Ford Pledges to Cut Energy Used in Automaking 25% by 2016

Ford Motor Co. (F), claiming a one-fifth cut in energy used to make cars since 2006, pledged to reduce consumption in its factories an additional 25 percent by 2016.

The second-largest U.S. automaker used 2,778 kilowatt hours to produce each vehicle in its global factories last year, down 22 percent from 3,576 kwh in 2006, it said in its annual sustainability report today. While Ford is using more energy- efficient tools and production methods, part of the gain is from increased use of factory capacity as sales rebounded, said John Viera, the automaker’s global director of sustainability.

“Our plants are running at a higher capacity,” Viera said in an interview. “That’s definitely going to be a factor.”

Environmental efficiency is a cornerstone of Chief Executive Officer Alan Mulally’s turnaround plan. As Ford has broadened its lineup with small cars such as the Fiesta subcompact, the fuel-efficiency of its U.S. vehicles has improved almost 17 percent since 2006, Executive Chairman Bill Ford said in a letter in the report. Factory emissions of carbon dioxide, a global-warming gas, fell 48 percent from 2000 to 2010.

“Ford is a different company than we were a few years ago,” Bill Ford said, referring to the automaker developing cars for global markets rather than regional ones. “It’s helping keep us on track to meet our goal to reduce carbon dioxide emissions from our vehicles in every region in order to address the climate-change issue.”

Reputation Builder

While it isn’t clear that Ford sells more cars and trucks because consumers are impressed by its environmental efforts, Viera said it enhances the reputation of the Dearborn, Michigan- based automaker, which avoided a government-financed bankruptcy such as those used by General Motors Co. (GM) and Chrysler Group LLC.

“The corporate reputation is we didn’t take the bailout money and we’re a responsible company from an environmental standpoint,” Viera said. “Collectively, those positive reputation pieces do allow us to sell more cars or get more consideration.”

The efficiency gains Ford is realizing in its factories have a relatively small impact on the total environmental impact of its cars, said Jim Kliesch, research director of the clean vehicles program at the Union of Concerned Scientists environmental organization.

“The total amount of emissions attributable to manufacturing is fairly small compared to what a vehicle puts out over its lifecycle,” Kliesch said in an interview. “Factory emissions account for about 15 percent of the environmental impact. The fuel economy of the vehicle is much more important.”

Shifting Focus

Ford highlighted fuel-efficiency gains in previous reports and decided to focus on factory improvements this year, Viera said.

Ford’s fuel economy is improving, thanks to new technologies such as turbo-charged, direct fuel-injected engines that boost mileage, Kliesch said. Ford still trails leaders such as Honda Motor Co., he said.

“Ford continues to push the envelope, but they’re still fairly well behind the industry as a whole,” he said. “The difference between the best and the worst is shrinking.”

Ford last month began selling an electric version of its Focus compact car. Also coming this year are hybrid and plug-in versions of the C-Max wagon Ford is bringing to the U.S. from its European lineup. Next year, Ford will introduce a plug-in version of its Fusion family car, Ford said in its report.

Ford will cut energy use at its factories over the next four years by installing more-efficient tools, lighting, paint processes and converting inefficient steam-powered systems to direct-fired gas systems, said Thomas Niemann, the automaker’s manager of sustainability.

“It’s not very sexy,” Viera said. “It’s not the big project you could put in a headline. It truly is the smaller things, the blocking and tackling.”

To contact the reporter on this story: Keith Naughton in Southfield, Michigan, at knaughton3@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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