Published on Friday, May 12, 2000 in the San Francisco Chronicle
Ford Admits Sports Utility Vehicles (SUVs) Are Irresponsible
Safety, environmental problems noted, but so are huge profits
by Keith Bradsher
ATLANTA - Ford Motor Co., which depends on sport utility
vehicles for much of its profit, acknowledged yesterday that they cause
serious safety and environmental problems.
In its first ``corporate citizenship report,'' issued at the company's annual shareholders' meeting in Georgia's capital, Ford Motor said SUVs contribute more than cars to global warming, emit more smog-causing pollution and endanger other motorists. The automaker said it will keep building them because they are so profitable, but will seek technological solutions and look for alternatives to the big vehicles.
Ford Motor's voluntary admission that it faces a ``dilemma'' because its most profitable products are not socially responsible has few parallels, according to Business for Social Responsibility, a corporate group in San Francisco.
In an interview, William C. Ford Jr., the company's
43-year-old chairman and a great-grandson of Henry Ford, depicted the company's statements as a combination of altruism and long-term business planning. He said he worries that automakers could wind up with reputations like those of big tobacco companies if they ignore sport utilities' problems.
Yet Ford and Jacques Nasser, Ford Motor's chief executive, said they had no plans to stop making sport utilities, including the immense Ford Excursion, which weighs as much as two Jeep Grand Cherokees and gets just 10 miles to the gallon in the city and 13 on the highway.
``If we didn't provide that vehicle, someone else would, and they wouldn't provide it as responsibly as we do,'' Ford said.
Nasser cautioned that while customers consistently say in market surveys that they want more environmentally responsible products, they are unwilling to pay more for them or to sacrifice features on their sport utilities.
SUVs are three times as likely as cars to kill the other driver in a crash, but the death rate for sport utility occupants is just as high as for car occupants because of sport utilities' tendency to roll over and their lack of crumple zones. Although current regulations allow large sport utilities to emit up to 5.5 times as much smog-causing pollution a mile as cars, President Clinton announced rules in December that will require sport utilities to meet the same standards as cars by 2009.
For the last two years, Ford Motor has voluntarily built its sport utilities to emit far less pollution than allowed by law. Ford has also voluntarily installed bars below the bumpers of the Excursion to reduce the risk that it will override cars during collisions, even though there are no federal regulations requiring this.
With sport utilities accounting for a fifth of Ford's sales -- up from 5 percent in 1990 -- and the bulk of its profit, the automaker's financial stability could be affected if the sport utility market slumped, warns Standard & Poor's, the credit rating agency.
Although Ford does not release profit margins by model, financial analysts say the company earns $10,000 to $15,000 per vehicle on Ford Expeditions and Lincoln Navigators and as much as $18,000 on each Ford Excursion. The factory in Wayne, Mich., that builds the Expedition and Navigator is the world's most profitable in any industry, generating roughly $3 billion a year in pretax profit.
Yet yesterday's report clearly expressed the company's concern that the big vehicles have inherent problems. ``Sustainability concerns associated with SUVs raise issues relative to Ford's corporate citizenship commitment,'' the report said, later adding: ``We believe that the steps Ford has taken to date are only a beginning in addressing the issues raised by these products.'' Ford's goal, the report added, is to find solutions that satisfy customers and maintain the company's market dominance while ``meeting our environmental, social and economic objectives.''
In a question-and-answer section of yesterday's report, Ford said it might be difficult to persuade Wall Street that it is worthwhile for Ford Motor to take big steps to be perceived as a progressive, environmentally friendly company.
``Analysts are focused on the next quarter's report, and at most, your next year's report,'' he said. ``And the kinds of issues we've been discussing today have payoffs 5, 10, 20, 50 years down the line. I do believe that I'm building a stronger Ford Motor Co. for my children and grandchildren. But that's not a theme that resonates very well with most analysts.''
Ford's comments yesterday confirm a shift in his position on SUVs. An ardent fly fisherman who bought his own fly-fishing rod company, he has been active in environmental causes since his days at prep school and then Princeton.
But he was also one of the company board's most enthusiastic supporters of the decision to introduce the Ford Expedition full-size sport utility vehicle in 1996.
©2000 San Francisco Chronicle