Public Policy Positions

This section summarizes Ford’s positions on key public policy issues currently under discussion in the U.S. The one important topic not addressed here is climate change policy; see the Climate Change and the Environment section for a discussion of that issue. That section also addresses policy issues relating to mid-level ethanol blends and upstream emissions associated with vehicle electrification.

Sustainable Raw Materials

Public awareness has grown around sustainability concerns associated with certain raw materials. So-called “conflict minerals” are one serious concern; these include tantalum, tin, tungsten and gold mined in or transported through the Democratic Republic of the Congo (DRC) and nine bordering countries. Profits from mining activities in these areas are being used to fund armed conflict in the region. Another area of concern is “rare earth elements” (REEs) – a suite of mined materials widely used in consumer and automotive electronics. China currently produces 95 percent of the world’s supply of REEs, and concerns have been raised about the future availability of these materials as well as sustainability aspects related to their mining.

In the U.S., the financial regulatory reform bill passed by Congress in 2010 included a provision relating to conflict minerals. This provision requires many manufacturers to report to the U.S. Securities and Exchange Commission annually on whether their products contain metals derived from certain conflict minerals and if those metals are necessary for the functionality and production of their products.

Ford has begun work on the issue of conflict minerals in the supply chain. We have an established mechanism for engaging with our suppliers on the topics of policy and management systems through our strategic supplier framework – the Aligned Business Framework. We have also fully integrated explicit human rights terms in all of our contracts with suppliers. In 2011, Ford joined the Public–Private Alliance for Responsible Mineral Trade (PPA). The PPA is a joint initiative among governments, companies and civil society to support supply chain solutions to conflict minerals challenges in the DRC and the Great Lakes Region (GLR) of Central Africa. The PPA seeks to support the development, piloting and implementation of systems in the DRC and GLR to provide a validated mineral supply chain that is acceptable to downstream actors and end users, compliant with the Organisation for Economic Co-operation and Development’s due diligence guidance, and credible to civil society and the broader stakeholder community.

Regarding rare earth elements, legislation is pending in Congress that would encourage domestic production of REEs. Ford has provided information and support to the relevant U.S. House of Representatives committee on this issue via the American Automotive Policy Council, to educate committee staff on the industry’s interests and positions on REEs.

Non-CO₂ Tailpipe Emissions

In the U.S., the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) regulate smog-forming tailpipe emissions, including hydrocarbons, nitrogen oxides, carbon monoxide and particulate matter. Both the EPA and California are in the process of developing the next generation of emissions standards (“Tier 3” and “Low Emission Vehicle III,” respectively). CARB is also in the process of revising its future Zero Emission Vehicle regulations, with the intent of integrating them into its programs for smog-forming and greenhouse gas emissions.

We are working with the agencies through their regulatory processes to help develop rules that are both effective and feasible. In setting tailpipe emission regulations, consideration of other vehicle rules such as fuel economy and greenhouse gas standards and safety standards must be taken into account to ensure that the total package of requirements is workable.

Ford continues to oppose technology mandates that seek to impose quotas or limits on the production or sale of vehicles with specified powertrain technologies. Regulatory efforts to dictate market outcomes, or to pick technology “winners” and “losers,” have never produced a successful outcome. Manufacturers need the flexibility to build the kinds of vehicles that the marketplace demands based on consumer preferences and other external factors. Emissions standards should be performance-based and should be designed to enable manufacturers to introduce vehicles with an array of different technologies.

Undesirable Chemicals

The European Union’s REACH program (Registration, Evaluation, Authorization, and restriction of CHemicals) regulates and seeks to phase out chemicals of concern. More and more countries are adopting similar regulations. Turkey and Romania adopted their own versions of REACH in 2009; China adopted its own version in October 2010. South Korea and Japan will soon adopt REACH-like regulations to manage their chemicals. In the U.S., the U.S. Senate and House both proposed bills in 2010 to overhaul the Toxic Substances Control Act. The state of California is also planning to promulgate regulations implementing a “green chemistry” law. In January 2009, the United Nations implemented regulations requiring a globally harmonized system of classification and labeling of chemicals.

We believe that regulatory requirements for the phase-out of undesirable chemicals need to be prioritized and implemented in a workable manner. Government and industry resource constraints mean that not all chemicals of concern can be addressed at once. Moreover, manufacturers and suppliers need adequate lead-time to identify replacement substances that are more environmentally friendly than the ones they replace, and also to design and engineer components that incorporate these new substances. Ford will continue to work with regulatory agencies to help develop rules that target the highest-priority chemicals first, and that drive steady progress toward the elimination of chemicals of concern in an effective and efficient manner.

Manufacturing Policy

Manufacturing is essential to local, regional and national economies. Manufacturing provides jobs and tax revenue, creates new products and technologies and promotes overall prosperity. When factories are closed, jobs are lost and the tax revenues that support hospitals, social services, local schools and public universities are reduced.

About 70 percent of all the research and development investment in the U.S. comes from the manufacturing sector. We believe that a strong manufacturing base – with its attendant focus on engineering, science and technology innovations – is important not only for national prosperity but for energy independence, energy security, national defense and sustainability.

A strong manufacturing policy is needed in the U.S. The government should implement policies that:

• Create a framework that allows companies to compete fairly and freely
• Encourage research and development and investment in the future
• Allow access to competitive capital and create a stable, predictable and globally competitive regulatory environment and tax regime
• Leverage the power of free enterprise and American ingenuity to create growth and prosperity

The U.S. Department of Energy’s (DOE) Advanced Technology Vehicle Manufacturing Incentive Program is a great example of how successful government–industry partnerships can work to achieve public policy goals. The program provides access to competitive capital while leveraging American ingenuity to invest in the production of more fuel-efficient vehicles. This program was authorized in 2007 and funded in 2008, and Ford is one of the recipients of these competitively awarded green loans.

Strong free-trade policies – enabling market access and prohibiting currency manipulation – also must be part of this equation. At Ford, we believe an export-driven strategy is critical to achieving our shared goals of economic growth, job creation and a sustainable future. That is why Ford President and CEO Alan Mulally is proud to serve as a member of the President’s Export Council. Also important are education policies that help to foster a skilled U.S. workforce. These types of policies are discussed later in this section.

Health Care Reform

In the U.S., national health care reform was the topic of intensive Congressional and public debate, culminating in the passage of national health care legislation in March 2010. We are encouraged that the new law includes provisions that are aligned with the three key areas (listed below) that we believe must be addressed in order to maximize the value of health care service (a combination of quality, appropriateness and costs).

• Wellness and Prevention – As a country, we must focus on wellness and prevention, and make sure that employers can offer creative incentives that work to engage people in healthy behaviors.
• Health Information Technology – We need a national technology infrastructure that allows the consolidation of a patient’s medical records, so that the most appropriate care is given wherever treatment is provided. To accomplish this, we need electronic medical records at every doctor’s office and hospital, and they all need to be connected. We also need tools to improve the accuracy and safety of prescription drug dispensing, such as electronic prescribing.
• Understanding What Works – By studying the cost and quality of health care and its effect on health status, we can deliver more effective care. New innovations in technology and drugs are key drivers of cost increases. Therefore, before new innovations are widely implemented, they must be compared to the standard practice to really know whether and how much additional value they bring.

For more on this topic, see the Financial Health section.

Vehicle Safety

At Ford, safety is one of the key principles that inform and guide our every design and engineering effort. We are committed to continuous improvement in vehicle safety; we are also actively involved in driver education and efforts to promote safer roadways. Ford will continue working with governments and the public to help further reduce auto accident and fatality rates, which reached historic lows in 2009. Early estimates from the National Highway Traffic Safety Administration indicate that U.S. traffic fatalities continued to decline through 2010.

Part of Ford’s commitment to safety is our open and transparent approach to quickly addressing customer questions and vehicle safety issues. Ford supports the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act, which opened even more transparency and information sharing between the government and the auto industry.

Ford believes driver distraction is a serious issue, which is why we were the first automaker to support legislation for a national ban on handheld devices while driving. Reflecting this public position, Ford clarified its employee policy to explicitly ban all handheld usage of electronics while driving. This is aligned with research showing that manually operating electronic devices that can divert drivers’ eyes from the road (not merely talking on cell phones) substantially increases crash risk. We also pioneered voice-controlled technologies, such as SYNC®, which this same research shows can help reduce this risk.

Ford is a leader in the cooperative effort with governments and automakers globally to develop connected vehicles that in the future could “talk” to each other through advanced Wi-Fi technologies, to help reduce crashes and traffic congestion. Ford is aggressively accelerating its commitment to connected vehicles – known as vehicle-to-vehicle communications – becoming the first automaker to build prototype vehicles for demonstrations across the United States, doubling its connected vehicle investment in 2011 and dedicating even more scientists to developing this technology. We also support efforts to harmonize technology standards around the world to help deliver the technology as quickly and affordably as possible.

Ford strongly supports maximum graduated driver licensing (GDL) in North America as a means of achieving reductions in crashes, injuries and fatalities by new teenage drivers. GDL is a system designed to delay full licensing while allowing beginners to obtain initial experience under lower-risk conditions. There are three basic stages to GDL: a minimum supervised learner’s period; an intermediate license (once the driving test is passed) that limits unsupervised driving in high-risk situations; and a full-privilege driver license upon completion of the first two stages. The Company encourages all states to adopt maximum GDL programs and urges all driver license programs to incorporate maximum GDL requirements, including information on safety belt use and impaired driving. Ford complements GDLs with its Ford Driving Skills for Life teen safe driving program and MyKey® technology, which helps parents encourage their teens to drive more safely. MyKey features programmable speed and audio volume limits and a “no belts, no tunes” feature to encourage the use of seat belts, which are still the number-one lifesaving device.

See the Vehicle Safety and Driver Assist Technologies section for more on our vehicle safety technologies and activities.

Human Rights

Ford is committed to respecting human rights everywhere we operate, because it is the right thing to do and it strengthens our business in the long run. We are a leader in addressing human rights and working conditions in the auto industry.

In 2008, Ford joined the United Nations Global Compact, a framework for businesses committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labor, the environment and anti-corruption.

And for several years, Ford has worked with leaders of the U.S. Department of State’s human rights programs and the U.S. Department of Labor to explore how to encourage multinational companies to act as a positive force in protecting human rights in global trade, both through work in their own supply chains and through advocacy. We have also consulted with these agencies on how the U.S. government can encourage the protection of human rights through its purchasing practices.

California has passed legislation to prevent human trafficking, and several U.S. states (including Ohio, Texas and Hawaii) are considering bills to prevent human trafficking. Ford supports the underlying goals of human rights legislation, and where appropriate, Ford is participating in sector-specific initiatives and with international organizations to systematically evaluate supply chains to determine the most effective measures to combat human rights violations.

For more on our commitment to human rights, see Human Rights in the Supply Chain.

International Trade

As a global automaker, Ford has a strong interest in issues relating to international trade. With manufacturing facilities in the Americas, Europe and Asia Pacific and Africa, sales in almost 90 countries and a global supply chain that moves parts worldwide, we are a strong supporter of trade liberalization. In fact, free trade is foundational to our business model.

Ford has supported every free-trade agreement (FTA) ratified by the U.S. government since the United States first began free-trade negotiations in the mid-1960s. In fact, the auto sector is the largest exporter of goods in the U.S., and Ford is the largest exporter within the sector.

To further increase U.S. exports and support American jobs, we believe a new approach to trade is required that puts U.S. manufacturing at the forefront. Given the importance of manufacturing to the U.S. economy, Ford supports a manufacturing-driven trade strategy that:

• Drives innovation and delivers economic opportunity to its citizenry by maintaining a vibrant manufacturing sector as its cornerstone
• Enables U.S. manufacturing to compete on a level playing field against the best competition from around the globe

Finally, we believe the elimination of trade-distorting policies such as currency intervention and manipulation must be considered a key pillar of any trade initiative. Currency manipulation provides foreign automakers with an export subsidy of several thousand dollars per vehicle, while at the same time acting as the ultimate nontariff barrier, protecting their market from imports. Ford believes the market should set currency exchange rates – not governments.

Education

Ford understands that global competitiveness depends on the ability of our K-12 educational systems and post-secondary institutions to prepare a 21st century workforce. With baby boomers beginning to retire in large numbers, and many high-skilled jobs going unfilled, improving the quality and performance of our schools has become an urgent issue facing communities large and small across the country. Within these communities, too many students are disconnected and unsuccessful in schools that struggle to be as engaging and relevant as they need to be. Add to that the considerable anxiety being generated by an economy in transition – from industrial- to knowledge-based – and education emerges as a critical factor in securing financial health and prosperity for individuals, communities and the nation.

Ford recognizes the importance of these issues and supports public policies and initiatives that are designed to mobilize educators, employers and community leaders to bring communities together to transform the entire educational system. These programs provide students with real-world learning opportunities that help them:

• Develop essential higher-order skills, such as critical thinking, problem solving, communication, innovation and creativity
• Make connections between the academic subjects taught in the classroom and their application in the real world
• Make meaningful connections to higher education
• Build more sustainable communities by involving local business and community organizations to create service-based academic projects that make learning more applicable to real-world situations and positively impact the community

By helping communities address this most critical challenge, Ford continues its long tradition of leading and supporting educational initiatives that empower students, strengthen communities and benefit the American economy. See the Investing in Communities section for more information on the programs we support.

Electrification

We stand at an exciting moment in automotive history – the introduction and growth of hybrids, plug-in hybrids and all-electric vehicles. As these advanced technology vehicles emerge onto our highways and roads, manufacturers must work together, and with governments as appropriate, to set standards for certain technical aspects of these new vehicles, to enable the market for them to proceed forward smoothly.

Consider, for example: When we go to a gas station, we take for granted that the pump nozzle is a size that will work with our vehicle. Early on, a standard size and configuration had to be developed and agreed to across all automobile and gasoline pump manufacturers, so that drivers could have a hassle-free experience when they went to fill up. As demand for and availability of plug-in electric vehicles continues to rise, it is similarly important that consistent standards be put in place regarding the technical aspects of these vehicles.

In North America, the Society of Automotive Engineers, with Ford’s participation, successfully aligned all original equipment manufacturers (OEMs) on a standard charge connector and communication protocol that will enable all plug-in vehicles to use common charge points. This will be a key enabler for adoption in North America, as it allows all public charge stations to be compatible with all vehicle manufacturers’ products. The same approach is under consideration in Europe and China. Further standardization initiatives that will be helpful include fast-charge standards (for DC charging) and vehicle-to-grid standards. For example, in the very near future, customers with battery electric vehicles will be able charge their batteries in less than 15 minutes at specialized public charging stations. Global commonality for these systems will also be needed. Ford is also working with other OEMs and suppliers to provide a common database of charge point locations for display within vehicles’ navigation systems. In addition, Ford and the industry are working collaboratively with the Obama administration and the U.S. Congress to address the challenges associated with the widespread deployment and commercialization of electric-drive vehicles.

We have also taken a standards approach in the design of the Ford/Leviton charge station. We codesigned a single version of the 240V charge station that not only meets the standards referenced above, but works with all of our plug-in products (i.e., plug-in electric vehicles and battery electric vehicles) and can be used in indoor, outdoor, residential and commercial use throughout U.S. and Canada.

See our Electrification case study for more information about our collaborative approach to encouraging the development of electric vehicles.