Using Innovation To Build A Stronger Company – And A Better World
Bill Ford believes innovation will drive the car industry into more prosperous days ahead. And the executive chairman of Ford Motor Co. also sees innovation as the key to resolving the global issues confronting us – the economy, energy and the environment.
The economic crisis that hit our country last year was especially hard on the American auto industry. What once would have been considered an unlikely worst case scenario became a grim reality as sales plummeted to their lowest rate in 25 years. As we begin to climb back from these challenging circumstances, I am optimistic about the possibilities that lie ahead. In fact, I believe this is one of the most exciting times in our industry since the automobile began being mass produced 100 years ago.
Today the auto industry is at the intersection of three critical global issues – the economy, energy and the environment. In response to these issues, for the first time in a century, some of the most fundamental and enduring elements of the automobile are being radically transformed by new technologies. The key to this transformation – and to success in the business – is innovation.
Like all automakers, domestic and foreign, Ford was adversely impacted by the extraordinarily difficult economic conditions we faced last year. But by dramatically cutting our costs and borrowing all we could ahead of the credit collapse, we were able to avoid a government bailout. These improvements also are enabling us to take full advantage of the gradually improving economy.
Our focus now is to grow our business by being a leader in the application of technology that makes our customers’ lives better. That includes developing breakthrough technologies to address the critical global issues that impact us all.
In the next 20 years, as the number of vehicles in the world doubles from one billion to two billion, the demand for fuel from all forms of transportation will increase by 45 percent. At the same time, the world’s supply of oil that is relatively easy and inexpensive to find and extract is shrinking. And much of what is left is in politically unstable or hostile areas. All of these factors increase the likelihood of significantly higher fuel prices or supply disruptions in the future.
Global warming is another challenge. The Intergovernmental Panel on Climate Change estimates that greenhouse gases in the atmosphere need to be stabilized at a level not much higher than today’s in order to avoid a rise in temperatures. That means dramatically reducing emissions from all manmade sources, including automobiles.
As we search for ways to address these challenges, it is instructive to look back to the last time the transportation industry faced a crisis of similar scope.
At the turn of the 20th century, an increasingly urban population in America faced a growing transportation crisis. As economist Steven Levitt has noted, in 1900 there were 200,000 horses in New York City alone, causing gridlock, noise pollution and a traffic fatality rate twice as high as today’s. To make matters worse, nearly five million pounds of pollution – in the form of horse manure – was being produced in the city every day, creating quality of life, health and disposal issues.
At the time, these issues seemed insurmountable, because all of the proposed solutions centered on things that already existed. As my great-grandfather, Henry Ford, once said, “If I had asked people what they wanted, they would have said faster horses.”
What finally solved this 20th century transportation crisis was an innovative technological breakthrough – the automobile. I believe that innovative technology can help us solve the transportation challenges of the 21st century as well.
That’s what Ford Motor Company is working to do.
We knew we had to do more than just cut costs during the recession – we had to transform our company and our products. Our goal was to be green, global and high-tech. That meant using our global resources more effectively to produce innovative, environmentally friendly vehicles.
To do that, we have created a single global product development organization to maximize economies of scale. Within the next four years, all Ford vehicles competing in global product segments will be common in North America, Europe and Asia. That allows us to fully leverage our research and development resources so that we can introduce new technology at a lower cost and a faster pace.
A lot of this new technology is aimed at improving convenience and safety, such as our SYNC voice command technology that connects portable electronic devices to a vehicle and our rear inflatable seat belt. But the majority of our research and development efforts are aimed at lowering CO2 emissions through fuel economy improvements.
Our commitment is to provide affordable fuel economy for millions of customers, not just expensive, low-volume niche vehicles. To do that, we are introducing innovative fuel-saving technologies across a wide range of vehicles.
Our EcoBoost engine technology uses turbocharging and direct injection to deliver up to 20 percent better fuel economy without sacrificing performance. We began offering EcoBoost in some of our vehicles last year, and by 2013 it will be available on 90 percent of our product nameplates.
We now have more fuel-saving six-speed transmissions on the road than any other manufacturer. By 2012, six-speed transmissions will be in nearly 100 percent of our North American vehicles. We also are doubling our volume of fuel-efficient four cylinder engines. By 2013 we will offer a four cylinder engine on every car and crossover in our lineup to deliver greater fuel economy.
We are the largest domestic producer of hybrid vehicles. Ford Escape Hybrid, the world’s first hybrid sport utility vehicle, is now in its sixth year of production. In 2009 we doubled the size and volume of our hybrid-electric vehicle lineup in the United States. Our Ford Fusion hybrid delivers 41 miles per gallon, making it the most fuel-efficient mid-sized sedan in America.
Overall, Ford Motor Company has improved in fuel economy more than any other major automaker since 2004, according to a recent report by the U.S. Environmental Protection Agency. The EPA rated Ford’s combined car and truck fuel economy improvement at nearly 20 percent, almost double the next closest competitor.
The fuel economy technology I have described so far is innovative, but most of it would fall into the category of “building a faster horse.” We also are working on new technologies that could radically change the automobile.
In 2009 we announced an aggressive plan to bring pure battery-electric vehicles, next-generation hybrid and plug-in hybrid vehicles to market more quickly and affordably. Our plan includes the introduction of four new high-mileage vehicles in the next four years that will use advanced lithium ion battery technology.
Looking further ahead at Ford, we are also working on vehicles powered by hydrogen fuel cells, which produce electricity through an electro-chemical process. There are zero tailpipe emissions when using this technology, with only drops of water coming from the tailpipe.
Innovations such as these are what it will take to be competitive in the 21st century. That is true in the auto industry and in every other sector of our economy. In a global marketplace finding new and better ways to address customer needs as well as social and environmental issues will be the ultimate competitive advantage.
Right now we are going through some tough economic times, but American ingenuity is still alive and well. That’s why I am so optimistic – about the future of my country and my company.
As my great-grandfather, Henry Ford, once said, “If I had asked people what they wanted, they would have said faster horses.”
