, or industry can solve these problems by themselves.
For example, as I mentioned earlier, the automobile industry is getting a lot of attention in regard to CO 2 emissions and global warming. But the fact is cars and trucks contribute about 20 percent of CO 2 emissions in the U.S., and 10 percent of the worldwide total. We need to do our part as an industry, but we are only one piece of a much bigger puzzle.
Right now in this country we have no overall framework to bring all the interested parties together as we make major decisions about our collective future. We need a convening forum of auto and energy companies, utilities, NGOs, government agencies, universities and other stakeholders to develop a comprehensive and cost-effective plan of action. We need a national energy policy, with a commitment to building the infrastructure and the tax policies to encourage national investment in clean technology.
Europe is moving in the right direction in this area. Their plan isn’t perfect – I’m not sure there is such a thing – but it provides a forum for discussion and a more integrated framework for action. It includes not only CO 2 targets, but also tools for achieving them such as tax incentives and the beginnings of a carbon trading program. Importantly, their policies target consumer as well as industry behaviors.
Domestic automakers are investing billions in research and development to address this issue, even as we struggle to fight back against foreign competition. We are not shirking our duty, or asking for handouts – just relief from uncertainty, and from a fragmented patchwork of arbitrarily set standards. We need a more holistic legislative approach to climate change and energy security, one that employs cost-efficient and economy-wide mechanisms for reducing carbon emissions and fuel consumption.
Otherwise, those who continue to believe that we can take the contributions of the domestic auto industry for granted will be proven wrong once again.
The second point I’d like to make is that our current challenges also offer us incredible opportunity.
In the auto industry, the company that can take the lead in addressing environmental concerns will have a real competitive edge. That’s why Ford is investing so heavily in this area. We want to transform ourselves into a leading-edge provider of sustainable personal transportation.
Among other things, we are working on hybrids, hydrogen fuel cells, hydrogen internal combustion engines, clean diesel, flexible fuel vehicles and advanced energy efficient powertrains.
Since 2005, we have had 30 Focus fuel cell vehicles in demonstration fleets that have logged more than 500,000 miles. Last week we delivered the world’s first commercial vehicles powered by internal combustion hydrogen-fueled engines to the Orlando Airport. Earlier this year we demonstrated the world’s first driveable fuel cell hybrid-electric vehicle with plug-in capability. This modified Ford Edge test vehicle uses an electric drivetrain with an onboard hydrogen fuel cell generator to give it a range of 225 miles with zero emissions.
We also are putting a demonstration fleet of 20 Escape Hybrids with flexible fuel capability on the road. These vehicles could help reduce our dependence on imported oil while lowering CO 2 emissions.
A lot of our advanced technology is already available to customers today. Worldwide, we have five million vehicles in service capable of running on various blends of renewably produced bio-fuels. Here in the U.S., we have sold more than 50,000 hybrid-electric vehicles, and offer three different production models.
From a more conventional standpoint, we offer 13 models that achieve 30 miles per gallon or more in highway driving. In Europe, half of the new vehicles we sell are powered by clean-running diesel engines.
Leading the way in technical solutions to global concerns isn’t just an opportunity to transform business, it is an opportunity to transform our region as well.
I am on the Board of E-Bay, so I often travel to Silicon Valley. On these trips I also visit with high tech start up companies. They all talk about opening offices in Detroit to get in on the environmental technology the auto industry is developing. They see tremendous opportunity ahead, and so should we. Why settle for just having sales offices? Why not encourage the development of research and development centers here?
The State of Michigan has a unique opportunity to once again be a world leader in the development of new technology. We have the assets to transform ourselves into a leading research and development center, including the intellectual capital, a skilled workforce and a first-rate higher education system. Why not take advantage of those assets to help preserve traditional jobs and create the next generation of high tech jobs?
These days everybody in the world wants to tell us how to go about our business – wouldn’t it be nice to show them that we are still the world leader in innovative mobility solutions?
How do we make that happen?
A good first step would be to pass the Michigan Business Tax plan now. This plan promotes a more competitive tax structure for manufacturers in Michigan. It broadens the base of business taxpayers by including out-of-state companies who sell their products and services in Michigan but don’t invest here. It also encourages the retention of research and development in Michigan through tax credits.
What else can we do?
A few weeks ago, Detroit Renaissance announced a plan to transform our regional economy called the “Road to Renaissance.” As Chairman of the Executive Committee of Detroit Renaissance, I was one of more than six hundred business, government and academic leaders who helped develop this plan. I believe it has the organization, resources, detailed planning and vision to succeed.
The Road to Renaissance concentrates on six specific objectives:
Making Southeastern Michigan the world’s dominant mobility center.
Developing an aerotropolis, or “airport city,” in the area surrounding Detroit Metro and Willow Run.
Growing metro Detroit’s creative community.
Expanding the region’s entrepreneurial capacity.
Securing a strong future talent base.
Promoting ourselves globally while communicating locally.
Frankly, too often in the past lofty goals were announced without the resources or careful planning to make them happen. The Road to Renaissance is different. These are results-oriented initiatives, with detailed action plans, budgets, and measurable outcomes. Starting in the Fall, a quarterly progress report will be published to ensure the accountability and success of the plan.
After the incredible success of Super Bowl XL, everyone asked, “Why can’t we work together and deliver great results like this all the time?” I believe the Road to Renaissance will help us to do that. So will another initiative that my cousin Edsel Ford told you about yesterday.
The Road to Renaissance and Detroit Renaissance are part of a larger effort to transform metro Detroit called “One D.” One D brings together six major civic organizations in an effort to get all of the communities in Southeastern Michigan working together. Edsel is a passionate and enthusiastic champion of One D, which holds tremendous potential for transforming the Detroit region.
I urge everyone to support these efforts to build a better future for us all.
I’ll leave you with one final point. Even as we make our way through a painful transition, there are still exciting opportunities available to our region. But if we want to reinvent ourselves for the 21 st century, we have to act now.
Now, while the assets I talked about are still in place. Before our engineers and scientists move somewhere else to find better jobs, before our tax base is too small to support a first-rate education system, before our children and grandchildren leave our state in search of greater opportunity.
We can transform ourselves into a leading center of technical innovation and sustainable mobility – but only if we act swiftly and boldly. The time for incremental steps and partial solutions is past. There can be no more “business as usual” – if we don’t change ourselves, the world will do it for us.
When I addressed this conference four years ago, there were those who said the concerns of the domestic auto industry were nobody’s business but our own. It was up to us to figure out how to compete, and if we didn’t, that was our tough luck. I’m sure there are still some people who still feel that way.
But the issues involved are more complex than this simplistic view allows, and the impact of failure far more widespread. Detroit automakers will continue to take care of business and take on the world, as we always have. But there are local, national and global problems that we all share, and we all must share in their solutions. As an industry, and as a region, we must transform ourselves for the 21 st century.
The people in this room represent a number of different organizations and perspectives. But there is one thing we all agree on – we can do better. And I hope you will agree with what I’ve said today – we can do better together.
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