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FORD CHAIRMAN AND CEO POLING SPEAKS AT ECONOMIC CLUB OF DETROIT

 DETROIT, Jan. 8 /PRNewswire/ -- Following is the text of remarks by Harold A. Poling, chairman and chief executive officer, Ford Motor Company (NYSE: F), at the Detroit Economic Club, on Friday, Jan. 8, 1993:
 I'm pleased to be here today and to share the podium with my two colleagues from across town, Jack Smith and Bob Eaton.
 The year is only eight days old, and it's already been quite a year: an American product recaptured the title as America's best-selling car (That's an achievement for all of the domestic manufacturers!); Jack, Bob, Owen Bieber and I met with the President-elect and Vice President- elect to discuss some issues of vital interest to the auto industry and to our country; and I even managed to squeeze in a couple of days to work on maintaining my golf handicap. So, 1993 is off to an auspicious start, and I have high hopes that the rest of the year will be as exciting as the first week has been.
 As you may have heard, we had an excellent session with Mr. Clinton and Mr. Gore on Wednesday. Of course, no specific agreements were reached. That wasn't our intent. But the right subjects were discussed and the President-elect and Vice President-elect listened well, showed an excellent grasp of the issues and their interrelationships, and demonstrated a desire to work with the auto industry to help move this nation forward. I believe I can speak for the four of us from Detroit in saying that the meeting signals a new era of cooperation between government, industry and labor, and we're very much encouraged.
 This afternoon, I'd like to focus on two major factors that are challenging the present health and future growth of our business and indeed all of American industry: first, economic conditions and, second, the current policy environment as it relates to trade policy.
 The U.S. economy continues to recover at a relatively modest pace. When the books on 1992 are closed, we believe they'll show a 2 percent increase in Gross Domestic Product -- slow growth for the early stages of a recovery. On the positive side, the economy grew at a 3.4 percent annual rate during the third quarter, the fastest increase since 1988. And recent indicators have improved, such as industrial production, consumer spending and vehicle sales. We're also seeing moderate inflation (about 3 percent) and lower interest rates. In fact, the prime rate, at 6 percent, is the lowest it has been since February 1973. For 1993, we expect growth of about 2.8 percent for the year as a whole, with inflation remaining restrained.
 The recession took a higher-than-anticipated toll on this industry; however, we are beginning to see some improvement. We expect the upswing, albeit moderate, to continue this year with total sales of about 13.5 million units.
 The weak economy severely affected the financial condition of the Big Three, which, despite six consecutive quarterly losses during 1990-91, maintained record capital spending to meet regulatory and competitive pressures. Even though the string of losses was broken during the first half of 1992, the industry continues to invest far more than it earns. For the 1988-92 period, the Big Three spent about $73 billion -- nearly five times their combined profits. Without these investments in competitiveness, jobs would be lost. And I don't think anyone would disagree that maintaining high-value jobs is just as important as creating new ones.
 There's no question that the domestic automakers are offering an exciting array of competitive products that should leave the industry well-positioned for the recovery. But even with consumer confidence up, customers remain cautious. They are more optimistic about business conditions in general than about their personal financial situations and are still unsure whether it's a good time to buy a new vehicle. Of course, we're hoping the "really big shew" next door will convince more than a few people that now is the right time!
 We are pleased that President-elect Clinton is giving high priority to the economy. Although recent data are encouraging, his challenge will be to put in place a plan that ensures continued expansion while, at the same time, implementing actions that will reduce the budget deficit (which promises to be our worst nightmare!) over the longer term.
 In acknowledging the need for prudent economic policy, it's also important to recognize that the United States cannot act alone on the policy stage. We cannot prosper at the expense of the rest of the world, nor vice versa. The integration of economies and the mobility of resources make it vital that we consider the international and global impact of our actions.
 This is particularly true today for a set of policy issues that fall under the umbrella of "world trade" -- two short words that describe a three-and-a-half-trillion-dollar phenomenon.
 The world trade system is changing constantly. One of the most important developments of the past 20 years is Japan's emergence as a major force and, with Europe and North America, as one of the three key economic and trading powers of the world. With that change has come new responsibility for Japan and its two major trading partners to work together, so that they set an admirable example for the rest of the global community.
 I think most nations support an open trade system that is universal in application, stable, equitable, predictable and mutually beneficial for all trading partners -- a system which provides the citizens of those countries the opportunity to work and live in harmony, well-being and peace. But this ideal is not the situation we have today and there are concerns about the trading system that must be addressed. For example, the current structure puts the United States at a chronic disadvantage because our markets generally are the most open in the world and Japan's among the most closed. And the Japanese-U.S. trade imbalance continues to pose a major threat to the health and vitality of the global economic system.
 While the U.S. trade deficit with the rest of the world has improved, the deficit with Japan remains persistently high. Japan's aggregate trade surplus totaled $542 billion over the 10 years ending in 1991. Its bilateral surplus with the United States during this period reached $412 billion, or 76 percent of the total. 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 impacts the economy and the industrial base.
 Since 1986, the automotive portion of the U.S.-Japan deficit has remained constant at about $33 billion per year. In recent years, this represented about three-quarters of the U.S.-Japan deficit. Projections are that the situation will get worse -- not better. And yesterday's announcement by the Japanese shows they are not very concerned about it.
 When bilateral imbalances of this kind persist, it is imperative that both partners undertake a systematic examination of their domestic and international economic policies to identify the root causes and correct them.
 But, as I see it, the United States has been exporting free trade philosophy while Japan has been capturing world markets. Major U.S. industries have been lost to the Japanese: consumer electronics, steel, semiconductors, machine tools -- and the list goes on. Automobiles, telecommunications and computers are the latest targets for takeover from abroad.
 The domestic auto manufacturers recognize the obligation to increase sales in foreign markets -- particularly Japan. So, we're making efforts to compete, with strengthened distribution systems and right- hand-drive vehicles.
 But it's difficult to make significant inroads in an automotive market that's been all but closed for the past 50 years and where production capacity exceeds home market demand by more than 100 percent, as is the case in Japan.
 Worldwide, excess capacity is now estimated at about 11 million units, creating intense pressure to maintain volume and market share.
 Japan and the EC have agreed to limit Japanese market share increases through the end of this decade and to regularly monitor the process to assure that the domestic European market is not unduly harmed. In fact, the agreement was adjusted downward to recognize the European recession.
 So, if the United States continues to be the most open market in the world, this excess capacity may well be directed toward the U.S. market at the further expense of U.S. jobs.
 The industry is encouraged by President-elect Clinton's position that the United States should stand up to countries that don't play by the rules of free and fair trade.
 In the absence of any meaningful progress on U.S-Japan trade over the past decade, we need to begin to see measurable results. The Big Three automakers have suggested that the Japanese commit to eliminating the deficit over a five-year time span. They should make their own decisions as to how to achieve this goal -- by importing more or exporting less -- and choose the sectors in which to do it. But we must insist on results. We must insist on their achieving a balance within $5 billion to $10 billion. And I believe progress toward that goal should be monitored on a regular basis.
 Let me state clearly that our position with the Japanese is not about protectionism; it is, in fact, about greater trade liberalization. The world trading system cannot survive and grow if one country seeks to achieve economic superpower status at the expense of other countries. And I believe Japan, Europe and the United States must work together, so that all nations -- from the least developed to the superstates -- are served by a trading system that is balanced and equitable.
 Akio Morita, chairman of Sony Corporation, said: "The criticism ... that Japan is too focused on its own narrow self-interests and insufficiently concerned with the greater good of the global community contains a measure of truth. ... The time has come for Japan to take more initiative in setting the U.S.-Japan relationship in a positive framework."
 Development of prudent and efficient "global" trade policy is a concern for all manufacturing industries and all manufacturing nations. But even more fundamental, from my perspective, is understanding and acting on the understanding that the competitiveness of U.S. industrial enterprises is both a public and private sector task, because the preservation and growth of our manufacturing base is so vital to our nation's future.
 There's no question that this is a critical time for our nation. Never before, except in war, have we had so many pressing concerns and so much opportunity to generate policy changes that will last well into the next century.
 I believe that now is the time to demand equal access to foreign markets for U.S.-made goods and services and take action where that access is denied. Now is the time to encourage U.S. laws to prevent predatory practices by foreign competitors. Now is the time to coordinate economic and regulatory policies to assure the competitiveness of U.S. industries in world markets. Now is the time for government and industry to truly work together.
 Other major industrialized nations understand the importance and value of such teamwork. And it's essential that we, too, come to recognize it -- and act accordingly.
 -0- 1/8/93
 /CONTACT: Judith Muhlberg of Ford, 313-322-9600/
 (F)


CO: Ford Motor Company ST: Michigan IN: AUT SU:

SB -- DE015 -- 5619 01/08/93 12:36 EST
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