Commentary: Ford Finds It Isn't Easy Going Green AloneDavid Welch
It was a surprising admission. At Ford Motor Co.'s annual meeting in Atlanta on Feb. 11, Chairman William C. Ford Jr. set aside decades of auto industry denial about the nasty side effects of its vehicles. Ford's Corporate Citizenship Report admitted its popular sport utilities contribute to greenhouse gas levels and global climate troubles and are a safety concern for motorists in smaller cars. "Most people say they're environmentally conscious," says Ford. "The real key is, how you are willing to back it up."
PR ploy or earnest mea culpa? As debate swirls around Ford's provocative concession, it's clear that the statement will pressure the company and its rivals to change the way they do business. Detroit no longer will be able to stonewall against tighter mileage requirements and emission restrictions for its oversized, gas-guzzling SUVs. And it will have to do more to ensure that its bigger vehicles pose less of a safety hazard to drivers of smaller vehicles. "Ford's statements make it easier for the government to hold the auto makers to tougher standards," says Clarence Ditlow, executive director of the Center for Automative Safety in Washington.
A real dilemma exists. Since Ford draws 90% of its huge profits from a handful of pickups and SUV models, it just can't stop making them and remain a powerful, global company. "I guess [Bill] Ford doesn't really like being rich," quips Dresdner Kleinwort Benson analyst David M. Garrity.
Actually, what he really doesn't like is the prospect of Ford developing some costly environmental and safety changes all on its own. By publicly raising the bar, Ford isn't just setting up his own company for a test of its environmental sincerity--he's setting up rivals such as GM and DaimlerChrysler as well. Environmentalists and safety hawks will be watching to make sure the industry puts its money and resources where Ford's mouth is. Says Sierra Club lobbyist Dan Becker: "Either they follow through, or the public will know they're a bunch of liars."
Ford could make its first show of sincerity later this month, when the House of Representatives considers steps that would raise fuel economy requirements. As has often been the case in past debates, the auto industry keeps claiming that such mileage mandates are difficult or impossible to meet. Even Bill Ford, whose concern for the environment seems genuine, says regulations aren't the way to bring change. "I personally believe incentives are better than mandates," he says.
But he and other carmakers need to boost their credibility by ending the practice of exploiting regulatory loopholes. Ford launched its hulking Excursion last year as a commercial truck, because they are exempt from mileage restrictions. Detroit also needs to show it is serious about bringing more new fuel-saving technology to market. Fuel economy for light trucks has not improved over the past 20 years.
BATTERING RAMS. One important initiative would be to come to market faster with next-generation clean vehicles. Japanese competitors Honda Motor Co. and Toyota Motor Corp. both are selling highly efficient hybrid cars powered by small gasoline engines and electric motors. Ford, in con- trast, won't launch its hybrid Escape SUV until 2003. GM and DaimlerChrys-ler have no plans to launch a hybrid.
It may be tougher for auto makers to prove that they're moving to make SUVs safer for other cars. Their sheer size and weight make them a danger to smaller vehicles on the road. Ford has equipped its Excursion with Blockerbeams--a bar beneath the front bumper that prevents it from riding on top of small cars in a collision. But safety advocates want softer front ends on SUVs that would act less like battering rams in a crash. "If they work on this now, they could have fewer lawsuits," says the Center for Automotive Safety's Ditlow.
If Ford and the industry can come through on improvements, they stand to avoid even stricter, more costly rules. "Nirvana," says Bill Ford, "would be to get out of the regulation game." That heavenly state will come about only if Ford and its competitors raise the bar voluntarily.