The automobile business is about to undergo the most profound and revolutionary changes it’s seen since the Model T first hit the streets

Both the Internet and alternative fuel vehicles are going to have a major impact on our business… but in different ways, and at a different pace.

The effect of the Internet is going to be fast and far-reaching. We’re racing to find ways to leverage the Internet throughout the entire automotive value chain – from suppliers to manufacturers to dealers to consumers. When we find the right business models and link it all seamlessly – which is going to happen faster than most people can imagine – it’s going to have an incredible impact on our business.

The best way I can describe that impact to you is to say that the Internet is going to be the moving assembly line of the 21st century. It’s going to improve productivity, lower costs, and surprise and delight customers that much.

The race is on to be the first with the most. You will hear more about this from all the manufacturers, here at the show and throughout the year. The Internet-related announcements we have already made – and the ones we’ll make this morning – should give you an indication of how serious Ford Motor Company is about winning this race.

If the Internet race is a sprint, delivering mass production alternatives to the internal combustion engine has been more of a marathon – but the finish line is starting to come into view. In the early ‘60s, Ford built two-seater electric commuter cars in England. In the mid-60s, we invented the sodium-sulfur battery. In 1979, we built our first hybrid vehicle, using a Ford Econoline van.

Today, we’re the world’s leading producer and seller of electric vehicles. We offer the broadest range of alternative fuel vehicles, including electricity, ethanol, natural gas, and propane. Until very recently, Ford sold more than 90 percent of the alternative fuel vehicles in North America. That percentage has come down as other manufacturers entered the market – which I applaud as being good for consumers and the environment.

As fast as we’re working to make it happen, it will be several years before a significant percentage of vehicles are powered by anything other than an internal combustion engine. That’s why Ford has been moving to make our conventional engines cleaner sooner, as we did with our low emission Sport Utility Vehicles and pickup trucks in North America last year, and the Stage IV low emission engines we will begin rolling out in Europe this year.

We’re making our conventional powertrains cleaner and more efficient as fast as the technology permits. By the way, the proposed requirements for lower sulfur fuel in the United States will help these "cleaner sooner" efforts.

Since I’ve been talking about the Internet and the environment this morning, it’s only fitting that I announce another Ford first that combines the two. We’re establishing a first-of-its-kind Environmental Labeling Web site that will give consumers online environmental information about all new Ford, Lincoln, and Mercury vehicles in the United States. The site, which we call Ford Envirodrive, is the only one-stop Web resource with the latest information on U.S. fuel economy, emission certification, recycled content, recyclability, and manufacturing plant environmental standards. You can check out Ford Envirodrive on any of the computer terminals on our Trustmark bridge, or on your own computer at www.fordenvirodrive.com.

Looking farther ahead, I’m especially excited by all of the hybrid-electric and fuel cell vehicles on the road and under development. In the near term, hybrids will make the first substantial inroads into the market. Longer term, I believe fuel cell vehicles will finally end the 100-year reign of the internal combustion engine.

What’s slowed the development of alternative fuel vehicles is not inventing the technology. As I indicated, much of it has been around for years. The difficult part has been producing an alternative vehicle that has cost and performance characteristics that are acceptable to mainstream consumers, so that the vehicles are purchased in high volume. Then there are also huge infrastructure issues. To make a significant difference in the environment, we have to sell millions of vehicles, not hundreds or even thousands.

That’s why I am pleased this morning to publicly introduce for the first time the Ford Prodigy – the hybrid-electric family sedan concept vehicle I drove up in.

Prodigy is an extremely fuel-efficient family sedan. It will go nearly 80 miles on a gallon of fuel with the power, drivability, and range that customers require. It has the passenger and cargo space of today’s Ford Taurus, but is 40 percent lighter. Prodigy is part of our efforts in the Partnership for a New Generation of Vehicles program with the U.S. Department of Energy. It’s an interim step between our P2000 research programs and an affordable, family friendly hybrid electric vehicle that we’ll begin producing in 2003.

We plan to reach the mainstream of the North American automotive market with a family-sized hybrid electric vehicle that delivers the performance and utility our customers demand. It will reduce their fuel costs, while making a significant, positive impact on the environment.

We’re excited about Prodigy… but if you think that’s all we’ve been up to, think again. There are a lot of other ways we’re going to be connecting to consumers in the new millennium… right Jac?

Following is the text of remarks as prepared for delivery by Bill Ford, chairman of the board, Ford Motor Company, at the CERES 2000 Conference in San Francisco, on April 14, 2000.

I want to say how pleased I am to be a part of this important forum. This conference is helping to establish not only the agenda of the next century, but also the relationships we'll need to solve some very daunting issues.

It's great to be here, and to have this opportunity to share our story with you.

One hundred years ago, my great-grandfather Henry Ford had a radical vision of the future. At a time when automobiles were reserved for the affluent, he foresaw a day when the average family could own a car, and use it to improve their lives. That vision put the world on wheels.

In the 20th century, the automobile provided tremendous benefits, and raised the standard of living in much of the world. But it also had a major negative impact on the environment. For twenty years I struggled to reconcile my environmental belief with working for an industrial company.

When I became Chairman of Ford Motor Company last year, we began to form a very different vision of the future. We have an opportunity to have a major positive impact on society. We cannot afford to miss this opportunity.

The expectations for multi-national corporations are rising rapidly. External stakeholder groups, including our own customers and shareholders, are demanding that we acknowledge their concerns and take leadership in addressing them. At the same time, our own understanding of what we need to do to grow our business has become much more sophisticated. We understand the triple bottom lines of sustainability - environmental, social, and economic - must all be addressed in order for us to be successful.

For example, we can't expand in potentially huge markets such as India and China - and provide a better life for millions of the world's poorest people - unless we can do it in a sustainable way. It's the only way we will be able to grow our business and reward our shareholders, in developing and existing markets.

I personally believe that sustainability is the most important issue facing the automotive industry and industry in general in the 21st century. We look at it not just as a requirement, but as an incredible opportunity. I want us to be a leader in driving the transition, and to be in a position to benefit from it.

So we've updated our vision. In the 20th century, we provided the world with mobility by making it affordable. In the 21st century, we want to continue to provide the world with mobility by making it sustainable.

I see a day when everything my company does - all of our facilities, all of our products, all of our services - contributes to a sustainable future. We want to produce automobiles that not only improve individual lives, but also the world around them. Given where we are, that might seem like a radical vision to some people, but we're already headed there.

We've begun an exciting and challenging journey. We plan to transform ourselves from the symbol of 20th century industry into the model of 21st century sustainability. Frankly, we don't have a detailed map of how to get there yet, or even an exact picture of what sustainable mobility will look like. In addition to the automobile, it may include mass transit, or Internet access, or something we haven't even thought of yet.

We need to engage you and others like you to help us imagine what sustainable mobility really could be.

To give you a sense of where we are on our journey, I'd like to tell you a little bit about myself and where I'm coming from, and a little bit about my company, and where it's going.

As you might have guessed, I'm a car enthusiast by heritage and by choice. I'm also a lifelong environmentalist. If you are a student of history, the fact that I'm an environmentalist shouldn't be a surprise. The environment is as much a part of my heritage as the automobile.

In addition to being an automotive pioneer, Henry Ford also was an environmental pioneer. He had a strong ethic of preserving the natural environment as well as reducing, reusing, and recycling.

He used hydroelectric power to run many of his auto plants, and his own home. He recycled wooden crates into running boards, and the leftover scraps into charcoal. He experimented with soybeans as a renewable resource for making lightweight auto parts. His vision was to create technology that complemented and benefited both mankind and the natural world.

To be candid, over the years Ford lost sight of that vision. We did the minimum to comply with the law, and fought virtually every initiative.

Today we are embarking on a leadership strategy, and we are facing some difficult issues.

Such as: Where do we put our resources - billions of dollars - to get the greatest benefit from new technology? How do we make that technology attractive and affordable for customers? What's the best way to add value for shareholders and society? Those are the kind of issues we're working on right now.

We don't have all the answers at this stage. But I think it would be useful to describe the approach we're taking to find them, and what we've learned so far.

The process we are using to become more environmentally friendly and sustainable has three major steps: engaging with stakeholders, including NGO's; establishing standards of conduct; and becoming more transparent.

In stakeholder engagement, we've come a long way since the days when I first joined the company, and was asked not to associate with any known or suspected environmentalists.

In the last year, I and some of our senior executives have met with a number of leading environmental organizations and advocates. We also engaged with CERES members to help us map out a sustainability strategy. We will continue to have an ongoing dialog with the smartest, most creative, and energetic people we can find to work with us.

This summer we'll launch our formal stakeholder engagement effort at a Thought Leader Forum that will bring together Ford executives and leading experts in corporate citizenship and sustainability.

In our initial talks with NGO's we have said that we plan on being the world's most environmentally friendly automaker. And we've asked for their thoughts on what it would take to achieve that vision. Their ideas have already begun to influence our efforts.

One of the first things they suggested was that we establish standards of conduct, including a clear set of business principles and transformational goals. Of course, we've always had policies, procedures, and standards we've followed. But they tended to be narrow and internally focused, and compliance-based. They made us good neighbors, but not global leaders.

I'm proud to announce today that, as a result of lengthy conversation and mutual decision, we are including the CERES Principles as a key part of our new way of doing business.

By endorsing these principles, we are pledging to go beyond the requirements of the law to preserve and protect the environment.

In many areas, we have already raised the bar on our performance voluntarily. At the end of 1998, we became the first and only automaker to certify all its plants around the world under ISO 14001. That's the international management standard that regulates and independently audits air, water, chemical handling, and recycling. We have 140 factories in 26 countries all held to the same standards.

Nobody has followed our lead. In addition we are requiring all our suppliers to meet the standard.

By the way, anyone who thinks there is a conflict between preserving the environment and rewarding shareholders should take a look at this program. It's saving us millions of dollars in energy, water, material, and waste-handling costs. It's confirmed my strong belief that - in addition to being the right thing to do - preserving the environment is a competitive advantage and a major business opportunity.

Ford also has been a leader in the development of clean-running alternative fuel vehicles. We are the world's leading producer and seller of electric vehicles.

We've just launched an entire new brand - TH!NK - dedicated to the development and marketing of alternative fuel powertrains and vehicles. And we've invested millions of dollars in alternative fuel infrastructure, including retail fueling stations.

We are a leader in reducing smog-forming emissions. Starting with the 1999 model year, all of our sport utility vehicles and Windstar minivans qualified as Low Emission Vehicles under federal guidelines. We followed that industry first by making all of our F-Series pickup trucks LEV starting in the 2000 model year.

This is the equivalent of taking 350,000 full-size pickups off the road, or putting 600,000 hybrid-electric vehicles on the road. It will reduce the amount of smog-forming pollutants being released into the atmosphere by 4,250 tons annually.

That kind of breakthrough improvement - to mainstream, high-volume products - is what we need to do to have a major positive impact on the environment. Customer acceptance ultimately drives environmental improvement, and mass acceptance is critical. Niche products are interesting, but to have a real impact, mainstream vehicles must be clean.

In our dialogs with environmental stakeholders, I think we are given a lot of credit for the improvements I've been talking about. But they've also made it clear to us the areas they feel we are not demonstrating leadership in: fuel economy and carbon dioxide emissions. I'm here to tell you today that we hear you, we get the message, and we're doing something about it.

For starters, we've left the Global Climate Coalition. We felt that membership in that organization was an impediment to our ability to move forward credibly with our agenda on environmental responsibility.

That's just the beginning.

We are committed to an improvement in fuel economy for all of our vehicles. With that improvement in fuel economy will come a reduction in carbon dioxide emissions. We know greenhouse gases and global temperatures are increasing. There's no need to wait for all of the science to be completed before taking responsible actions. That's what we're going to do.

Keeping everyone informed of our progress in this and other critical areas is the third major step in our sustainability process. We want to be transparent in everything we do. That includes having our environmental, social, and economic goals, and our progress towards meeting them, clearly understood by all of our stakeholders.

Next month we will publish our first Corporate Citizenship report written under the Global Reporting Initiative's Sustainability Reporting Guidelines. This will help Ford begin to measure and document the full spectrum of its impact on the environment, society, and the economy.

Our first report won't have all the numbers yet, we're still establishing many of our targets and measurements, fuel economy being a prime example. But we've begun the process, and we're not turning back.

Where will this process lead us? As someone once said, it's difficult to make predictions, especially about the future. But some of the things we're already doing point to where we're going.

The new Volvo S80 has a catalytic coating on its radiator that converts smog-forming ozone into oxygen. It actually cleans the air as you drive. The technology does not make cars emission-neutral yet, but it's getting closer. I'd like to see us get it to the point where every car on the road is improving the quality of the air as it drives by.

Another effort that I hope revolutionizes industry is what we're calling the "Heritage Project" - the environmental renovation of our Rouge manufacturing complex in Detroit.

The Rouge complex is one of the enduring symbols of the Industrial Age. Since it began operations 80 years ago, it has been studied and duplicated by companies and countries around the world, as the paradigm of the modern, integrated manufacturing facility. The goal of the Heritage Project is not just to reduce any harm this massive facility does to the environment, but to actually make it a positive contributor to the environment.

We are consulting on this innovative effort with architect Bill McDonough, the first recipient of the Presidential Award for Sustainable Development, and a leading advocate of "eco-effective" design. Bill has been a real inspiration to me. Those of you who are familiar with his work will understand how excited we are about the possibility of creating a new standard for industrial facilities. We think this is a terrific opportunity to transform the icon of 20th century manufacturing into the model of 21st century sustainable manufacturing.

Looking further into the future, the possibilities are even more exciting. The internal combustion engine, which powers the majority of the world's automobiles, will eventually be replaced by cleaner, more efficient technology.

In the near term, hybrid-electric vehicles will make substantial inroads into the market. Hybrids, which are powered by a conventional engine as well as an electric motor, could represent 20 percent of the market in ten years. That will happen if we apply the technology to mainstream, high-volume products - which is what we plan to do.

A lot of stakeholder groups have expressed concerns about Sport Utility Vehicles, especially in regard to fuel economy. They dislike them as much as our customers like them. We're working hard to make SUV's acceptable to everyone, and hybrid technology is now part of that effort.

The only emission from a fuel cell is water. It will be a winning situation all the way around - customers will get an efficient power source, communities will get zero emissions, and automakers will get a major business opportunity.

That last point is important. As an environmentalist and a businessman, I view government regulation as the least effective way to create real progress toward a better future. It's sometimes necessary, especially if business doesn't fulfill its responsibilities. But regulation tends to be based on the status quo, not breakthrough improvements. I prefer a collaborative model that harnesses the power of the free market, and aligns it with social needs.

A great example of this is the California Fuel Cell Partnership. Ford is a founding partner of this group, which includes auto and energy companies and state and federal government agencies. This partnership will have a test fleet of fuel cell vehicles in operation on the streets of California by the end of the year. I think it's very appropriate that the future will start here.

On that note, let me step back for a moment. Despite all the hype about the millennium, we may have forgotten that we are, in fact, standing at a critical juncture in history. In some ways, humanity has succeeded beyond all imagination, mastering extraordinary new technologies, creating wealth at a speed without precedent. At the same time, we face problems greater than anything our ancestors anticipated.

Our oceans and forests are suffering, species are disappearing; the climate is changing. Around the world, billions of our fellow human beings lack the most basic requirements of health and dignity. Their suffering may be silent and invisible, but it is real. And it could intensify. In the past we might have been able to look away. We might have been able to expect someone else to act. But this is our time and our task. We live in a world of interlocking systems. We can't separate things into politics and economics and science and ecology and culture. Everything is intertwined.

But if we really live in a world of interwoven systems, then we need to draw on the energy of every network, every group, every community. The dedication, ideas, and connections represented just by those of us who are in this room today are mind-boggling. Imagine what we could do if all of our networks and all of our combined resources began to pull in the same direction.

On some matters we will have different interests and points of view. But those differences will bring us new energy and will pale in comparison to what we can get from shared commitment, creativity, and goodwill.

If some of the challenges appear insurmountable to us, we must remember that our predecessors faced challenges that appeared equally insurmountable to them. They found success because they chose to cast aside the received wisdom, cut through old boundaries, and chart a new course into the future.

This is our time. For the sake of our children and our grandchildren, we must prevail.

We're also working on hybrid-electric and fuel cell powered vehicles. Hybrids, powered by a conventional engine as well as an electric motor, could represent 20 percent of the market in ten years. We'll have a hybrid-electric Ford SUV for sale in 2003. Longer term, I believe fuel cells will finally end the 100-year reign of the internal combustion engine. Fuel cells, which run on hydrogen, a renewable resource, have zero emissions. We'll have a test fleet of fuel cell vehicles on the road by the end of next year. Fuel cells could be the predominant automotive power source in 25 years.