Last Wednesday, Mark Fields spoke at a Competitiveness Forum sponsored by the United States Chamber of Commerce. Fields has an impressive title: “President, The Americas, Ford Motor Company.” He also has an impressive international resume: Managing Director, Ford of Argentina; CEO of Mazda; Executive Vice President of Ford of Europe, and Chairman and Chief Executive of Ford’s Premier Automotive Group. The auto exec’s speech touched all the usual bases: ethanol, currency manipulation, health care, tax credits, etc. When Fields turned his attention to issues of national pride and policy, his remarks were measured and concise — and made about as much sense as a Ford GT entering the Baja 500.
According to Mr. Fields, the auto industry is “iconic to America” and Ford is “an iconic American brand.” Of course, by “America” Fields meant the United States; not Paraguay, Honduras, Guatemala or Mexico. On the other hand, Fields admitted that FoMoCo “faces a tough 2006 in North America.” So maybe “America” means the entire North American continent, including Mexico and Canada. Or… not. “The United States is the most open and competitive automotive market in the world.” So he was talking about the US and not the rest of the Americas? Or even the rest of North America?
Maybe. Field asserted that the Mexican-made Fusion triplets (Fusion, Milan, Zephyr) are “gaining share” and the “Fusion … is our way of saying … the Honda Accord and Toyota Camry’s reign at the top of the American sedan market are no longer unchallenged.” So a Mexican-built car is Ford’s hedge in the American market against Japanese-branded cars built on US soil. This is getting more and more confusing. But wait – there’s more.
Fields bragged that Ford’s new hybrids are “posting record sales of late” and their “innovations led to more than 130 patents,” with more pending. The Ford exec conveniently omitted the fact that Ford’s hybrid technology depends on technology licensed from Toyota. Nor did he mention the Japanese-made transaxles and battery packs and German-built regenerative braking systems which make Ford’s hybrids possible.
Halfway through his speech Fields finally explained what he meant by an “American” car. Like the Ford-sponsored Level Field Institute pressure group, Fields’ definition of an American automotive product relied almost entirely on US employment statistics: the number of Americans employed in America by foreign-owned automakers vs. the domestic-owned carmakers’ American workforce. Even though Daimler-Chrysler is German-owned, Fields grouped DCX’ workers with Ford and GM’s domestic workers. Translation? In Field’s world view, “American-made” refers to any car, truck, minivan or SUV built in an American plant that isn’t owned by a Japanese or Korean company.
Fields then castigated his Japanese and Korean competitors because “most of their design and engineering jobs are not located in America.” Maybe that’s because they’re GLOBAL corporations that decided to locate their design and engineering centers inside their target markets. If you look at the top models Honda, Toyota, Nissan and Hyundai sell in America, the majority was conceived in design centers located on American soil, designed by American-born designers.
Anyway, for industry watchers concerned with The Blue Oval’s impact on US industrial policy, Fields’ speech raised more questions than it answered. Why, for example, did Ford’s president single-out Japanese and Korean manufacturers for criticism, instead of censuring all companies selling cars on American soil that aren’t built in the USA by an American-owned company? Could it be because that definition would include Ford-owned “foreign” brands: Volvo, Aston Martin, Land Rover and Jaguar?
If you think about it, the cars made by these companies are just as “foreign” as an imported Toyota. So why did Fields denounce “foreign” automakers that come here from other countries and establish a brand identity and manufacturing presence in the US? They’re only doing the same thing Ford did in Germany. And England. And Australia. And Argentina. And… and… and…
Not to put too fine a point on it, Fields’ hypocritical flag waving was stunning in its rational inconsistency. Fields’ speech bitched about foreign governments helping their automakers with currency manipulation, and then bragged “states and local governments subsidize new investments, in some cases as much as $160,000 per job. Governors get re-elected winning new plants.” How can Fields criticize Toyota for investing in American (US) production when (according to various press reports) Ford has just pulled the trigger on an estimated $9.2 billion to update and expand its Mexican operations — to replace lost production capacity from closing plants on US soil?
Despite his assertions to the contrary, Fields’ speech was nothing more than a thinly veiled plea for a bailout from the federal government via tax credits and for protection from the very same free trade market that companies like Ford helped build. If that’s all Mr. Fields has to say, perhaps he’d be better off restricting his remarks to the viability of Ford’s products in the American marketplace. Then again, maybe not.
The full text of Mr. Fields’ speech can be found here:
http://media.ford.com/article_display.cfm?article_id=23632
And this is the magician who’s going to rescue Ford? At best, he deserves a new title: Spin Doctor. Why doesn’t he just paint the American flag on his cars, so we can all feel like the patriots we once were? Instead of trying to make us feel guilty about buying elsewhere, it’s high time that Ford realized it needs to compete on the quality and desirability of the product. The Ford Mustang is a forward step, but it takes more than one car to resurrect a franchise. Ford needs to do what Toyota does in product development: LISTEN TO YOUR CUSTOMERS. Americans buy what they LIKE, and the last thing they need from Ford is a “wave the flag” pep talk. At the moment, there’s more to like inside an import showroom. It’s PRODUCT, PRODUCT, PRODUCT. Like, duh.
Dave, not that I’m criticizing your post, but I have to ask the general readership about somethng you brought up – you say ‘patriots we once were’…and this is something I’ve never understood, so bear with me – how is it unpatriotic to buy a car? Not that this is what you are saying, far from it. But the sentiment among the General’s army and Ford loyalists is that if you buy a car that has a foreign sounding name to it, it’s unpatriotic.
Perhaps it’s my relative youth to such sentiment (I’m 28). I wasn’t around for the heyday of Detroit and the mammoth engined beauties that are now looked at as a golden age of US autos…I caught the tail end of it in the 80’s when I was a child, understanding what I could from stuff like that movie Gung-Ho. Satire aside, I think it paints a stark picture of the general public’s thoughts on foreign autos at the time. My grandfather once said “I could have had a Mercedes, but I got a good, american built Caddy”. Well, whooptie-do. Of course then, I was like “YEAH PAP-PAP!”
Am I alone in the thinking that I don’t care where a car is designed, built, or imported from? I want a quality, reliable, somewhat luxurious vehicle that looks good and handles well. It can come from Detroit, Mexico, Lagos, Japan, Trinidad…I don’t care.
I’m a patriot because I love this country, ridiculous faults and all, and pay my taxes, and support her. I’m not necessarily happy about the war, but I’ll support the troops, despite thinking the President could give TTAC’s buddy Rabid Rick a run for dunce of the decade. In fact, the more I think about it, the more it makes sense – the Auto industry in the US is in self denial, and relies heavily on unfounded, unabashed bullshit. Just like this current government does. “Sure, things are great, no don’t ask that question, look over here, no, here, yes this is wonderful here because we can spin it that way…no, don’t look at that big mess, look here at this little mess that we’re pushing as being good for you and us.”
GM and Ford think we’re stupid. The Whitehouse thinks we’re stupid. And half the country agrees with them. These days, I guess patriotic, for some part of the population, can be equated with ignorant.
But I still don’t get how a car purchase is ‘patriotic’. My home purchase was patriotic, if the definition applies, because it was on US soil, and I had US contractors refurbish pieces of it, using US materials and US sweat and effort. But by that definition, the burrito I had at Taco Bell 3 nights ago was patriotic too…
The U.S. is a capitalist ceconomy. As such, the ‘American Way’ is the capitalist way.
It is your ‘patriotic’ duty as a consumer to purchase those goods and services that best meet your needs and fulfill your desires. End of story.
As Ayn Rand once famously said, ” ‘Buy American’ is un-American.”
I was arguing that Mr. Field’s comments were inappropriate when he appealed to our patriotism to buy his cars. I AGREE totally that product is king (next to cash), and that Americans shouldn’t be choosing inferior product to avoid guilt. In a free enterprise system, the winners win because they built a better mousetrap — however that’s perceived. In this world economy, buying a car out of loyalty to “Made in America” sentiments are nothing more than convenient distinctions, and it’s insulting that Mr. Field’s thinks we don’t know any better. His pablum will do more to perpetuate Ford’s problems than fix them. Sadly, I don’t think he’s the guy to pull a rabbit out of the hat.
I remember some Ford guy explaining to me that the reason Ford bought the licenses to so much Toyota technology for the Escape hybrid was not that they actually used it but in case they ever needed it. Or something…
Stephan Wilkinson
Am I unpatriotic because I purchased a Subaru Legacy GT that was assembled in Lafayette, Indiana over a Ford Fusion that was assembled in Mexico, Mr. Fields? I don’t get it. While profits do go back to the mother country, the fact is the vast majority of those profits are re-invested back into the countries that they came from. Toyota and Honda are each investing lots of money into the States because they are making lots of money in the States and they want those profits to grow more. GM is making lots of profit in China and are re-investing those profits back into China so those profits can also grow.
Corporate welfare–it’s the American way!
People use the “Profits go back to the other country” argument too much, and I don’t think it makes any sence. (Note to GM: first you need to generate a profit before it can go back to your country.) Where to the profits go? They go to the share holders. There’s nothing stoping me (an american) from buying Honda (NYSE:HMC) or Toyota (NYSE:TM) stock. So the profits go back to me! However, I think the most important thing is the workers you support, they’re the ones that take that money and buy stuff in their town and pay taxes and support the country. So when I buy a Honda or Toyota made in the south, I’m supporting american workers which has the biggest effect on the US economy, and then any left over profits go to share holders. If I buy a Ford made in Mexico or a Chevy made in Canada, I’m not supporting american workers or the US economy, and there’s no profit going to the US anyway.
One more note on the patriotic thing: given the post 9/11 world, isn’t it unpatriotic to by a low MPG car? Over the life of that car, it is going to consume a lot of gasoline. Much of the dollars spent on gasoline goes to the oil producers, many of whom wish the US harm.
This is not an anti-SUV rant. If you need an SUV or a minivan (like I do), fine. You could still buy the higher MPG model.
Wonder why Ford never talks about patriotism from that angle?
The ol’ bugaboo currency manipulation, huh. Asians — who are poorer than Americans — suck it up and weaken their own currency, to their own detriment, in order to subsidize a car purchase for my rich American butt, so that I can eat my quadruple-patty bacon cheeseburger in a sweet Accord. That’s remarkably kind of them.
Whereas the UAW unionists with half my IQ and education expect to make twice as much money as I make by selling me a lousy car.
Well, that’s why I like Asians and buy their cars.
miked: brilliant point about repatriated profits. The social and economic good arising from profits primarily comes from returns to shareholders as you say — and I’d add, capital expenditures that profits enable. Otherwise it’s just dead money sitting around. Seems to me the Asians may be making more Cap-ex here in the US than the Big 3 at this point.
As of a year and a half ago (when the economist articles on the car industry were published), market capitalisation for Toyota was more than Nissan and Honda combined or more than the Big Three combined.
This should tell the tale.
http://www.economist.com/images/20050129/CSF320.gif
Don’t the Japanese maker have a good incentive to build cars on US soil? I read somewhere they had ‘quotas’ of import, beyond which tariffs increase. To counter that fact, they build directly in the US.
When you think about it, it would make alot more sense for Nissan, Toyota, Hyunday-Kia to open their factories in Mexico or even Canada (some do have plants in Canada, I know) where labor is cheaper or at least health care is not their direct burden.
Being domestic, GM-Ford-DCX can import all they want from China (even fully built engines and transmission) to their heart’s content.
Thankfully, now I can see on the sticker the percentage of part and location of final assembly. I’m pretty sure they don’t do it out of good will.
This speech is a throw-back to the days of Henry Ford II who thought that fuel-efficient autos were just a passing American fancy in the 1970s. Of course, he was somewhat right about that, as the wacky world of mom driving the children around in a Ford Expedition, Explorer or not-so-minivan came into existence when petrol stabilized in during the Reagan years.
But then, we end up behind the proverbial 8-ball on September 11, 2001 when planes are turned into weapons by a team of high-jackers, most from one village in the country where we get much of our petroleum, a country reportedly called “an allie.”
“Engineer” is correct. It’s time to get patriotic by buying high-mileage machines, when we can – at least for commuting. Is Ford building such machines for the American public? The answer is “hardly.” They still make their nut off of Explorers and trucks – 1/2 to one ton in variety. It’s off course the same deal over at The General. And frankly, it’s a bit of the same at Toyota. (Yes, they sell tons of Camrys but look at how many jacked-up Tacomas and Tundra they sell and figure the margins on those versus the money lost on their hybrid auto.) Let gas and diesel rise to five dollars a gallon and maybe Americans will pull their heads out of their derrieres. Will Ford be there to provide the machines they need? Right now, I give them 50–50 odds. Tell this empty suit, Fields, to start bringing over some of the autos Fords sell in Australia, to start the needed product revolution out. And then, sell us the European version of the Focus.
tms1999, the Japanese makers have a very powerful incentive to build vehicles – particularly trucks – on US soil. And the automakers have no one to blame but themselves.
In 1963, the US started applying a 25% tariff on imported pickup trucks in retaliation for a tariff the European countries put on American chickens. It was originally aimed at VW which was importing a pickup truck based on their original van. Europe eventually rescinded their chicken tariff, but the US never removed the tariff on trucks.
When the Japanese manufacturers began seriously importing small pickup trucks – a market segment totally ignored and scoffed at by the US manufacturers – the high tariff applied to them as well. To get around this they started importing their trucks as a bare chassis (the entire truck minus the bed) which were subject to only a 4% tariff. (By comparison, car imports only have a 2.5% tariff on them.)
In 1980, the Big 3 and UAW pressured the Customs Service to reclassify the bare chassis as trucks, making them subject to the same 25% tariff. This was just before Ford and Chevy introduced their first domestic-built small pickups, so they no longer had to rely on rebadged Mazdas or Isuzus to compete in that market. It automatically gave them a 25% price advantage in what was becoming a very active market segment.
At that point the foreign manufacturers had no choice if they wanted to continue competing in the US. They had to begin truck production here. Once they had established that beachhead it was just a natural progression to begin auto production here too.
The only reason the Japanese started producing vehicles here was because Ford, GM, Chrysler, and the UAW couldn’t stand a little competition. Instead of developing a competitive product to meet the Japanese head on they tried to get the government to protect them. Their actions eventually bit them in the ass. Fields and other American auto execs are begging for government protection and bailouts again (still?). And again it’s because they won’t (or can’t) develop a competitive product. Like Yogi Berra said, “it’s deja vu all over again.”
Frank
Re: Miked
The 1965 Auto Pact between the Canada and the US essentially makes it an integrated market. Most companies with large factories in Canada only produce a few models there that are sold throughout NA, and vice versa.
For instance, most Camry’s sold in Canada probably originated from an American plant, while the Toyota plant in Ontario put out around 4 models at first, but a few years ago, shifted Solara production to a US plant to increase capacity for the Matrix, Corolla and Lexus SUVs.
The same goes for the Ford, GM, and DCX plants up here too, they usually produce only a selection of models (Chrysler minivans, for example) in order to gain efficiencies of scale and specialize plants – a plant may be able to quickly retool from assembling Yaris sedans to Camry’s, but all the other items down the supply chain (engines, interiors, seats) need to shift as well.
http://www.toyota.com/about/operations/manufacturing/ details some of Toyota’s NA plants, what they make, and where they go.
Where the automaker sets up shop these days has to do with how close it is to their prospective market, subsidies or breaks offered by the government, integration into their existing logistic network, local workforce ability, etc. Medicare costs, tariffs, or political expediency are all part of the equation, but not the only factors involved.
Back in January, I wrote an editorial for this site about Fields’ keynote speech at the Greater L.A. Auto Show. There’s one quote from Samuel Johnson, which I should have used then, “Patriotism is the last refuge of the scoundrel.”
Bob Beamesderfer