SPEECH: BILL FORD - DRIVING U.S. COMPETITIVENESS

Bill Ford U.S. Chamber of Commerce Washington, D.C. November 10, 2004

Driving U.S. Competitiveness

I want to thank the Chamber for inviting me here today. It's a pleasure to have an opportunity to speak at such a distinguished forum.

The timing couldn't be better.

A few short years ago, manufacturers from the Midwest, including U.S. auto companies, were written off as Rust Belt dinosaurs. Today, those perceptions are changing, and manufacturing is once again being given the respect it deserves. In the election candidates at all levels sang the praises of manufacturing jobs, and with good reason.

Manufacturing is still an important engine that drives the U.S. economy. It provides "good" jobs that everyone wants to preserve.

This is not just about narrow self-interest or material wealth. Our success benefits this country directly, and it also helps increase prosperity around the world. As the standard of living goes up, so does the quality of life in the community. With greater prosperity come advances in health, education, cultural achievements, and social stability. And ultimately, greater security around the world.

President Bush has made it clear that building a strong economy and creating new jobs is one of his top priorities. So have Congressional leaders in both parties. I know every business leader in this room applauds that commitment and has already taken steps to accomplish these goals. What I want to share with you today are my ideas for how we can work together to make this happen. And in the weeks and months ahead, I hope we as business leaders can continue this dialogue. Not only among ourselves, but with the government and the public, in order to move forward on a shared agenda for strengthening American manufacturing.

I talked about timing earlier.

Americans are ready for business leaders to step up and work together for the greater good of this country. The last few years have seen our share of corporate scandals, to the point where now 1 of 2 Americans say they have very little trust in corporations to do the right thing. This must change. And for it to change, we must act together.

Former Commerce Secretary, entrepreneur and businessman, Pete Peterson spoke to this kind of leadership as "business patriotism." Here's what he said in a recent article in the Washington Post.

"True corporate leadership is a kind of business patriotism: It requires taking an honest stand on the great questions that face us. Patriotism is taking a chance – and not just saying, "I got mine." Patriotism is putting ourselves on the line for the policies that we believe will help the long-term interests of our economy and our country."

As Peterson noted, business leaders have traditionally played a leading role in shaping, selling and executing many initiatives. For example, when the Marshall Plan was announced, only 1 in 7 Americans approved of it before the business community engaged. They helped organize a massive public education effort and along the way, helped America change its mind.

I think it's time we did the same thing right here at home to restore American competitiveness. We need to speak candidly, openly and directly to the issues that affect us. If we do this and work together to find creative solutions, as the President of the United States said a week ago today, "there is no limit to the greatness of America."

No one has all the answers. But I believe we have an historic opportunity before us and I want to be part of that.

By birth and by choice, I have gasoline in my veins. As you might imagine, I grew up talking about auto industry issues around the dinner table. I've worked at Ford now for more than 25 years. For the past five years I've served as Chairman, and for three years I've been the CEO. I care deeply about this industry and manufacturing in this country. To me, this isn't a job. It is my heritage and my children's future.

Last year, I presided over the celebration of Ford's 100th anniversary, and we looked back on what we had accomplished over the years. Overall, in terms of economic and social influence, Ford had a tremendous positive impact on the lives of people around the world in the 20th century.

Through remarkable innovations, so did American business in general in the last 100 years. But we know nostalgia won't take us very far in today's world.

Two weeks ago I had the honor of hosting the 75th anniversary of The Henry Ford, the museum created by my great-grandfather. Henry Ford didn't build his museum just to celebrate the inventions of the past. He built it to inspire future generations of Americans to create their own innovations.

That's an important lesson to remember as we move forward.

As business leaders, we are responsible for making sure our companies can compete on a world stage. We need to innovate and compete on our own.

But some of the key issues are bigger than any one company or any one industry. In order to tackle them effectively, we need the collective action of government and industry working together, to ensure the U.S. remains competitive, and our economy stays strong.

First of all, health care. We have the highest health care costs of any major nation, and those costs keep increasing rapidly. The United States spent an estimated $1.7 trillion on health care in 2003 alone. That represents over 15% of our GDP. During the four-year period through 2003, health insurance premiums increased by 11.4% a year, compared to 2.2% for overall inflation. This is a pace we cannot sustain.

At Ford, we provide health care coverage to over a half million employees and retirees. In 2000, we paid $2 billion for employee health care. In 2003, those costs rose to $3.2 billion. That adds about $1,000 to the price of every car and truck we build in America. As a company, we spend more on health care than we do on steel, if you can imagine that. We're taking on this issue through benefit design changes, pushing better quality and value and by working for solutions at the bargaining table.

Some might argue that we are the ones that got ourselves into this health care situation, so it's up to us to get out of it. I would remind my friends who take this position that just as we – the U.S. auto industry – have invested billions in the economy, we also have invested in our greatest resource – our workforce. I'm proud to share the vision of my great-grandfather, who believed in doing the right thing for the people who are the backbone of our business.

The business leaders I talk to all are committed to providing high quality, affordable health care for employees, retirees, and their families. They're not looking for bailouts, they're looking for long-term solutions. I believe that a coalition of business, labor, consumer, medical, government, and other stakeholders is key to meeting this challenge. What we seek is a partnership with the government to find solutions to America's health care needs. Our goal should be to make affordable, quality care more accessible to everyone.

The Medicare Prescription Drug legislation established a strong foundation for addressing our problems together, like medical liability reform, help for the uninsured, and catastrophic reform. I want to make it clear that we are in no way suggesting a slow march to national health care.

I am suggesting using all of the efficiencies of the market, along with the proper role of the government, to provide better health care at a better price. We can do this if we work together.

Tort Reform is another critical issue, one that is also related to rising health care costs. America is experiencing a dramatic rise in the number of lawsuits and multi-million dollar settlements. In 2002, the legal costs paid by U.S. companies totaled $233 billion, which is ultimately paid by all of us.

As a percentage of our GDP, we spend more than double the amount of other industrialized nations on lawsuits. But only 20 cents from each dollar spent actually goes to winners in those lawsuits. This is raising the cost of doing business and raising questions about the fairness of our legal system.

It also puts an excessive burden on businesses and consumers. We need to let the public know that they are the ones who ultimately pay the price of an unfair system. In the new Congress, passing class-action and asbestos reform would be a good start.

Global trade is another area where government and business need to work together for the common good. Once again, we're not looking for bailouts or special favors. We just expect to compete on a level playing field.

In the auto industry, for example, the U.S. is one of the most open markets in the world. But all too often, when U.S. automakers try to export or build our vehicles in other countries, we face a different set of rules. There are tariffs, investment restrictions, import quotas, local supplier sourcing rules, currency manipulations, and unnecessarily restrictive vehicle standards, to name a few.

The Doha Round of the WTO negotiations offers manufacturers an opportunity to remove these barriers to trade to the benefit of all countries. The degree to which the negotiations succeed in doing so will be a key test of whether the business community can enthusiastically support its passage in Congress.

American industry with few exceptions supports free trade as well as an open investment environment here at home. And while we welcome the investment of our foreign competitors in the United States, we should never be confused with the competition. The traditional U.S. automakers – DaimlerChrysler, Ford, and General Motors – are the foundation of the U.S. manufacturing sector.

We employ nearly 90% of the autoworkers in the United States. We manufacture 75% of the cars and trucks made in America. Ford, DaimlerChrysler and General Motors spend more than $16 billion on research and development every year, more than any other U.S. industry. We purchase 80% of all U.S. auto parts. Since 1980, we've made more than 85% of the total investments in the U.S. auto industry.

In fact, the average domestic content of our vehicles sold in America is 80%, compared to 31% for Japanese manufacturers, 5.4% for European, and 2.1% for Korean. And the money we earn here stays in this country.

Our new Dearborn Truck Plant is a good example of the kind of investment we're making here at home. Dearborn Truck combines a world-class manufacturing center with advanced environmental concepts. That includes the world’s largest "living roof" with more than 10 acres of sedum plants helping to clean the air, generate oxygen and manage storm-water runoff. Being green also saves us money.

This plant is the centerpiece of our project to transform our Rouge manufacturing complex – the icon of 20th century manufacturing – into the model of 21st century sustainable manufacturing. We made this investment at an existing location because of our commitment to the community and the environment. And the product we build there, the new F-150, is the single best-selling vehicle in the world.

We're all doing our part to be competitive. At Ford we've raised our quality and taken billions of dollars out of costs in the last few years. We are on a road to sustainability, which will save us money, and make us leaders in environmentally responsible manufacturing.

Ford has been around for more than 100 years. We know how to compete globally, as do so many other American businesses in all sectors of the economy. Manufacturing is the engine that drives the economy; industry and government are the key to keeping that engine revving.

The last issue I want to address is how we go about developing the technology that will lead us to a clean and energy efficient future. Clearly, business has to take the lead in this area, but government can help, especially in leading-edge environmental solutions.

This issue is much larger than simply writing and complying with regulations. Technological innovation has always played a key role in America's economic success. I'm convinced that providing market-driven solutions to these concerns is an outstanding business opportunity that will give us a competitive advantage.

At Ford, our new Escape Hybrid, the world's first SUV hybrid, can do everything our regular Escape can, only with 80% better fuel economy in city driving. We also plan to sell a Mercury Mariner Hybrid SUV in 2007, and a hybrid version of a future mid-size sedan. These hybrid vehicles offer both challenge and opportunity.

The challenge is developing a vehicle with new technology and two powertrains into the market in sufficient volume at a reasonable cost. The opportunity is for government and industry to work together to develop market-driven policies to spur demand.

As I look ahead, I am excited about creating a path to a clean, renewable, hydrogen-powered future. I see this as a tremendous business opportunity. We are investing huge resources to advance and demonstrate this technology. A few weeks ago we announced that we will build 100 airport shuttle vans powered by hydrogen internal combustion engines in 2006.

Ford Focus Fuel Cell vehicle is one of the industry's first hybridized fuel cell vehicles. It combines the improved range and performance of hybrid technology with the benefits of hydrogen powered fuel cells. It showcases what the clean cars of tomorrow can be.

There are many obstacles to overcome, but the potential rewards of this new technology are great. The 100-year reign of the gas-powered internal combustion engine could come to an end in our lifetime.

Given the enormity of the task, I believe that partnerships involving industry, energy providers and government will be required to make hydrogen power a reality. We have already started, including partnerships with the Department of Energy. We can deliver the technology, but we must have a coalition of government and fuel-providers to create the infrastructure. And we must work together to enact supportive tax policies.

Obviously, there are many more issues confronting U.S. business as we strive to be competitive in the 21st century. Pensions, regulations, tax reform, immigration laws, corporate governance – any area where business interests and public policy intersect has the potential to impact our performance.

It's our job as business leaders to speak up and make our case to the American public. Business leaders cannot be silent, even in an era when CEO's are under fire. The free enterprise system requires our thoughtful leadership.

We don't have all the answers yet, but we have to continue the dialog, and find creative new approaches to working together. We can't afford not to – everyone in this room has a stake in our success. I plan to return to Washington in the months ahead to address the issues I raised today in more detail. I look forward to future opportunities to hear from many of you in this room through the Chamber about how we can best do this together.

With his usual eloquence, Winston Churchill summed up the essence of this issue decades ago. He said, "Some regard private enterprise as if it were a predatory tiger to be shot. Others look upon it as a cow they can milk. Only a handful see it for what it really is: the strong horse that pulls the whole cart."

For the sake of future generations, we need to ensure that the horse pulling the cart remains strong. I hope you'll join me in speaking out to keep U.S. competitiveness at the top of our collective agenda. And I hope we'll all keep working together to build a better future for all Americans.