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OPTICAL AND HEARING
23rd September, 2005
I want to welcome the people here in the room and everyone watching on our FCN webcast. I also want to welcome the news media that are with us today.
Before I get into our main business of the day, I want to address an issue that I know has been on many of your minds for the past few weeks, and that is the devastation caused by Hurricane Katrina.
I’ve often thought that America and its various regions are really Ford Country. It's not just because we make the cars and trucks that move America's families and help drive its business.
It’s because when you look at our history, at the work of our employees and our dealers, you'll see a company that's committed to building stronger communities, to helping veterans and police officers, to building parks and community centres. And to being on the front lines when Americans need us most, as when Katrina struck families in the Gulf Region.
I can’t even begin to list all of our initiatives that have helped this vital region in the Gulf begin to recover. But I can say this: of course we donated money. But at times like this, people know that Ford does more than just write a cheque.
In fact, what truly distinguished us was personal involvement – on the ground in Louisiana , on the phones at the telethon and on duty and ready to serve with Ford trucks.
Throughout the stricken region, we acted fast, well before many established emergency groups mobilised. Heart is something that cannot be measured, but it is something that can very much be appreciated. And for that, I thank you.
The response in the last few weeks by the people of Ford Motor Company made me feel humble and proud. And it reminded me what a great honour it is to lead this enterprise.
Now, to the business of the day and the reason I’m here in this place, where some of the best and the brightest in Ford Motor Company gather each day to think, to test, to learn, to discover, and to ask: How can we do this better? How can we make our cars and trucks stronger, yet lighter; cleaner and greener; powerful, but still more fuel efficient; and safer for everyone, inside or outside the car.
The questions for me are personal: how can I help some of the most innovative thinkers on earth feel free to surface their breakthrough ideas, to see things in a different way and to push our company to new heights?
I am asking these things of you and of myself at a time when our company faces daunting challenges, a time when our competition is as fierce as it is strong, a time when others would gladly grant us our place in history, but would raise questions about our role in the future.
People are fond of saying that when Ford stumbled it was because products were weak and that when we came roaring back it was because products got stronger. There's truth in that, but that's not the whole truth. We have succeeded when we found ways to let the innovative spirit of our people soar. And we have failed when we allowed that spirit to be harnessed. We have done that in the most innocent ways and with the best of intentions. But we've done it -- and that must end now.
From this point forward, innovation is going to be the compass by which this company sets its direction.
Today, I am renewing the promise of Ford Motor Company – to again be first in delivering innovative products to our customers – stylish in design, safer for our families, first in technology that uses new fuels and offers new service to customers.
We will continue to cut our costs and improve our efficiency, but we cannot win the hearts and the minds of a new generation with efficiency alone – we will win them by delivering the next generation of vehicles for the American roadway.
We will truly drive American innovation to new heights. Building on our legacy. Building not for the past or even the present, but for the future of our company and our country.
I am personally going to lead this renewed drive toward innovation, with the full backing of the Board and every member of the senior executive team.
But we can't do it alone.
I need your help more than ever. I need you to question. I need you to challenge. I need you to stop unnecessary process. I need you to declare that innovation is going to be a necessary ingredient in everything we do.
I'll invite the world to measure the Ford Motor Company is actually setting the innovation pace. I intend to do so knowing that there are shortcomings, but full of confidence that you and your colleagues around the world will make good on the promise.
Our commitment must begin here in the United States . While we're a global company, our greatest challenges and the need for dramatic change are right here – North America .
We will drive innovation in all Ford Motor Company brands across the world, and we will use the power of our global operations to discover great ideas.
Innovation – in safety, in the environment, in design, and in technological solutions to problems – is going to be reclaimed as our natural birthright. It will be the lens through which we view our budgets and our capital investments, our people and programmes, and the way in which we rank our most essential priorities.
Innovation is what made this company great, from the Model T, to the assembly line, the $5 a day wage, flathead V8, seatbelts and passenger side air bags. Innovation is what created the great Lincoln Continentals, the ’49 Ford, the T-Bird, the Mustang, the original Taurus, the first hybrid SUV, and the best-selling trucks the world has ever seen. And I believe it's the key to our success and it will distinguish this company in the marketplace. Starting today, starting now, starting here, we're restaking our claim. Innovation is ours.
Here in the United States, too many consumers are looking too far away to find the best in automotive design, safety and innovation. We want to reclaim those customers, bring them back to America, and bring them back to Ford.
The goal of this effort is to broaden our share of the marketplace, building on our strength in trucks and retaking share in cars and crossovers.
We will target new segments of customers especially in parts of the country where people like our brand but have lost touch with what it can deliver in their daily lives. That means we will do better with safety conscious drivers, especially women, and at the same time provide the emotional lift in design that Americans always demand.
And we won't pass any opportunity to deliver our innovation message. You will be hearing consistently from me and the entire Ford leadership team as we communicate inside and outside the company.
And let me share one other bit of news. We haven't used corporate advertising to carry important messages in over three years. That changes next month when we launch a major advertising campaign in the U.S. to carry our innovation message.
Outside of this building we'll be changing the name on the sign. For years, it has said Ford Scientific Research Laboratory, but that didn’t quite get at the real value of this place.
Having ideas is important; applying them, however, is where we add real value. That’s why the new name outside is going to be the Ford Research and Innovation Centre. I'd like to invite each of you to think about the word "Innovation" every time you walk through the door.
At Ford, science has always been essential to what we do. But that’s not why we’re in business. We are at our best when we apply our research in a way that our customers can feel, touch, and see real value.
We’ve had some terrific innovations in recent years. The Rouge truck plant is where some very determined people looked at a traditional way of doing business, and said we can do much better if we asked ourselves: what if?
What if we could create a living roof – and take all the smokestacks off? What if we could let the sun shed light on the plant floor – and cut our electricity bill at the same time?
What if we could take all those nasty fumes emitted from the Volatile Organic Compounds and convert them into something useful, like fuel. What if all of this could point our way to the future?
The Rouge today stands as testament to the power of innovative thinking and how Ford people, our people, can do amazing, inspiring things when they think, they push, and they don’t accept the status quo, and they don’t take ‘no’ for an answer if it’s for the right cause.
Look at what some of the people in this very room have accomplished over time. Haren Gandhi developed the first catalytic converter.
He's the first and only automotive engineer ever to have won the prestigious National Medal of Technology, which otherwise been won by people such as Bill Gates and Edwin Land. Priya Prasad is probably the foremost expert on safety systems in the world today.
I am very confident that there are more generations of Haren’s and Priya’s and many more like you in this room, and on this webcast, just waiting for the opportunity to shine.
My advice to you: Don’t wait any longer. Push those ideas up. Make us pay attention. Don’t let us off so easy. Lots of stuff that made this company great started off as something that wasn't in the budget.
I am not interested in undoing a global development process that is already making us more effective and efficient. But I have asked Phil Martens to work with me to augment that process.
I am convinced that we can do more to find and protect breakthrough ideas. We don't want to walk away from something that holds great promise for our customers just because it doesn't fit into an established programme.
You know, sometimes I think the innovation that emerges from large corporations is like a tree that grows off the side of a rocky mountain. It just seems to defy the odds.
I’m not saying every off-beat idea is a winner. But I am saying that we need to make sure that the best ideas get a fair hearing. Our customers deserve it. Our company needs it. And the times demand that we move quickly.
That’s why we’re pushing ahead on some of our best innovations right now – in technology, in safety and the environment. Start with what I consider a real company strength: technological innovation, as captured in our hybrids.
We developed the world’s first SUV hybrid in a way that’s unmistakably Ford. Other companies pretend they invented everything about hybrid powertrains, but they also had to invent an entirely new vehicle to house them.
We decided to put our hybrids into mainstream products that were already popular. The Ford Escape and Mercury Mariner Hybrids that are on sale today were born and built in the USA. And they are the only hybrid SUVs made in America.
That's why I'm proud today to announce a ten-fold increase in our commitment to hybrids. In fact, by 2010, more than half of our Ford, Lincoln and Mercury products will have hybrid capability.
We’ll have the capacity to produce at least a quarter-million hybrids a year, and the ability to scale up as the market demands. Talk about driving American innovation. This plan will challenge our ability to innovate in a number of ways, but it’s absolutely essential that we do so.
We know that our customers are increasingly concerned about energy for many reasons: its volatile price; its impact on the environment; and its concentration in the hands of a few nations, some of whom are hostile to our national interests. A multi-dimensional energy crisis afflicts this nation, and our customers feel it in their pocketbooks.
Our job is to help alleviate some of their concerns with viable options in their personal transportation. And that poses a particularly difficult challenge to us at Ford, where many of the vehicles we produce are bigger, heavier and more energy intensive than those of some of our competitors.
We’re responding effectively in several respects. For instance, we’ve devoted a good deal of our product development resources to cars, and we’re now beginning to see a return on that investment.
Our car share is up for the first time since 1993, and I expect that trend will continue as we launch the Fusion, Milan and Zephyr this fall.
We’re also putting more into crossovers, the car-based SUVs that offer our customers improved fuel economy. It’s the fastest-growing segment in the market today and we have the best-selling vehicle in it, the Ford Escape. We also have the largest sales increase of any manufacturer.
But the challenging issues raised by the use of fossil fuels call for even more creative solutions, some of which may not be fully appreciated for a number of years. Just as the naysayers questioned the market's acceptance of hybrids when we first announced ours, they may question some of the innovations we're working on right now.
I want to tell you about a couple of such programmes that we are launching today. One is a pilot programme that will offset the greenhouse gasses emitted in the manufacture of our hybrid vehicles.
Our Carbon Offset programme will pay for projects around the world that reduce carbon dioxide emissions by the same amount that we emit in the production of our hybrid vehicles. That might mean a methane abatement project in Central America, a tree planting effort in Asia or a wind farm in California that would reduce the amount of CO2 that would normally occur had such projects not been in place.
In addition, we've begun discussions with outside partners to initiate an informational campaign for consumers on how they can offset the carbon emissions from their use of the vehicle.
We take climate change and CO2 emissions very seriously. I am very excited by this novel programme, and as we gain experience, we can apply this concept to other vehicle lines. This is truly an industry first.
I am also announcing a Flexible Fuel initiative based upon ethanol. Ford has historically been a leader in FFV’s going all the way back to the original Model T. Over the past quarter century, we've put more than one million ethanol capable vehicles on the road in the United States, Brazil and Europe.
The recent energy bill in Washington has a provision to encourage the use of ethanol, which is a clean, renewable fuel.
Better still, it's made here in the USA, which helps us reduce our dependency on foreign oil. So here in America, it will help our farmers, and best of all, it will relieve some of the pressure that our customers are feeling at the gas pump (bowser). Ethanol is typically cheaper than regular gasoline (petrol), and we're going to do all that we can to support it.
That's why I'm pleased to announce that we will offer four new vehicles for 2006 that run on a mixture of gasoline and ethanol: the F-150, Crown Victoria, Grand Marquis and Town Car. In all, we will produce approximately 280,000 Flexible Fuel Vehicles in 2006.
In addition, we are working with fuel providers to expand the infrastructure needed to provide ethanol. And we're going to actively engage customers so they will understand that they have FFV options.
Longer term, people in Ford labs around the world are working hard to develop technologies that provide even more options, such as clean diesel, hydrogen internal combustion engines and fuel cells. It is simply too early to know whether one solution might render the others obsolete.
That's why our strategy might be termed Aggressive Flexibility; let's push hard on all of our best ideas to respond as markets and governments make known their preferences.
It's within these walls that some of the greatest innovations in automotive safety history have also been born. The auto fatality rate in the U.S. has dropped from 6.5 deaths per 100 million miles in the mid-1960s to 1.5 deaths today, thanks in part to the people of Ford.
But still too many people – nearly 40,000 Americans (per annum) – lose their lives today in automobile accidents. So when a mother sends her teenager out on the road for the first time, I understand both the pride and the anxiety. I want her to feel comfortable sending off her child in a Ford, because that's the most important thing that we can do.
Ford was the first U.S. manufacturer to offer driver and passenger air bags before the federal government mandated them; and also rollover deploying side curtains. Today, we are developing the next generation of air bags to protect passengers in frontal, side and rollover accidents.
Beyond air bags, Ford has many other safety firsts. We were one of the first companies to introduce child safety locks for rear doors, and we pioneered the inside trunk (boot) release. Both are now standard equipment on all our vehicles.
We introduced BeltMinder, a simple but effective technology to remind the driver to buckle up. That's helped drive safety belt use up by five percent – so much so that NHTSA has asked all manufacturers to add this feature. And we pioneered another safety feature – Roll Stability Control – that measures the roll motion of a vehicle and then takes corrective action.
We feel so strongly about these safety benefits of these technologies that we made many of them available to the rest of our industry.
But this is just a start.
Ford and Volvo engineers are working closely together to develop the safety innovations of tomorrow – like the next seatbelt, a new collision avoidance system, and night-enhanced vision. Our goal is not just to go above and beyond our competitors, but to work around-the-clock until vehicle fatalities are part of history.
An important part of our recent management changes was appointing Hans-Olov Olsson, who led Volvo for many years, as our chief marketing officer. Part of his job is to help us pursue and leverage safety innovation across all of our brands. Ground-breaking innovation that occurs anywhere in the Ford Motor Company will be celebrated and then brought into the mainstream.
We don’t need to invent everything here. After all, we didn’t invent the car; we just invented the first car to have mass appeal at an affordable price.
We didn’t invent the assembly line; we just had the intelligence to apply it to our own business. We didn’t invent the SUV; we just made it better. And in that same way, we must think in ways that reach beyond our walls and beyond our gates, beyond our job descriptions, and beyond, sometimes, our own imaginations.
A new commitment to driving American innovation depends at its core on a sound business strategy regarding our fundamentals.
I recognise many of you want to hear details about how we're going to deal with some of our most difficult issues, such as plant capacity and health care costs. But you need to look no further than our recent successful talks with the Canadian Auto Workers to understand that we prefer private negotiations to public posturing.
In other words, we'll let everyone know at the appropriate time about our progress. But, if you've noticed, we're already making a lot of it, with Visteon, Hertz, Fiat, our Sales & Marketing reorganisation, and our recent executive announcements.
The fact is that I need to give our leadership time to assess our progress and make the adjustments they deem necessary. Mark Fields, recently assigned to lead our business in The Americas, is charged with restoring our operations in North America to a sustained level of profitability. Mark hasn't even officially started yet, but I can tell you that he has already hit the ground running, and I expect a very action-oriented business plan to unfold in the next hundred days.
And Greg Smith will be overseeing the development and implementation of our corporate strategy, and there is nothing more important to this company, so that we have options even as the world around us takes unforeseen turns.
We still must navigate some rough patches financially in the months ahead as we move to strengthen our balance sheet, optimise our global footprint, accelerate our drive to deliver great products and to reduce our costs. Over the long-term, however, I do see light at the end of the tunnel.
We have a very strong cash position, particularly following the Hertz sale. We're going to use the proceeds to strengthen our balance sheet, and to re-invest in our core business and, in particular, in growth areas of the world. And we have the resources, especially in our people, to make the improvements that will distinguish Ford in the world.
Our vision is to create a stronger, sustainable business model while improving launches, quality, warranty costs, safety, and technology adoption.
We will continue to make bold and decisive steps toward our future, including addressing the basics of capacity, cost structure, and our global footprint. But just getting to the right size, and the right locations, won't ensure our success. Our organisation can't just look different – it has to think and it has to act differently.
In closing, let me say this: as you can see today, Ford has a blueprint for the future.
Today we shared an important part of that blueprint – our absolute commitment to making innovation a central part of everything we do, and today I have announced some first important steps on that journey.
We know where we're headed and what our priorities must be. We're going to follow them -- and we're going to build an even greater company. Working together, I'm confident that our best days are ahead of us.
Thank you for listening and taking the time to be here today. I encourage you to keep pushing the boundaries, doing things better, and working to be the best.