The Fordasaurus
CASE 7.3 The Fordasaurus
before ford publicly unveiled the bigg est sport- utility vehicle ever, the Sierra Club ran a contest for the best name and marketing slogan for it. Among the entries were “ Fordasaurus, powerful enough to pass anything on the highway except a gas station” and “ Ford Saddam, the truck that will put America between Iraq and a hard place.” But the winner was “ Ford Valdez: Have you driven a tanker lately?” 106 Ford, which decided to name the nine- passenger vehicle the Excursion, was not amused. Sales of sport- utility vehicles ( SUVs) exploded in the 1990s, going up nearly sixfold, and the company saw itself as simply responding to consumer demand for ever larger models. Although most SUVs never leave the pavement, their drivers like knowing their vehicles can go any-where and do anything. They also like their SUVs to be big. Before the Hummer passed it, the Excursion was the largest passenger vehicle on the road, putting Ford well ahead of its rivals in the competition to build the biggest and baddest SUV. The Excursion weighs 8,500 pounds, equivalent to two midsize sedans or three Honda Civics. It is more than 6 ½ feet wide, nearly 7 feet high, and almost 19 feet long— too big to fit com-fortably into some garages or into a single parking space. Although the Excursion is expensive ($ 40,000 to $ 50,000 when loaded with options), it is, like other SUVs, profitable to build. Because Ford based the Excursion on the chassis of its Super Duty truck, the company was able to develop the vehicle for a relatively modest investment of about $ 500 million. With sales of 50,000 to 60,000 per year, Ford earns about $ 20,000 per vehicle. Classified as a medium- duty truck, the Excursion is allowed to emit more smog- causing gases than do passenger cars. However, Ford says that the Excursion, with its 44- gallon gas tank, gets 10 to 15 miles per gallon and that its emission of pollutants is 43 percent below the maximum for its class. By weight, about 85 percent of the vehicle is recyclable, and 20 percent of it comes from recycled metals and plastics. The company thus believes that the Excursion is in keeping with the philosophy of William Clay Ford, Jr. When he became chairman in September 1998, he vowed to make Ford “ the world’s most environmentally friendly automaker.” He added, however, that “ what we do to help the environment must suc-ceed as a business proposition. A zero- emission vehicle that sits unsold on a dealer’s lot is not reducing pollution.” The company, however, has failed to win environmentalists to its side. They believe that with the Excursion, the Ford Company is a long way from producing an environmentally friendly product. Daniel Becker of the Sierra Club points out that in the course of an average lifetime of 120,000 miles, each Excursion will emit 130 tons of carbon dioxide, the principal cause of global warming. “ It’s just bad for the environment any way you look at it,” he says. John DeCicco of the American Council for an Energy- Efficient Economy agrees. He worries further that the Excursion is clearing the way for bigger and big-ger vehicles. “ This is the antithesis of green leadership.” Stung by criticism of the Excursion, Bill Ford vowed to make the company a more responsible environmental citizen. Worried that, if automobile producers didn’t clean up their act, they would become as vilified as cigarette companies, in August 2000 Ford promised it would improve the fuel economy of its SUVs by 25 percent over the next five years, smugly inviting other automakers to follow its green leadership. To this GM responded that it was the real green leader and “ will still be in five years, or ten years, or for that matter twenty years. End of story.” When they aren’t bragging about their greenness, however, both companies continue to lobby Congress, and battle in the courts, against new mandates on emissions and fuel efficiency. Update Ford Motor Company failed to keep its promise to improve fuel economy by 25 percent by 2005, but it has now phased out the Excursion. After a five- year stint as president and CEO of Ford, Bill Ford remains chairman of its board of directors and is still hoping to push the company toward a greener future. Recently, the com-pany introduced the Escape, an SUV that is a gas- electric hybrid, and Ford’s research- and- development people are working hard on developing a hydrogen engine. Still, Ford is filling the void left by the Excursion with an extra- long version of its Expedition. Not only do gas guzzlers continue to roll out of Detroit’s assembly plants, but some of the automakers’ supposedly environmentally conscious efforts— consider the new Cadillac Escalade Hybrid— seem to be a sham. Perhaps that is not so surprising when one finds Bob Lutz, vice president of GM, stating in 2008 that hybrids like the Toyota Prius “ make no economic sense” and that global warming “ is a total crock of [ expletive].” However, with higher gas prices and the average fuel economy of new vehicles sold in the United States no bet-ter than it was twenty years ago, the backlash against SUVs is growing. Environmentalists have now been joined by con-servatives, who in the aftermath of the wars in Iraq and Afghanistan, are worried about supporting Middle Eastern oil producers who fund terrorism, and by evangelical groups, whose bumpers stickers ask, “ What would Jesus drive?”
DIS CUSSION QUESTIONS
1. Are environmentalists right to be concerned about the environmental impact of SUVs? How do you explain the demand for ever larger passenger vehicles? Will higher gas prices change that?
2. In developing and producing the Excursion, was the Ford Motor Company sacrificing the environment to profits, or was it acting in a socially responsible way by making the Excursion relatively energy efficient for its vehicle class? If you had been on the board of directors, would you have voted for the project? Why or why not? Do Ford’s stockholders have a right to insist that it produce the most profitable vehicles it legally can, regardless of their environmental impact?
3. Assess William Clay Ford’s promise to make his company the “ world’s most environmentally friendly auto-maker.” What are the environmental responsibilities of automakers?
4. Is Ford Motor Company simply responding to consumer demand for large vehicles, or is it helping to shape and encourage that demand?
5. Should there be tighter pollution restrictions on SUVs? Should the government try to discourage the production and use of SUVs?
6. Is it moral or environmentally responsible to drive an SUV? What would Jesus drive?
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