SHANGHAI, China — The U.S. government’s support for the auto industry following the 2007 financial crisis was critical in forcing manufacturers to restructure and build sustainable and profitable businesses, Joe Hinrichs, president, Ford Asia Pacific and Africa, told a major industry forum last Sunday.
At the 10th China European International Business School (CEIBS) Annual China Automotive Industry Forum, themed Shaping the Future of the Auto Industry: Consolidation, Technology and the Role of Government, Hinrichs spoke about the then trouble US auto industry from a Ford perspective.
In his presentation, Hinrichs highlighted several examples of progress achieved when the government and auto manufacturers worked together toward one plan. The development of the Energy Independence and Security Act in 2007 that developed one national standard for energy efficient vehicles was one case in point.
"The first lesson from the US was when the Act was put forward in 2007 with one national standard and a road map for the next 10-15 years, along with ways for the industry to achieve fuel effiency goals. This is very important for auto makers in planning for their business and products," said Hinrichs, who emphasised that stable and predictable policies were essential for the auto industry in any country to thrive.
"As part of the Act, the US government also made green technology loans available to auto makers, which played an important role in Ford's introduction of new technologies like EcoBoost engines to significantly improve fuel efficiency performance for consumers," he added.
Hinrichs also pointed out that the US government's involvement in restructuring the auto industry through rationalisation of capacity and brands helped to address overcapacity issues and raised the industry's profitability.
"In the case of Ford, we closed 16 manufacturing plants and our hourly work force, in the course of 7 years, was reduced from 100,000 to 42,000 in the US, which was a painful but necessary decision that let us achieve higher margins for our business in the United States," said Hinrichs.
He also shared with the audience his insights on key issues that help drive a profitable auto industry.
"We need to have a policy that is transparent, fair and stable so that businesses can plan for it and make their business successful,” he said. “It also requires the involvement by all the players in the industry as well as consumers in some cases, like government incentives to purchasing a new energy vehicle."
After the presentation, Hinrichs was joined by three keynote speakers – Dongyang, executive vice chairman and secretary general of China Association of Automobile Manufacturers (CAAM), Ivo Belet, a member of the European Parliament, and Ma Jun, vice president, Changan auto to discuss measures that the Chinese government can take to help its auto industry to compete internationally.
The CEIBS Auto Forum was established in 2003 as one of the most influential industry events in academia.