Big 3 Hope US Leads World Out of Slump
Ford executive looks for rebound in '93 domestic sales. BYDavid R. Francis, Staff writer of The Christian Science Monitor
THE chiefs of the Big Three United States automakers anticipate seeing President-elect Clinton in "coming weeks" to talk about what the new administration can do for them.
"Undoubtedly [a meeting] will happen at least once," says Alexander Trotman, who becomes president of Ford Motor Company's worldwide automotive operations on Jan. 1 and is widely viewed as a likely choice to head the almost $100 billion company sometime in 1993.
Like their counterparts in Europe and Japan, US carmakers face weak sales.
"It is far from a healthy industry," Mr. Trotman says. He expects combined car and light-truck sales in the US this year to reach about 13 million, up from 12.5 million in 1991. Sales exceed 16 million in a good year.
Next year, Trotman speculates, sales could reach 13.5 million to 14 million - maybe more "if the new administration should do something stimulative."
Ford, General Motors Corporation, and Chrysler Corporation have a combined annual payroll of some $25 billion for some 800,000 employees. They have plants or other facilities in 35 states. Together, these companies account for 4.5 percent of the nation's total output, not counting suppliers and dealers.
In the past few weeks, Trotman says, the leadership of these three companies have been "putting our story together" for communication to the Clinton administration. "It helps the government by speaking with a more or less unified voice," he says.
In an interview, Trotman listed several concerns of the car companies:
Health-care costs. These amount to some $750 to $800 per car for the US automakers if the health costs of suppliers are included. "We would like to see some control of the escalation on the cost side," Trotman says. "We are not precisely sure what the answer is. But we would like to see a health-care delivery system that is competitive on a world basis." Health costs are much greater for the Big Three than for Japanese auto plants in this country with a younger work force or for plants in Japan or Europe .
Trade imbalance with Japan. The administration, he says, "should make it clear to Japan that the trade imbalance has to be addressed. We would like a five-year program with 20 percent per year reductions in the trade imbalance." A $5 billion or $10 billion overall trade imbalance "doesn't bother us."
Inadequate education. "We are not competitive in the world these days in the standard of education of entry-level people," Trotman says.
Tax incentives for investment. Trotman calls for an investment tax credit, faster write-offs, or other incentives to industry to invest in plant and equipment, technology, and training.
Tort reform. The auto and other businesses waste too much time and money with lawsuits compared to competitors in Japan and Europe, Trotman says.
Burdensome regulation. "Automotive is one of the most regulated industries in the US," Trotman says. Though generally approving of regulations governing fuel economy, safety, and so on, Trotman complains that "there has been no overseer in Washington to modulate or measure the benefits and costs to society of all the regulatory costs being piled on."
"We are being slowly turned from a manufacturing society into a service society with lower-paid jobs and lower-technology jobs," Trotman says. "It has changed America's wealth-generating capability. It has changed our technology base and changed our place in the world as a leading industry country. It has to be arrested and turned around."
Ford itself is doing relatively well. After earning $840.3 million in the first half of this year, it lost $158.9 million in the third quarter as sales abroad turned down, especially in Europe. But GM lost $3 billion in the first nine months of 1992.
"Marketing costs are still very high," Trotman notes, referring to customer rebates, inexpensive auto loans, and incentives for salespeople. Ford's share of the US car market rose 1 percent to 21 percent in the past 12 months and its share of light-truck sales climbed more than 1 percent to 30 percent. The company has five of the top 10 best-selling vehicles in the US. Trotman hopes the Ford Taurus by year end will pass the Honda Accord as the best-selling passenger car.
Further, he says, Ford is the most efficient automaker in the US, beating even Japanese auto transplants. And the quality of Ford-made vehicles has improved dramatically. "The differences in quality now are very small and our best vehicles are as good as anyone else's in the world."
"Cars are a much better value than they were 10 years ago," he says.