Ford Touts INNOVATION!

Ford touts role of U.S. automakers

Package of tax incentives sought

BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER

November 23, 2005

Bill Ford, chairman and CEO of Ford Motor Co., speaks about American innovation at the National Press Club in Washington on Tuesday. (GERALD HERBERT/Associated Press)

The day after General Motors Corp. announced it would slash 30,000 jobs and stop production at 12 plants, Ford Motor Co. Chairman and CEO Bill Ford delivered an impassioned manifesto about the importance of the domestic auto industry to the United States -- imploring Congress to offer tax incentives that would help keep it strong.

Tuesday's speech to the National Press Club in Washington came as Ford Motor is preparing to announce a restructuring plan in January. That plan will likely involve idling plants, laying off thousands of workers and implementing other cost-cutting actions certain to hurt the local and national economy.

And it came at a time when national leaders, many with new foreign auto plants in their states, seem, at least to many Detroiters, less interested than ever in the woes of the local auto industry.

But the Motor City may not be as neglected as it might appear. Ford gave his speech just before meeting for more than an hour with a senior White House official to discuss his call -- first made in September -- for a summit on the nation's energy policy.

"Now, more than ever, with the competitive pressures of globalization, America needs to respond to the economic challenges of our time," Ford told journalists.

"This is not the moment to stop investing and concede our competitive edge in vital parts of the economy. Just the opposite, we must take the lead and show the world that there is only one, true innovative manufacturing giant. And it has three distinct initials: U.S.A."

Ford also urged Congress to offer a package of tax incentives to drive innovation in the auto industry that will help make the nation less dependent on foreign oil, as well as a tax incentive to help American manufacturers to convert old plants into high-tech facilities.

In September, Ford Motor launched a campaign to promote its plans to produce 250,000 hybrids a year by 2010, more than 10 times the number it produces now. It currently has two hybrid crossovers, the Ford Escape and Mercury Mariner, on the market. It has also announced plans to produce 250,000 ethanol-capable vehicles in 2006.

"We also need to invest in the American workers who build our products with training programs and incentives to upgrade worker skills," Ford said. "That will help us move into the future while preserving American jobs."

But what's American in the auto industry is difficult to pin down these days.

Ford's speech seemed to define it as GM, Ford and DaimlerChrysler AG, which was spawned by the 1998 merger between the German Daimler-Benz AG and the old Chrysler Corp. And he even noted that he was "amused by advertisements I've seen lately from one overseas carmaker bragging about its first new plant in America."

"That's something Ford did in 1903," Ford said.

But during a question-and-answer session after the speech, Ford cited the company's new economical sedans, the Ford Fusion, Mercury Milan and Lincoln Zephyr, as being successful in the marketplace. He didn't mention that those vehicles are made in Mexico, and he continued to herald the accomplishments of the industry as led by GM, Ford and DaimlerChrysler.

"Our domestic auto manufacturers are still the foundation of the auto industry in this country," Ford said. "We still employ about 90% of the workers in our industry. We still manufacture about 75% of the cars and trucks made in America. We purchase 80% of all U.S. auto parts. And since 1980, we've made more than 85% of the total investments in our industry -- about $175 billion.

"Granted, there are foreign automakers who have built plants here in this country -- and I don't discount their contributions," he said. "But having a few assembly plants here doesn't necessarily make you American. The average American content of the vehicles sold in America by U.S.-based companies is 80%, compared to 31% for Japanese manufacturers, 5% for European, and 2% for Korean. ...

"U.S. automakers also provide health-care benefits to more than two million employees, retirees and their families. And we pay more than $11 billion in pensions each year to 800,000-plus retirees and surviving spouses. To put it simply, we invest in America -- and in Americans -- every single day."

If the domestic auto industry doesn't adapt to the changing business climate, Ford said, it deserves "to suffer the consequences."

"However, if we innovate and take the necessary steps, we will succeed as we always have, with the might of America behind us. That's what we've done throughout American history, through the ups and downs of war and tough economic cycles. Our government must view the challenges of this era through the same lens -- and stand by American workers, and American industry as it always has."

Contact SARAH A. WEBSTER at 313-222-5394 or swebster@freepress.com.

Copyright © 2005 Detroit Free Press Inc.