Energy
The first is energy. Ford is working to make our existing conventional engines more efficient and to invest in engines that run on new sources of energy, like battery power, ethanol and other biofuels. Ford developed the first American hybrid – the Ford Escape Hybrid SUV. And, as I said earlier, we’ve made a significant investment in vehicles that run on E-85 ethanol, which support American agriculture, offers families a choice at the pump, and lessens our dependence on foreign oil.
Today, Ford has more than 1.6 million flex-fuel vehicles on the road, and we’re committed to producing another quarter-million this year. We see renewable fuels as a vital part of our future, too, and that’s why, along with GM and Daimler-Chrysler, we’ve endorsed the Energy Futures Coalition’s goal of getting 25 percent of the country’s transportation energy from renewable sources by 2025.
The problem is that, while our vehicles have the capability to use E-85, there aren’t enough gas stations out there to supply it. There are 170,000 gas stations in the United States. But there are only about 700 E-85 gas pumps. If you have a flex fuel vehicle here in Washington, DC, there is not one station in The District where you can fill it up. In all of Virginia, there is only one. In Maryland, only four.
That’s not enough. Right now, Ford is investing its own money, working with partners like VeraSun, the second largest ethanol producer in the country, to increase the number of E-85 ethanol pumps in America – a process that costs as little as $5,000 a pump. This is a place where businesses, such as the oil companies and the government, through incentives like tax credits can do much more than we ever could to increase retail distribution of E-85.
You know, there’s a reason we’re doing something about energy independence – it’s what our President has called for, it’s what the Congress has been working on, and, more importantly, it’s good for America.
Health Care
It's no secret that the skyrocketing cost of health care is one of the greatest challenges any of us in business face. When costs are rising eight percent a year, it’s a corporate competitiveness issue – and no business, big or small, can ignore it. This is especially true of Ford, when every car off the line has about $1,110 in worker and retiree health care costs built into it. That’s more in health care than in steel, and that’s $500 to $600 in costs our foreign competitors operating in the US don’t have to carry.
Unfortunately, I don't have time to get into a discussion this morning, but I want you to know that we're working overtime in Detroit to get our health care costs in line. We’ve invested in health IT… we’ve steered our employees toward mail ordered maintenance drugs and generic versions when available… and we have innovative wellness and disease management programs. Taking on this issue is a little like boiling the ocean – and even big changes seem like we're just nibbling around the edges. It's going to take all of us -- corporations, government, and the American people -- to find a solution.
R&D
Another way to fuel greater competitiveness is to support the investments we’re making in research and development. Research and development is the lifeblood of manufacturing, and currently, the automotive industry is the largest source of corporate R&D in the United States.
The Japanese auto manufacturers employ about 4,000 R&D jobs at 33 facilities nationwide. That’s all well and good, but as a point of comparison, there are 65,000 people employed in auto R&D at 200 facilities in Michigan alone.
Ford alone spends about $7.5 billion a year on R&D. That’s nearly as much as NASA and more than the Department of Agriculture, Interior, Labor, Justice, Commerce, Transportation, EPA, Education and Homeland Security combined.
We believe this is one of the best investments we can make. But we shouldn’t have to make that investment alone. While the government of Japan directly supported the development of their first hybrid battery – one of the most complex and expensive components of a hybrid vehicle – we developed ours ourselves.
We don’t need the full force of the federal government behind our efforts; all we are seeking is the certainty that allows us to make the investments we’re already making. We’re asking for a permanent research and development tax credit that we can count on through the highs and the lows of the business cycle.
But it’s not just about developing new technologies; it’s also about investing in the factories to put those new technologies to work.
Right now, the difficult truth is that it’s a lot easier to build a brand new factory than to retrofit an old one. You are a hero to an entire state if you build a new plant. States and local governments subsidize new investments, in some cases as much as $160,000 per job. Governors get re-elected winning new plants.
But you don’t get as much help, or credit, when you invest just as much money updating existing plants.
Ford, GM, and Daimler-Chrysler invested about $29 billion in America over the past three years. That’s more than the 14 Japanese automakers doing business here have invested over the past 25 years.
Let me repeat that. We invested more in three years – despite dramatic economic hardships – than our competitors have invested here since 1980.
With the right incentives, we can develop new technology for advanced high-tech vehicles and components. That’s why, like many of you, we’re urging Congress to consider tax incentives to help American manufacturers do just that. This isn’t just about what looks better on our balance sheet, but what is in our long-term national interest.
Trade
Similarly, we recognize that it is in America’s national interest to remain the most open and competitive automotive market in the world. Even in the face of this increased competition, Ford is ready to defend our home turf against any foreign automaker. We’re only asking for one thing: the opportunity to compete fairly on theirs.
Ford Motor Company does not support a protectionist trade policy – and we never have. In fact, our company has supported every free trade agreement negotiated by the United States since the US-Canada Auto Pact in 1965.
The qualifier to “free trade” is “fair trade.” If foreign governments, like Japan and Korea, use non-tariff trade barriers to keep us out of their markets – well, there’s nothing free or fair about that. Competing fairly means allowing the market to set the rates of currencies against one another – not governments.
Between 2000 and 2004, the Japanese government spent more than $400 billion to keep the yen weak. That artificial weakness is, in practice, a $3-7,000 per vehicle subsidy for exports.
We can compete with Toyota, or Honda, or Nissan – but we can’t compete with the government of Japan.
Right now, the President and Congress are discussing a free trade agreement with Korea. As I said earlier, theirs is the most closed automotive market in the world – even as our market is wide open to Korean auto companies.
This potential trade agreement is an opportunity for the President and Congress to demand some reciprocity, including full and unimpeded access for US made vehicles to the Korean market. Anything less will not be worthy of our support. However, this potential trade agreement, if done right, is an opportunity to finally level the playing field.
This afternoon, I’m going to the Hill to talk to leaders of both parties about these and other issues, especially about how Ford is living up to its obligation to change.
Late in his life, Henry Ford was asked about the world changing nature of his achievements. His response was, “I don’t do so much, I just go around lighting fires under other people.”
It’s clear that Henry Ford understood that you don’t get anything done by yourself. You need partners.
Every business has an obligation to deliver quality products and services to their customers while respecting and protecting the wider interests of society. At the same time, our partners in government have an obligation to safeguard and enhance the ability of business to compete. In a town that loves to hate “special interests,” I want to be clear that doing this is very much in the national interest.
When I first took the job of running Ford’s North American operations, I wrote down several thoughts in a notebook. Looking through it recently, I came across one thought that has some currency for today: “What a turnaround feels like: uncomfortable and exhilarating all at the same time.”
This is an exhilarating time to be at Ford. Sometimes finding the right balance, or charting a challenging new course forward, can be uncomfortable. But, with the right partnership between business and government – and smart decisions on our part – I know we can succeed.
Thank you very much.