Ford is doing a lot of things right. Their Ford Fusion was just named Motor Trend’s 2010 Car of the Year and their profits and revenues are growing. In hindsight, they also executed successful management decisions in both downsizing their company and increasing vehicle fleet mileage performance before the double shock of a global economic meltdown and a new oil price floor above $70 per barrel. Unique among American car companies, Ford did not accept TARP funding during the dark hours of the financial meltdown.
Ford is again stepping out ahead of their competitors by pioneering the integration of climate science into their core business strategy. John Viera is Director of Sustainability & Environmental Policy for Ford Motor Company and a twenty year Ford veteran. He is smart, articulate and passionate about Ford’s ability to win market share selling products that contribute toward solving climate change and energy independence. In this interview he outlines how Ford is pioneering the integration of climate change science into vehicle designs and manufacturing.
Roth: Does Ford think climate change is real and if so, how important is it to Ford’s business strategy?
Viera: Executive Chairman Bill Ford and CEO Alan Mulally have committed Ford to being part of the solution for achieving global environmental stability.
Roth: That’s pretty strong when some are saying this is all a hoax.
Viera: We are a company of very good engineers and business people that make decisions based upon the numbers. Ford’s commitment is based upon the United Nations’ Intergovernmental Panel on Climate Change (IPCC) report developed by over 2,000 scientists from around the world. This report sets the bar for limiting global warming to a marginally impactful two degree Celsius increase in global air temperature. Achieving this goal requires capping atmospheric levels of global CO2 emissions to 450 parts per million (ppm). Ford has incorporated into our core strategies the action plans to do our share in achieving this 450 ppm result.
Roth: Ford’s adoption of the 450 ppm is not what 350.org or Jim Hanson of NASA are saying is needed to stop global warming.
Viera: Ford and other businesses with our level of commitment to the environment do face the challenge of choosing the right goal to measure our performance against. A global consensus among the largest body of earth scientists established 450 ppm as the goal. If the scientific community does reach consensus on a new stabilization goal, then I am confident you will see Ford taking a leadership role in doing our part to achieve that result.
Roth: So how does Ford’s commitment to 450 ppm shape your business strategy?
Viera: It is at the core of our product design. Ford will be the leader in fuel economy in every category we produce a vehicle. Fuel economy is tied directly to CO2 emissions and, next to price, is the key number on the window sticker used by buyers in assessing their vehicle choices. If we are leaders in fuel efficiency then we will also be leaders in reducing CO2 emissions.
Roth: How are you executing this climate change driven product strategy?
Viera: It begins with a multi-tier engine and drive train strategy for optimizing gasoline engine performance supplemented with a longer-term strategy to electrify our entire product line. In a few weeks we will be launching sales of the Fiesta, a gasoline fuel based car that will offer best in class in fuel economy and performance. The Fiesta’s design reflects Ford’s commitment to be best in class in fuel economy for every car and truck market segment we participant in. Later this year we will launch the all battery electric (BEV) Transit Connect van targeting commercial truck customers and then in 2011 we will launch the Focus BEV. Both BEV vehicles are examples of Ford’s next generation electrification technologies. Then in 2012 we launch our plug-in hybrid vehicle and two next-generation lithium-ion battery hybrids. Looking further into the future, we are moving our strategy into urban transportation designs. Population growth and density requires the seamless integration of mass transportation with the freedom and enjoyment of driving a car. Ford has begun working with several cities in the U.S. and Canada exploring what this future could look like and how Ford will be a solution partner.
Roth: Any other examples of Ford’s adoption of clean tech within your cars?
Viera: A car’s cabin is an environment too. We want the Ford passenger to be comfortable, safe and healthy inside our vehicles. We are re-engineering our seats, dashboards, carpets, etc. using materials that enhance in-cabin air quality by reducing their emissions. We are also introducing air filtration technologies so that being inside a Ford limits exposure to air borne pollens and particles.
Roth: Candidly, how realistic is it that Americans will give up their gasoline addiction and go electric?
Viera: Vehicle electrification offers the benefits of energy independence and environmental stability that are important to all of us. Plus, these cars will be just as much fun to drive as our current gasoline fueled cars. Another benefit to Americans is Ford’s commitment to building electric cars in the USA. First we decided to build our electric Focus in Michigan at a former plant that produced our large SUVs. Next we located our electric battery assembly plant in Michigan as well. We didn’t have to. Asia is currently the leader in battery assembly. Yes, we received attractive tax incentives from the state of Michigan that facilitated the financial decision. But at our core we plan to build our electric technology and electrified-vehicles in the USA.
Roth: Noble words and deeds, but is such a commitment to American manufacturing competitive?
Viera: We have to become competitive because what America doesn’t need is to substitute our dependency upon foreign oil with a dependency upon imported electric batteries and technologies. Ford believes we can build price competitive, clean-tech cars and trucks in America.
Roth: How does this U.S. manufacturing competitiveness align with Ford’s goals for contributing to environmental stabilization?
Viera: Ford has a strategy for deploying technologies that are cost competitive, energy-efficient and clean. We are conducing pilot installations of LED lighting technology because this technology uses even less energy than the CFL lights available in retail stores as a more efficient alternative to the pear shaped incandescent bulb. We are looking at roof top solar power with supporting storage battery systems as a clean energy supply to operate a plant and equipment like forklifts. This focus upon solar power that produces DC (direct current) electricity has also increased our awareness of the energy efficiency gained from using DC compared to the AC (alternating current) supplied by utilities. AC losses 66% of its original fuel-sourced energy through the cycle of power plant combustion, transmission line transportation and then final onsite delivery. A DC electricity production system located at our manufacturing plant would avoid this energy loss, reducing emissions and costs.
Roth: But the fact is that the vast majority of your manufacturing plant’s electricity supply will be utility based with much of this being source from coal.
Viera: Yes. Ford still has much work in front of us to find onsite clean tech energy technology solutions while also helping our utility suppliers realize their own need to implement a cost competitive energy supply strategy that aligns with our environmental goals.
Roth: What about car prices, when will we see clean-tech cars prices that are competitive with gasoline-based technology?
Viera: The fact is that the future of competitively priced, fuel-efficient cars with historically low carbon emission footprints has arrived. The Fiesta’s sticker price will be very competitive while also offering class leadership in fuel economy and class leadership in its reduced emissions footprint. Today, if you are a taxi driver in someplace like New York City then buying a hybrid is the financially competitive technology solution because of the hybrid’s superior fuel economy in city driving. As Ford gains economy of scale manufacturing cost advantages for our electric vehicle product line you will see these savings reflected in their prices. Ford gets it. We have integrated climate science into our core strategies and will be a leader in offering price competitive, fun to drive, fuel-efficient vehicles that significantly contribute toward achieving environmental stability.