Friday, January 22, 2010

Insight from Ford Automotive leadership

I had the pleasure of attending one of California Lutheran University's corporate breakfast events. The guest speakers where Donald E. Petersen, Expert, Former CEO and Chairman of Ford Motor Company and James D. Power III, Expert
Founder and former CEO of J.D. Power and Associates. The topic was American Auto Industry and some of the questions centered around innovation.

I thought that an interesting topic for an American Auto maker but realized as the event progressed why it had been selected. It wasn't so much about what innovation had been done but more about the consequences of not innovating sufficiently. Now some of you may be scratching your head and asking yourself (and me) what does any of that have to do with sustainability or being green. Here is the bit I wanted to share with you. Donald Petersen (no relation to me that I'm aware of) made an interesting statement that does tie into Motherearthjewels mission. He said that the number one reason that America is so far behind other countries in innovation to produce and drive fuel efficient vehicles is because we've had such low gas prices. And, the reason we've had such low gas prices is because our government has always subsidized the industry. Had our government not subsidized gas, the way other governments did, then we would have been forced to develop more efficient cars and cars that used other fuels. He used the example of diesel. Our government (and the oil industry; which could be thought of as one and the same) did our country a huge disservice by subsidizing gas. This created a domino effect and was a contributing factor to the failure of the auto industry in the U.S. Well, I should say GM and Chrysler, Ford was the only one that did not take government bail out money. All of this begs discussion on a whole other topic but I'll leave that for you to explore on your own.

Another complication Mr. Petersen also explained was the industry standard for measuring and assessing an auto makers efficiency rating. The ackronym is CAFE. Corporate Average Fuel Efficiency. I was not familiar with this term or its meaning. The technical definiation is this:
Corporate Average Fuel Economy (CAFE) is the sales weighted average fuel economy, expressed in miles per gallon (mpg), of a manufacturer’s fleet of passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 lbs. or less, manufactured for sale in the United States, for any given model year. Fuel economy is defined as the average mileage traveled by an automobile per gallon of gasoline (or equivalent amount of other fuel) consumed as measured in accordance with the testing and evaluation protocol set forth by the Environmental Protection Agency (EPA).

According to Donald Petersen, this is a very complex and confusing method of measurement and only considers cars that are manufactured in the US. So if you are an auto maker that imports fuel efficient cars, but do not produce them here, it won't go into your mix. It doesn't matter if 90% of the cars you sell under your brand are high fuel efficiency; you get the lower rating. However, there are ways around it. For example; if you import mini-trucks and have them come in two pieces; the truck and the box for the back; then assemble them here; that will go into your equation. Like a lot of regulations, it usually starts out with good intentions but then people find the loopholes so it ultimately become ineffective.

I wasn't sure what I was going to walk away with when I attended this breakfast. All in all, it helped bring more clarity to the Detroit debacle. One thing I learned for sure is that because of ineffective regulation, inappropriate government subsidies and favoritism plus corporate greed; this country, and our planet, are now paying a very big price. Lessons I'd like to believe our regulators have learned from. Or not. The good news is that its not too late to fix the problem for the planet. There are more options for public transportation, alternative fuel and minimizing consumption. My neighborhood still has WAY too many monster SUV's but I'm also seeing an increase in hybrids and compact vehicles which is very encouraging. As for GM and Chrysler; time will tell.

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