A focus on efficiency helps Ford pull away from the Detroit pack. Executive Sue Cischke explains how.
In the long history of U.S. automakers, green strategy and profitability have rarely gone hand in hand –until, that is, Henry Ford’s great-grandson made them a centerpiece of his tenure as the company’s president and CEO. But by 2006, in the face of larger woes in the U.S. auto sector, Bill Ford had to step down from day-to-day management of the company (he now holds the title of executive chairman). Just two years later, in 2006, Bill Ford’s green vision looked cannily prescient. With gas prices spiraling skyward that summer, U.S. drivers stampeded away from gas-guzzlers. Soon after, the financial crisis leveled the economy, and car sales collapsed. Unlike its Motown rivals, Ford was able to steer clear of bankruptcy, thanks in large part to savvy financial moves by Bill Ford’s successor, Alan Mulally.
Today, with auto sales looking up again, Sue Cischke (pronounced SIS-key) believes that extending Ford’s commitment to green corporate practices and energy-efficient vehicles will help it outpace global rivals. Cischke entered the auto biz as a mechanical engineer at Chrysler in 1976, in the aftermath of the Arab oil embargo and as high-mileage Japanese imports began to fundamentally reshape the business. These days, she is Ford’s senior-most executive focused on environmental strategy, reporting to CEO Mulally as group vice president, sustainability, environment and safety engineering. One of her top responsibilities is steering Ford’s long-term vehicle development, a vital part of helping the company meet its commitment, unique among its peers, to cut the greenhouse gas emissions of all new Ford vehicles by 30 percent by 2020 (based on a 2006 baseline).
OnEarth contributor Adam Aston recently caught up with Cischke in Detroit to hear how Ford’s green push is unfolding.
Discussions about automakers going green tend to focus on vehicles. But Ford’s been pushing sustainability in its internal operations, too. How do you measure that?
We recognize that our manufacturing operations, in terms of energy use and the materials we consume, have an environmental impact. So our strategy includes increased energy efficiency in both our products and our manufacturing.
Since 2003, we’ve seen energy consumption at Ford’s factories around the globe fall by 29 percent. We’ve won a series of Energy Star awards from the EPA recognizing these efforts. We’ve undertaken countless steps, from small to big, to make these savings. On our assembly lines, for example, thepneumatic tools used to assemble cars have been made smarter, so that they power down quickly when not in use. We’ve also upgraded factory heating and lighting systems. And at some of our paint shops, we’re also converting fumes into fuel to make electricity.
Water is another concern. From 2000 to 2008, we have reduced our water usage by 56 percent. At our Cleveland plant, for example, a program to lower the amount of water used in the casting process, together with efforts to filter and reuse water thoroughly, cut fresh water use by 35 percent in 2009, on top of a 27 percent reduction the prior year. Each year, that’s saving the plant more than $1.2 million in city water costs alone. Worldwide, those kinds of efforts have saved more than 9.5 billion gallons of water at our factories. And we work aggressively to recycle the water in our plants for reuse in manufacturing.
And what about your vehicles?
Ford’s largest environmental impact comes from our products, which is why we have made the commitment to increase fuel efficiency and cut CO2 emissions in every new vehicle we produce. Ford now offers 12 cars, trucks and utility vehicles that lead their segments in fuel economy, including four with certified ratings of 40 mpg or more.
At the 2010 Detroit Auto Show, Ford announced an ambitious range of electrified vehicles. What green technology do you see as having the greatest impact?
In a car, to eke out mileage improvements, it’s about much more than the engine. It’s looking at every component as well as overall design, looking for ways to improve efficiencies. We call it paying attention in exquisite detail. It’s like going on a diet: to lose weight, you can’t just cut down on desserts. You’ve got to exercise more. The change needs to be comprehensive to last.
In the near term, I think Ford’s EcoBoost technology will have the biggest impact because it is an affordable fuel-economy technology that we will offer across most of our lineup. The centerpiece is a four-cylinder engine that delivers the power of a six-cylinder design, boosting gas mileage by up to 20 percent and reducing CO2 by as much as 15 percent. We use turbochargers and direct injection of the gasoline at higher pressures to help achieve these gains.
The approach makes other improvements possible, too. A smaller engine is lighter, so we can downsize other parts on the car — smaller brakes, lighter power-steering motors, and less rugged transmissions, for example — without sacrificing performance.
You’ve said that improving the efficiency of Ford’s entire product line with steps like EcoBoost — rather than the development of a particular advanced hybrid or electric technology — will be the company’s biggest impact. Why?
Because we developed EcoBoost and related design enhancements at a time when the industry was throwing out attention-getting, high-tech prototypes like EVs and plug-in hybrids. Those are important technologies, but will sell in small numbers for some while. We wanted a solution that was more holistic and mainstream.
It doesn’t have the same pizzazz, but because this [EcoBoost] technology will make its way into nine out of 10 of our models within a few years, most of the cars we sell will have the option to be up to 20 percent more fuel-efficient. We are adding more EVs and hybrids too.
In the near term, selling larger numbers of more efficient, affordable gasoline engines will have a bigger impact in reducing CO2 than the much smaller volume of electric vehicles.
In July, President Obama announced a landmark agreement with the auto industry to boost average fuel efficiency to 54.5 miles per gallon, for the model year 2025. In talks with lawmakers, car manufacturers have long fought to stop, delay or reduce such an increase, as they did during recent negotiations. For all the talk about greening cars, why has it been so hard for industry to change its tactics?
We look at affordability and higher mileage goals and realize we can’t just force certain technology onto consumers. When we started the first serious push for fuel economy back in the ’70s, consumers were disappointed with cars that were so underpowered they could barely get out of their own way.
That said, much has changed. In the past, the government would throw out a new mileage number and the industry would say, “No,” and the relationship was much more adversarial.
Today, we recognize efficiency as a strong reason for consumers to buy a Ford. It’s a competitive advantage for us. We are committed to improving the fuel efficiency of every new product we bring to market, but in terms of regulations, we still believe the agencies setting standards need to understand there is not a single technology solution, and that the technology advances we employ must remain affordable for car buyers.
In your role, how do you make sure that the company isn’t just paying lip service to sustainability but is getting actual, measurable results?
The thing is, the company that figures this all out is going to be the most successful. That’s a powerful incentive to get the strategy right. It’s easy for a company to project a vision and talk about the future. We’ve found it more useful to do what we need to do, and then talk about it.
Frankly, with all the noise out there about the financial troubles in the auto sector in recent years, it’s been hard for our green offerings to get the attention I think they deserve.
Our momentum is building. We’ve had a highly successful launch of our EcoBoost technology. The Escape Hybrid SUV has been on the market since 2004. The Fusion Hybrid joined the line up in 2008. And we recently announced we are bringing a new hybrid, a plug-in hybrid, and two all-electric vehicles to market within the next two years.
What does the future hold for Ford’s lineup — will it be all-electric?
It’s important to recognize that there is room for an entire range of technologies, but in terms of electrified vehicles (EVs), we see a stronger future for hybrids and plug-in hybrids. A plug-in hybrid can be charged overnight and run on batteries until they’re depleted, before switching over to a gas engine.
If I look into a crystal ball, we’re looking for two breakthroughs: battery costs have to come down as more EVs are sold, and we’re looking for new, better battery technology that will help increase driving range. Without both of those, I’m not certain whether drivers’ concerns about running out of battery power can be overcome for EVs that don’t have a traditional engine as a backup.
That’s why we’ve also focused on charging infrastructure, improving both charging speed and encouraging the development of more sites where drivers can re-charge outside their homes. We expect most people will charge at home, but we also believe consumers will become more comfortable with the concept of electric vehicles when there are a lot more places to plug them in.
In a company with some 160,000 employees around the world, simply delivering the message that sustainability is a priority seems daunting. How has Ford done that?
Our CEO Alan Mulally saw my background and appointed me to head up sustainability. Given that I started out as an engineer, his decision reinforced that the sustainability factors are woven into the earliest stages of our design process all the way through manufacturing.
Day to day, one of the ways we keep the organization’s many moving parts in sync is via a sustainability mobility governance group, which includes senior executives in charge of developing new products, R&D, marketers and others. The issues we evaluate and prioritize there help guide Ford’s highest, board-level discussions of automotive strategy.
Sidebar: Truth Squad
Checking industry claims with NRDC’s sustainability experts
Alone among its Motown rivals, Ford outran bankruptcy during the fiscal crisis. For this and for developing a genuinely greener lineup of hybrids, electric vehicles and higher mileage cars, Ford deserves praise, said Roland Hwang, NRDC’s transportation program director in San Francisco. For example, under CEO Alan Mulally, Ford has re-geared its product offering to emphasize fuel-saving options across more of its offerings. In mid-September, it ended production of the Crown Victoria sedan, a fuel-economy laggard that averaged just 16 mpg in the city.
The broad shift has proven Ford can make money selling more efficient, in some cases smaller, vehicles, said Hwang. “Ford’s return to profitably this year has been impressive,” he said, and unlike past years, “earnings weren’t driven by pickups or SUVs.” Yet this fiscal resilience cast the company in a peculiar role: as de facto leader of the automotive industry’s opposition to the White House’s push for higher mileage standards. With the federal government holding about one-third of GM stock, and nearly a tenth of Chrysler’s, Ford emerged as the industry’s flag carrier.
In May, Mulally personally lobbied Washington lawmakers to bar California from setting higher standards independent from federal rules. And behind the scenes, Ford’s top lobbyists led a push to soften the new standard, known as Corporate Average Fuel Economy (CAFE). “These lobbying efforts run counter to its progress with greener vehicles,” said Hwang. In early July, the auto industry and the Obama Administration settled on a figure of 54.5 mpg by 2025, up from around 30 mpg today. A month later, Ford responded to the tougher rules with a plan to join forces with Toyota, its top international rival, to co-develop gas-electric hybrid systems for SUVs, pickups and other light trucks. Under past mileage rules, this so-called light truck category has been granted loopholes that tighten under the new standard.
There are competitive reasons for the tie-up too. The world’s other two top auto markets — China and Europe — are pushing towards mileage standards more stringent than proposed U.S. rules. Adds Hwang: “Ford knows there’s a solid business reason to be ready sooner than later with high mileage solutions.” — Adam Aston
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