ford welcomes obama plans for green vehicles
Post on 11-Sep-2014
Embed Size (px)
The New York Times websiteViewed 11/24/08
Ford Scion Looks Beyond Bailout to Green Agenda
By BILL VLASIC
Published: November 23, 2008
Carlos Osorio/Associated Press
From left, Alan Mulally, chief executive of Ford; Bob King, vice president of the United Automobile Workers; Gov. Jennifer Granholm of Michigan; Rory Gamble, of the U.A.W.; and William C. Ford Jr., the executive chairman of Ford, in Dearborn last month.
DEARBORN, Mich. As the Detroit auto companies contend with their worst financial crisis in decades, the most famous American auto executive has stayed largely out of sight.But William C. Ford Jr., the executive chairman and scion of the founding family of the Ford Motor Company, has been preparing for a bigger role in the industrys plan for survival.
While General Motors and Chrysler plead to Congress for a bailout, Mr. Ford has reached out to President-elect Barack Obama in hopes that his company can benefit from the administrations longer-term strategies for the auto industry.
Mr. Ford has been working behind the scenes, meeting one-on-one with Mr. Obama in August, conferring with his senior economic advisers, and teaming up with Gov. Jennifer Granholm of Michigan to push a vision of a leaner, greener auto industry.
With Detroit on the brink of disaster, the great-grandson of Henry Ford could play a critical role in how the Obama administration decides to assist the companies financially and shape broader energy policies.
One of the things that I feel very encouraged about is the president-elect and where hed like to take this country in terms of energy, and I completely buy into his vision, Mr. Ford said in an interview, his first since the Big Three approached Washington lawmakers about a rescue plan.
He can afford to take a longer view because Ford, unlike G.M. and Chrysler, does not need an immediate infusion of government aid to stay in business.
While Fords chief executive, Alan R. Mulally, joined his counterparts from G.M. and Chrysler in testifying before Congress last week, Ford is not asking for an immediate bailout from Washington for now.
William C. Ford Jr., 51, the great-grandson of Henry Ford, at Ford headquarters in Dearborn. The company has enough cash on hand $18.9 billion, as well as a $10.7 billion line of credit with private lenders that will keep it running through 2009 without cutting development of its next generation of more fuel-efficient cars.
While Ford cannot continue to burn cash indefinitely, it is also not on the verge of bankruptcy like G.M. and Chrysler. And the health of the company presents a unique opportunity for Mr. Ford, 51, who has been chairman of the company since 1999 and served five years as its chief executive.
We have a plan that is high-tech, product-driven, which is a fuel economy plan, he said. And we have kept that plan in place under these tough conditions.
In August, Mr. Ford shared those plans with Mr. Obama, then candidate for president, when he was in Lansing, Mich., for a speech on energy policy.
We talked about the electrification of our industry and other fuel-economy issues, Mr. Ford said. Hes a great listener and he asked all the right questions.Mr. Ford said they focused on a few specific, industrywide issues. One was government help to put more electric cars on the road.
One of the things we need to sort out as a country is batteries, Mr. Ford said. We really dont want to trade one foreign dependency, oil, for another foreign dependency, batteries. The main producers of batteries are Asian manufacturers.
Spencer Platt/Getty Images
Ford has already begun to transform its truck-heavy vehicle fleet with an influx of smaller, more fuel-efficient cars.
He does not profess to have Mr. Obamas ear yet on the how to save Detroit. But Mr. Ford is keeping close contact through Governor Granholm, a member of the president-elects economic advisory team.
I think he is a key player, she said of Mr. Ford. He has tremendous credibility with respect to the serious issues related to renewable energy and energy security for this nation.
Mr. Ford has been Detroits most vocal environmentalist since becoming the first family member to run Ford since his uncle, Henry Ford II.
Even when Ford was living off profits from its big sport utility vehicles, he was pushing to take the company in a greener direction. Ford was the first automaker to bring to market a hybrid version of an S.U.V., the Ford Escape, and it is introducing a new line of Ecoboost engines next year that will cut fuel consumption by up to 20 percent.
The Ford family controls the automaker by virtue of its 70.85 million shares of Class B stock, which carry 40 percent voting rights for the entire company.
But the familys wealth has taken a drastic hit as losses have mounted at Ford and its stock price has plunged.
The familys Class B shares were worth $101 million at Fridays closing price of $1.43 a share, down 81 percent from a year ago when the shares had a value of $532 million.
Mr. Ford also owns 5.2 million shares individually, which have dropped in value to $7.4 million from $39 million.
The family clearly has taken an enormous financial beating, Mr. Ford said. But the family still is here and standing behind the company.
The company is in better shape than G.M. and Chrysler, but just barely. Ford has lost $24 billion since 2006, and it reduced its cash cushion by $7.9 billion in the third quarter this year.
Two years ago, Ford was seen as the riskiest bet in the industry to survive when it mortgaged nearly all its assets, even its blue Ford oval trademark, to secure a huge line of credit.
Now, with the collapse of the credit market, G.M. and Chrysler cannot borrow money on their assets and could face insolvency by the end of the year without federal assistance.
Mr. Ford said his company was interested in being able to access government loans only if the economy continues to deteriorate. Were trying very hard not to need it, he said. Our plan is to have our own liquidity and get through without it.
Ford has already undergone an extensive revamping at the direction of Mr. Mulally, who succeeded Mr. Ford as the automakers chief executive in 2006.
Since then, the company has cut 40,000 jobs, sold off three of its brands and begun an effort to transform its truck-heavy vehicle fleet with an influx of smaller, more fuel-efficient cars.
Mr. Ford remained in Detroit last week as Mr. Mulally endured two days of harsh criticism by lawmakers over Detroits financial plight, along with G.M.s chairman, Rick Wagoner, and Chryslers chairman, Robert L. Nardelli.
In the interview, Mr. Ford said that some of the skepticism from Congress about the industrys future was justified. I completely understand the frustration that Americans feel and it came out loud and clear this week, he said. I dont think we told our story terribly well.
After 15 years of relying on pickup trucks and S.U.V.s for profit, Ford is putting the bulk of its capital investment into smaller cars.
Much of the debate in Washington has centered on the best source of government money for an emergency loan program for Detroit.
One is a $25 billion low-interest loan program already passed by Congress that provides money specifically for improvements in fuel efficiency.
Ford has applied for $7 billion of those loans, which are administered by the Department of Energy. Mr. Ford expects that any aid from the Obama administration in the future will be tied to improvements in fuel economy.
We just submitted our application to the D.O.E. and whats interesting is in the next two years, 75 percent of our vehicles will qualify for their definition of advanced vehicle technology, he said.
Mr. Ford said he was committed to helping Mr. Obama end Americas dependence on foreign oil whether Detroit gets a bailout before the end of the year or not.
Its all about fuel economy and energy independence, he said. I passionately believe that Ford can and should be part of that solution.