Clean Production:
    The SUV

Ford's attachment to existing automotive constructs is most obvious in its continued strategic investment in SUVs. In 1999, Ford sold 768,743 SUVs, which represented a nearly 50 percent increase from its 1990 sales of 540,199 SUVs. This 1999 figure also represents 20 percent of Ford's sales, while SUVs were only 5 percent of 1990 sales.1 Keying off its new company philosophy of corporate interdependence with the consumer, Ford attributes most of this growth "to baby boomers switching from cars to SUVs for the added functionality and features... compared to a 1991 large station wagon, the Ford Explorer (4x4) can tow a larger trailer, has about the same cargo caring capacity and gets better economy".

Cast in this fashion, it is those baby boomers again who are to blame for having insatiable demands for 4x4s. FoMoCo, at the same time, openly admits as part of its good corporate citizenship policies that SUVs are a problem: SUV fuel economy is nominally less than cars, leading to added pollution; SUVs are permitted higher emissions than cars due to being regulated as trucks, allowing manufactures to dodge regulation; SUVs create safety concerns for other drivers due to their size, causing visibility and security issues in traffic; and , SUVs can be driven irresponsibly off-road, creating tremendous localized environmental damage.

Still all of these issues have been true since the 1950s when SUVs entered small niche mostly rural markets for 4x4 users. Nonetheless, Bill Ford chose to officially admit to these concerns as part of FoMoCo's long-term strategic development and new corporate citizenship practices. In a page one New York Times story, the Chairman of Ford's Board conceded that FoMoCo was worried about being seen and treated like big tobacco companies: "the court of public opinion sometimes decides before you are ready for them to decide, and I want to make sure we're ready and ahead of the curve."2 So when Ford introduced its 19 foot long heavy SUV, the Excursion, for 2000, and the Sierra Club christened it the "Ford Valdez," FoMoCo draped a new green layer of concerned citizenship around its products and operations. And, this proactive strategy seems to be delivering results.

This outcome on the risk management side is critical, because Ford has no intention of ending, or even scaling back much, on its SUV production, except for the big Excursion unit. In May, 2000 slow sales for the Excursion moved FoMoCo management to cut its output 25 percent to 52,000 units in 2000. Yet, Ford's equally big, and fuel-hogging, super duty F-250 and F-350 4x2 and 4x4 trucks, which are built on the same lines as the Excursion, will be replacing the big SUV in the FoMoCo's unit output. In 2000, overall SUV sales were quite strong, and 53 percent of those sales were buyers trading in old large SUVs to move up to new ones. This figure was up from 1999 when only 40 percent traded one SUV for another. For FoMoCo, these trends are critically important for its profitability. Standard & Poor's independent financial analyses estimate Ford makes $10,000 to 15,000 in profit on every Ford Expedition or Lincoln Navigator that it sells, and up to $18,000 in profit on every Ford Excursion.3

Ford does not release figures on its profits by model. Nonetheless, its 2000 Corporate Citizenship Report admits that SUVs are vitally important to FoMoCo's cash flow:

SUVs are a competitive strength for Ford. The SUV market continues to grow, although at a much slower rate than in the early to mid-90s. Sales and profits remain strong, and on a per unit basis, SUVs contribute more than any other vehicle to the company's bottom line...without SUV offerings, Ford likely would lose sales and profits as many potential consumers would turn to competitors to purchase their SUVs (most of which have higher emission levels than Ford SUVs) rather than to other Ford Motor Company vehicles. This in turn would make it more difficult to generate the financial resources necessary to invest in research and development of new technology and products.

Keeping Ford in the green, then, requires it to go green in its products and practices. FoMoCo's corporate citizenship program builds up Ford as the caring company, the Earth friendly manufacturer, or the progressive producer. Even though some environmentalists call it the Extinction, the Ford Excursion will continue to be made. As Bill Ford maintained, "If we don't provide that vehicle, someone else would, and they wouldn't provide it as responsibly as we do."4 And, someone else would, of course, also make $18,000 in profit for each of those allegedly more irresponsible SUV units.

To some heft its environmental program, Ford has successfully met and exceeded existing North American pollution standards on all of its trucks and SUVs. In fact, all Ford pick-ups, vans and SUVs are certified as LEVs, or low emission vehicles, by the U.S.A.'s Environmental Protection Agency. Its F-150 pick-up, which is the same platform as its Expedition and Navigator SUVs, has been named as the American Council for an Energy Efficient Economy (ACEEE) as a "greenier choice" for new truck buyers in 2000. This LEV program for Ford trucks was launched in 1998 as part of the FoMoCo's strategy of being "Cleaner, Safer, Sooner" in the global automobile industry. By putting new F-150s on the road in volume, Ford's efforts, according to the company, represent the equivalent savings in overall vehicle emissions of taking 350,000 old full-size pick-ups off the road or putting 600,000 hybrid electric vehicles on the road.

In addition to this achievement, 80 percent of every new Explorer is recyclable, and many of its parts are made out of recycled metal, plastic, and rubber. Ford's envirodrive.com web site lets buyers scan their FoMoCo automobiles for recycled content, and Ford of Europe is launching an "e-label" program for 2000 and 2001--a year ahead of its EU mandated implementation date--to detail its products' CO2 output, fuel consumption, safety performance, overall recyclability, and tailpipe emissions to guide consumer decisions. All of these environmental agitprop initiatives by FoMoCo are not going unnoticed in some quarters out in society.

In 2000, Ford moved from fourth place in 1999 to first place in 2000--ahead of Honda and Toyota-- in the Green Index 2000 Report from CALSTART. Based on a survey of global opinion leaders, one third of CALSTART's respondents saw Ford as a global leader in environmentalism and technological innovation as opposed to 21 percent for Honda and 16 percent for Toyota. The ecological mentality behind Ford's corporate rationality seems to be paying off in all of these recognitions. Moreover, they are revalorizing FoMoCo's physical and intellectual capital with new symbolic capital that Ford's top managers wish to accumulate as global corporate leaders.

While these attributes are always relative and open to interpretation, President and CEO Nasser succinctly summarize how their ecological mentality anchors FoMoCo's corporate rationality by positioning Ford as one of a few world leaders in corporate citizenship. In their behavior, such firms are "open, transparent and accountable for the social, environment and economic impact of their choices," and, in their impact on the world, they can generate "sustained profits from market offerings that meet important human needs with a smaller environmental footprint and a greater value to society". Realigning corporate actions with managerial ideologies is critically important for CEO Nasser. "Quite simply," he claims, "we must 'walk our talk'," and set "transformational goals" in corporate citizenship and sustainability. From endorsing the Coalition for Environmentally Responsible Economies (CERES) and the Global Sullivan Principles to withdrawing from the Global Climate Coalition.5 FoMoCo is trying to walk the talk in its public relations. And, its new TH!NK line of electric cars and bicycles for overseas markets are being pushed hard as another concrete sign of Ford's transformational goals.

So far, it is working. Not many firms can make it look like producing one fifth of its products, which are heavy, fuel-guzzling, and potentially destructive truck-like SUVs, is truly serving the environment and humanity, while it makes $10,000 to $18,000 in profit on each unit. As long as fuel prices remain relatively low, automobile buyers believe that they need a SUV's cargo carrying and towing capacities, and Ford wins respect and trust of most buyers in this market, FoMoCo will undoubtedly remain a world corporate leader in both sustainable corporate development and profitability.

Footnotes



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