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FORD CHAIRMAN SAYS FREE TRADE MUST BE FAIR

 /ADVANCE/NEW ORLEANS, Feb. 6 -- The present state of global trading relationships is destabilizing the world economic system, and every nation shares in the responsibility to find a solution, Harold A. Poling, chairman and chief executive officer of Ford Motor Company (NYSE: F), said today.
 "I think most nations support an open trading system that is universal in application, stable, predictable, equitable and mutually beneficial -- a structure that does not give particular advantage to any nation or group of nations," Mr. Poling said. "But this ideal does not exist today."
 Mr. Poling noted that Japan, specifically, is reaping the benefits of the world trading system at the expense of other nations. "Over the 10 years ending in 1991, Japan's aggregate trade surplus totaled $542 billion," Mr. Poling said. "Its bilateral surplus with the United States during this period reached $412 billion."
 The chronic imbalance is causing serious dislocation in the United States, Mr. Poling said. Both the economy and the industrial base are being impacted, he noted, as every $1 billion of our bilateral trade deficit costs the United States about 30,000 jobs.
 Mr. Poling, speaking to the 76th Convention and Equipment Exposition of the National Automobile Dealers Association, used the industry's retail franchise system as just one example to support his point. "Consider for a moment that there are more outlets for import cars in the United States than for domestic cars," he said. "Ninety-five percent of all U.S. car outlets sell at least one import brand. That's an open market. In contrast, only 1 percent of the outlets in Japan offer a foreign brand nameplate."
 Mr. Poling acknowledged that the Japanese are strong competitors. "There's no question that Japanese manufacturers are good at what they do," he said. "But they are not so good as to control nearly a third of the U.S. car market and about 11 percent in Europe -- while, at the same time, the combined total of all vehicle imports into Japan amounts to less than 3 percent of the market."
 The world economy cannot remain healthy unless trade is open, fair and free, Mr. Poling said. "So, Japan must allow its trading partners the same access to its markets as Japan has obtained in the United States, Europe and the rest of the world."
 Mr. Poling stressed that Ford's position is not protectionism, but supports greater trade liberalization and preservation of the world trading system. "We must convince each of our trading partners that all will pay the price if the present trading imbalances are maintained -- including Japan."
 Mr. Poling said this will take more than a mere Declaration of Intent. "Americans began calling for Japan to address the trade situation over two decades ago," he said. "Japan asked for patience and time. Now, more than two-thirds of a trillion trade-surplus dollars later, I think we've exhibited enough patience and given enough time."
 Mr. Poling noted that we were "visionaries" after the Second World War in rebuilding a war-torn world and re-establishing broken economies. "We must be visionaries once again," he said, "to make the global trading system work for a new century and a changing world and for the benefit of all people."
 On another subject, Mr. Poling told the dealers that industry and the federal government need to work together to ensure continuing prosperity in a highly competitive world. "What's needed is a strategic approach to issues that affect all Americans -- a process through which government and business share a vision of success in the world economy and recognize the importance of cooperative effort to achieving that vision."
 He said he was optimistic about working with the new Administration and believed that President Clinton "is ready, willing and committed to facing the challenges successfully."
 Mr. Poling concluded by stating that both manufacturers and dealers will have to work even harder to keep customers satisfied. "In the future, customers will demand more and more, and we have to deliver. What's on the line is everything we value in our business," he said. "All of us in the industry are fighting the greatest competitive battle in our history. And it's the customer who will decide who wins and who does not."
 Mr. Poling noted that Ford has established satisfaction standards, for both the company and the dealers, which are measurable and defined by the customers. "Together with our dealers, we're making progress, and we'll keep pushing ourselves to improve," he said.
 Following is the text of remarks by Harold A. Poling, chairman and chief executive officer, Ford Motor Company, at the NADA 76th Convention and Equipment Exposition in New Orleans, LA, on Feb. 6, 1993:
 It's an honor to be here at this opening of the largest single gathering of automobile dealers in the world.
 Much has been said and written about the challenges our industry faces as we approach a new century. Still, I'm optimistic that these challenges, overall, will help forge a stronger partnership between dealers and manufacturers than any we have known thus far.
 There's no question that auto manufacturing represents industrial enterprise at its best, just as the auto dealership represents entrepreneurship at its best. The franchise system that links our efforts has survived for nine decades because it works for both of us and is sound.
 But like everything else in our industry, this system is experiencing the pressures and challenges of change. As has been said, it seems as though change is the only constant nowadays.
 Industry analyst David Cole has observed that we're in a period of fundamental transition, different from what most people envisioned a few years ago. We used to think about change as something to see us through the tough times and then back to business as usual. But, as Cole says: "If there is any way to characterize (the future of our industry), it would be 'business as unusual.'" What we'll see is a future marked by massive, continuing change. And if "stability" is your cup of tea, I suggest you update your resume. Nothing will be really quite what it's been in the past.
 This afternoon, I'd like to tell you about several aspects of my vision of the future -- a vision reflecting the change we have seen thus far and foresee for the years ahead. First, working together with government to meet key national objectives. Second, the one major international issue that I believe will have the greatest impact on our ability to manage the future -- the global trading system. And finally, the partnership between dealers and manufacturers to satisfy the customer.
 First, government. I know it comes as no surprise to any of you that government and industry often work at cross purposes. But if the United States and its industries are to prosper in the years ahead, we must follow an entirely new course. What's needed is a strategic approach to issues that affect all Americans -- a process through which government and business share a vision of success in the world economy and recognize the importance of cooperative effort to achieving that vision.
 I believe 1993 presents an important challenge to the auto industry. With a new Administration and 123 new members in Congress, we have a responsibility and an excellent opportunity to become even more effective in the political arena -- to take thoughtful positions on matters that affect our industry and the environment in which it operates.
 It's remarkable what manufacturers and dealers can do when we work together on common concerns. Seven years ago, at Ford, we recognized a need for closer cooperation with our dealers on governmental issues that directly affect us. And here on this very podium, we said so. The result was the creation of a Dealer/Company Governmental Affairs Action Committee. It brings together dealers and our senior management team to jointly develop initiatives addressing legislative concerns.
 For example, we worked diligently in 1990 to win approval of practicable, albeit stringent, amendments to the Clean Air Act. And, last year, we were successful in making a thoughtful case against proposals that represented technically unattainable fuel economy standards.
 I don't think anyone will disagree that this nation and its governing bodies face some very compelling domestic policy issues that affect us all -- including:
 -- How to keep the economy moving while implementing actions to reduce the federal budget deficit.
 -- How to provide health care for the 37 million Americans now doing without ... and at the same time maintain high quality standards, at world-class cost levels.
 -- How to address our environmental challenges effectively and cost efficiently, as well.
 -- And how to ensure that we responsibly meet our most urgent social needs -- sheltering the homeless, feeding the hungry and educating our young.
 Many of you have been helpful in the past in voicing our concerns in Washington on issues such as these. We're going to continue to need your help in the future. And I urge each of you to take the time to contact and get to know your congressional representatives and government officials. I think it imperative that we broaden the dialogue necessary to link the strengths of business and government in the cause of our country's goals and greatness. Other major industrialized nations understand the value of such a relationship. And it's essential that we, too, come to recognize it and act accordingly.
 I don't want to sound overly confident but, frankly, I'm optimistic about what we can expect from government in the future. Based on the Little Rock economic conference, the recent meeting with Owen Bieber and the auto industry CEOs, and other positive signs, we believe that President Clinton is ready, willing and committed to facing the challenges successfully.
 He brings a fresh perspective to many of the problems confronting the nation. We're particularly encouraged about many aspects of his program to preserve and strengthen our manufacturing base and restore the competitiveness of the United States. This brings me to the second element of my vision ... the restructuring of world trade -- a three- and-a-half-trillion-dollar phenomenon that profoundly affects our ability to manage our future.
 After the Second World War, our nation envisioned and championed an open world economy. We led the way in offering resources and institutions to rebuild a war-torn world and re-establish broken national economies. The Marshall Plan. The World Bank. The IMF. The General Agreement on Tariffs and Trade. And virtually free access to our own rich market for goods and services. No nation has ever been so generous.
 From this unprecedented effort emerged Japan and Europe as economically strong, highly competitive players on the global economic scene, and we took pride in their extraordinary success.
 We were visionaries then; we must be visionaries once again to make the global trading system work for a new century and a changing world and for the benefit of all people.
 I think most nations support an open trading system that is universal in application, stable, predictable, equitable and mutually beneficial. A structure that does not give particular advantage to any nation or group of nations. But this ideal does not exist today. For example, the current situation puts the United States at a chronic disadvantage vis-a-vis Japan, because our markets generally are the most open in the world and Japan's among the most closed.
 Over the 10 years ending in 1991, Japan's aggregate trade surplus totaled $542 billion. Its bilateral surplus with the United States during this period reached $412 billion. That's 76 percent of the total. And this, despite a substantial strengthening of the yen since 1985.
 This $412-billion surplus was more than accounted for by trade in manufactured goods and is causing serious dislocation in the United States as the consequent loss of manufacturing jobs -- high-value-added jobs -- impacts the economy and the industrial base. By some estimates, today every $1 billion of our trade deficit costs us about 30,000 jobs.
 Since 1986, the automotive portion of the U.S. deficit with Japan has remained constant at about $33 billion per year. In recent years, this represented about three-quarters of the U.S. deficit with Japan. And projections are that the trade situation will get worse, not better. Two weeks ago, Japan announced a 1992 trade surplus with the rest of the world of $107 billion -- the highest surplus ever for any nation.
 Peter Drucker has observed that, in economic history, the point at which a nation's dependence on one market becomes economically and politically dangerous is somewhere around 25 percent. Japan has surpassed that point with the United States, which buys more than 40 percent of Japanese exports.
 Clearly, something's out of whack. As I see it, the United States has been exporting free trade philosophy, while Japan has been capturing world markets -- primarily ours!
 There's no question that Japanese manufacturers are good at what they do. (Many of your businesses provide the proof!) But they are not so good as to control nearly a third of the U.S. car market and about 11 percent in Europe -- while, at the same time, the combined total of all vehicle imports into Japan amounts to less than 3 percent of the market.
 Let me state clearly that our position is not about protectionism, despite what was said in a national newspaper this week. The reporter alleged that I had "laid out a broad protectionist agenda" in the industry's discussions with the President. But he and the unnamed industry sources from whom he got such a misguided idea are dead wrong. In fact, what I laid out was a framework for greater trade liberalization.
 The present situation is destabilizing the economic system that has served the world so well for so long. And each nation shares in the responsibility to find a solution. It's not just fair play. It's essential to the preservation of the system. We must convince each of our trading partners that all will pay the price if the present trading imbalances are maintained -- including Japan.
 A nation that becomes a major player in the world economy needs a healthy world economy to survive. And that system cannot remain healthy unless trade is open, fair and free. So, Japan must allow its trading partners the same access to its markets as Japan has obtained in the United States, Europe and the rest of the world.
 I've been suggesting for some time that Japan commit to addressing the deficit over a five-year time span, with a reduction of about 20 percent each year. They should make their own decisions as to how to achieve this goal -- by importing more or exporting less or both -- and choose the products with which to do it. But we must insist on their achieving a balance within $5 billion to $10 billion on an ongoing basis and that the balance be maintained over time.
 Japan must realize that a solution which benefits all trading partners will take more than a mere Declaration of Intent. The true test of an open market is a barrier-free environment for high-value- added products that compete with the home brands. When you're willing -- as we've been in the United States -- to put a Bell & Howell at risk, a Zenith or Magnavox, a Ford or GM or Chrysler -- that's what free trade and open markets are all about.
 Let me offer a concrete example. Consider for a moment that there are more outlets for import cars in the United States than for domestic cars. I'll repeat that: There are more outlets for import cars in the United States than for domestic cars. (It's easy to see why they've captured a third of our market!) Ninety-five percent of all U.S. car outlets sell at least one import brand. That's an open market! In contrast, only 1 percent of the outlets in Japan offer a foreign brand nameplate.
 Japan claims to support free trade. But actions speak louder than words.
 Take semiconductors, for example. Japan made a commitment in 1986, renewed in 1991, to help foreign suppliers obtain 20 percent of their semiconductor market -- the largest in the world -- by the end of 1992. As you may have read, that target was not met. Imports finished the year at a market share of about 16 percent, and Japan offered apologies. What we need is results-oriented policy, not "regrets."
 A former USTR official recommends that the United States formulate an explicit, focused and strategic Japan policy. "In the post-Cold War world," he said, "Japan needs to be dealt with holistically as the powerful nation that it is, one that routinely plays off the State Department, Defense Department and National Security Council -- who see Japan as a faithful (political) ally -- against the Commerce Department and Office of the USTR -- who view Japan as (an economic rival) a challenge if not a threat. ... With the United States and Japan comprising 40 percent of the world's GNP, how our two nations identify problems, resolve differences, and work together has profound implications for the international system as a whole."
 Even an elite Japanese organization, the Council on Japan-U.S. Economic Relations, has observed: "Whether or not Japan and the United States are able to build a common vision and demonstrate collective leadership through appropriate responsibility-sharing in the economic sector of the new world order -- will shape the outlook for world prosperity into the 21st century. ... Among the issues that Japan must address is voluntary and fundamental improvement of the openness and transparency of the Japanese market."
 Some of our critics have claimed that, for those of you who own Japanese outlets, our goal is to make you less competitive or close you and the Japanese manufacturers down. Nothing could be further from the truth. We simply want Japan to trade fair -- to adopt policies and practices that are equitable and just.
 Americans began calling for Japan to address the trade situation over two decades ago. Japan asked for patience and time. Now, more than two-thirds of a trillion trade-surplus dollars later, I think we've exhibited enough patience and given enough time.
 I believe our position deals realistically with things as they are. But it would be good to live, by the end of this decade, in a world in which business entities and individuals, as well as governments, recognize their shared responsibility not only to act in the best interests of their home economies, but also to maintain and enhance a free and fair global trading system.
 Perhaps existing ideals and institutions as they are today won't serve in a new economic era. If not, we must discover what will. And we must provide creative leadership to spur the changes necessary to secure the benefits of world trade for tomorrow's global citizens.
 But government policies and practices aside, important though they may be, there's no question about your primary focus and mine: manufacturing, selling and servicing world-class cars and trucks. And that brings me to the third element of my vision -- how manufacturers and dealers need to work together as partners to meet our customers' needs.
 I think we all can agree that the U.S. auto market has become a customer's market. No longer blindly loyal to particular companies or brands, customers are inquisitive, demanding, discriminating.
 Nowadays, it's not enough to provide just the basics. Customers want
instant gratification, and they are getting it. 24-hour news.


One-hour photos. One-hour eyeglasses. Faxes. Microwaves. Cellular phones. 10-CD changers in the trunk. Shopping by computer. Bill paying by phone. "Drive-through" just about anything. ATMs to transfer funds on the fly. I even heard about a church service in Florida guaranteed to "deliver" in 22 minutes or less! (The only part of the service not shortened was the collection!)
 In our business today, customers demand the right product, at the right place, right price and right time, with greater reliability, greater convenience and greater variety. And the product must offer more safety features, higher content, better serviceability and less pollution, but higher mpg.
 In the future, customers will demand more and more, and we have to deliver. What's on the line is everything we value in our business. Automakers, dealers, suppliers -- all of us in the industry are fighting the greatest competitive battle in our history. And it's the customer who will decide who wins and who does not. That means we must all work harder to keep customers satisfied -- to provide whatever it takes to make them want to come back again and again.
 At last count, more than 550 car models were being offered in showrooms across America. So, for each of us, the $64,000 question must be: What can we do to ensure that the one the customer chooses is ours -- over and over again?
 The answer: Anticipate what they want and give it to them. Quality, dependability and reliability in the product. And service that's professional and convenient.
 To this end, at Ford, we have established customer satisfaction standards between the company and dealers, between dealers and customers, and between the company and customers. These are measurable, customer-defined standards to achieve customer satisfaction and, thus, a sustainable competitive advantage. Together with our dealers, we're making progress, and we'll keep pushing ourselves to improve.
 While we must keep focused on the ultimate customer, I believe the standards of responsibility between the company and its dealers are key. Unless we are customer-driven among ourselves, we won't be customer- driven in our relations with the people who buy our products -- the people who put food on our tables and send our kids to college.
 For all of us, regardless of brand affiliations, the market changes we've already witnessed and those we expect tell us that we must renew our commitment to working as a team. I am confident that will happen. And in the future, I envision a partnership that is more seasoned and sound than any that has existed in the past.
 In closing, let me sum up what I've said about my vision of our future in three quick points: (1) We'll see new responsibilities and opportunities in the political process, and we jointly can be effective participants. (2) Pay close attention to the trade issue as it evolves. It will impact far more than just your own business, whether you're an import or a domestic dealer -- or both! Trade affects this country and all of its partners in the world community. And (3) satisfying the customer is ana time to be bold in setting our goals and bold in determining how to achieve them. The challenges we face will require us to nurture this business and lead it to ever higher levels of excellence. As we near the new millennium, let us resolve to ensure that our industry will be strong, within the strong economy of a sound and powerful nation.
 It is to this goal that we must dedicate our combined determination. It's up to us to lay the foundation for our future and that of our children and theirs.
 -0- 2/6/93/1730
 /CONTACT: David Scott, John Roberts, Thomas Rhoades or Carolyn Burke of Ford Motor Company, 504-595-5560/
 (F)


CO: Ford Motor Company ST: Louisiana, Michigan IN: AUT SU: ECO

SM -- DESA02 -- 3817 02/06/93 11:33 EST
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