Lee A. lacocca Ford Motor Company Dearborn, Mich. 48 12 1 Believe it or not, Ford Motor Company supports federal regulation of some aspects of the automobile industry. This acknowledgment will probably surprise many people who believe that the company opposes every law, rule, standard, or other directive coming out of Washington. In fact, federal regulations did help to make it possible to build today's cleaner, safer cars. This could not have been done under private auspices alone, because of limited market appeal of emissions controls and safety features. Had Ford alone spent the hundreds of millions of dollars required to provide these features, and then priced all of its cars to recover at least the bulk of that investment, it would have been at a serious disadvantage. Competitive cars without those features would have been priced hundreds of dollars below those of Ford. Added costs of standards To be sure, the automobile has been regulated to some extent since the earliest years of its existence, mostly by state and local governments. Taxes were levied on vehicles and fuel. Drivers were required to purchase personal licenses. Over the years, such features as safety glass and sealed-beam headlamps were mandated. The intensive phase of regulation began in the mid-l960's, with passage of the Federal Motor Vehicle Safety Act and, later, the Clean Air Act. The government had, of course, been involved with highway safety for a long time, but with these laws, federal agencies also became involved in car design. This involvement stemmed from federal requirements that all automobiles must meet certain emission and safety standards. Compliance with these standards resulted in additional costs, a good portion of which car manufacturers had to pass on to their customers. Indeed, certain government-mandated standards have cost 32 Environmental Science & Technology
How can motor vehicle emission and safety regulations be made more cost-effective? A leading industry spokesman offers his recommendations car buyers a great deal of money. Some of them have, perhaps, been worth the price, but others have not. However, before the question of costs and benefits of these standards is discussed, a look at the backgroundof federal involvement in the automobile industry would be in order. The laws passed during the mid-l960's, mentioned earlier, were what started the process of bringing the federal government into the industry with both feet, so to speak. Since that time, working closely with federal and state agencies, Ford Motor Company believes that the industry, as a whole, has done its part to help clean America's air. For instance, exhaust hydrocarbon (HC) emissions from 1977 cars are 90% lower than those from uncontrolled vehicles. Carbon monoxide (CO) is down 83% and nitrous oxides (NO,) 67%. The industry also significantly improved safety-production features of automobiles and reduced the vulnerability of cars to damage. Again, working with government, manufacturers have incorporated safety belts for front and rear seats, padded interiors, collapsible steering columns, warning flashers, stronger . bumper systems, and many other features. However, regulated improvements have not come cheaply. Through the 1977-modelyear, for example, Ford Motor Company would have had to have increased the retail price of a car by an average of about $580 in order to recover fully the costs of equipment needed to meet federally mandated safety, damageability, and emissions standards. Moreover, as time went on, the industry reached a point of diminishing returns with respect to compliance with some government regulations. For instance, it was relatively inexpensive to remove the first 50% of tailpipe emissions. But as the 75 YO reduction level was reached, it was found that although costs were increasing, benefits were actually decreasing.
Air quality perspective Before any discussion of emission standards, what Ford believes to be the role of the automobile in America's air quality should be put in perspective. Now, some environmentalists concern themselves with only one aspect of the total air-pollution problem-the weight of pollutants from each source. Also, government researchershave calculated that in 1970, the automobile accounted for approximately 45% of all man-made pollution. However, it is generally recognized that a more realistic measure of air pollution from any given source should be based on its relative effects on human and plant life. For this reason, scientists, using information on present atmospheric levels and human tolerances, have developed systems that permit the rating of various pollutants in terms of these effects. They estimate that on a health-concern basis the automobile accounts for a maximum of 12% of all man-made air pollution. In this light, it is unfortunate that the automobile is singled out too often as the source of most of the air pollution in this and other countries. Equally unfortunate, it seems, is the fact that the federal government's body of experts in air quality-the Environmental Protection Agency (EPA)-does not have the authority to set ultimate emission standards for motor vehicles. Instead, Congress has set those standards, and persists in retaining them, even though the EPA has said since 1973 that at least one of the statutory levels mandated by Congress-for oxides of nitrogen (NO,)-may be more stringent than necessary. This point also was made by Prof. Arthur Stern, recent president of the Air Pollution Control Association and chairman of a National Academy of Sciences panel that studied air quality and automotive emissions. Stern wrote that . . the panel felt that the statutory automotive emissions standards were too severe by a factor of about three to accomplish their intended purpose" (€S&T, June 1975, p 510). In spite of such beliefs by respected authorities, Congress continues to keep the presently mandated standards. Automobile makers hope that Congress will seriously consider the EPA views when it deliberates on standards for 1978 and thereafter. This consideration will obviously involve compromises-but reasoned compromises are needed in this matter. In other words, in cars, as in homes or anything else, it must be decided how clean is clean. For instance, it would be possible to keep a kitchen as clean as a hospital operating room, and there might be benefits in eating from sterilized dishes with sterilized utensils in a room whose air contents are carefully controlled. But the work and cost required to provide such an atmosphere at home would outweigh the benefits. Likewise with cars, the cost, time, and manpower required to eliminate all remaining traces of emissions-if they could be eliminated-would far outweigh the minute benefits to be derived. ' I .
Oil embargo fallout A few years ago, the Arab oil embargo further complicated the emission picture by making fuel economy the auto industry's foremost priority. And last December, Congress passed the Energy Policy and Conservation Act, which included future requirements for vehicle fuel economy. The law requires a series of mandatory fuel-economy standards starting in 1978. By 1985 the cars each manufacturer builds and sells in the U.S. must achieve 27.5 mi/gal, averaged over its total output, on a production-weighted basis. This requirement represents mileage improvement of 100YO over 1974 and would be a greater change than has occurred since the birth of the industry. The average 1985 vehicle would have to achieve the fuel economy of today's small cars. This means that the industry will have to commit large sums of money, although it does not have certain vital information. It is working hard on new technology that promises large fuel-
economy improvements. But what is uncertain is how well each new approach will work. It is known, however, that major across-the-board fuel-economy gains will involve large investments and consumer costs. How large these costs will be is an open question. Nevertheless, consumers will have to pay for better fuel economy in one way or another. But what tradeoffs they will prefer to make among fuel economy, car size, performance, convenience features, and price cannot be forecast. The industry expects that the fuel economy demanded by law will be substantially greater in 1985 than the fuel economy that would be demanded in a free market. But how big the gap will be, or how many consumers will stay out of the market because they will not be able to buy the types of cars they want or because they cost too much, is not possible to predict at this time. As for vehicle safety, seat belts-one of the first devices mandated, and a feature voluntarily offered by Ford as far back as 1956-have proved to be as valuable as all of the other government-required devices put together. The first dollars spent on safety improvement brought clear benefits at relatively reasonable cost; however, succeeding dollar outlays have brought benefits that were more and more marginal. Volume 11, Number 1, January 1977
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Cost-effective safety equipment Although the goal is to continue building safe vehicles, one cannot lose track of what the customer can pay, or is willing to pay, for a new car. For instance, when a buyer spends a dollar for a safety feature, he should receive a dollar's worth of protection. But here are some examples which show that this is not always the way things work in real life: Each year, car buyers pay more than $100 million for head restraints, but studies estimate that the restraints eliminate only 3000 minor injuries. That represents an average expenditure of more than $33 000 to eliminate each minor injury. Car buyers also spend about $100 millionly for side-impact protection; estimates indicate that only 12 400 minor injuries are prevented. Car buyers pay more than $50 million each year for roofcrush resistance that provided little if any discernible benefit. The National Highway Traffic Safety Administration (NHTSA) has considered requiring another device in cars-a so-called passive-restraint system most commonly represented by the air bag. The industry believes air bags should not be required by the government. Present safety belts provide protection comparable to bags plus lap belts; the lap belts would be needed along with air bags to meet a proposed government standard. Air bags would cost a buyer about $235 per car, in addition to the present cost of safety belts. The government probably would not consider requiring air bags if more than half the drivers and passengers today did not ignore the safety belts they now have. Indeed, the lap-andshoulder-belt combination is the best piece of safety equipment available, and if all people used it regularly, highway deaths and injuries would drop dramatically. Government survey results which show that more and more people are "buckling up" are encouraging. But because some people do refuse to use the safety belt protection already available in nine of ten cars now on U.S. roads, those who douse their belts could be required to spend hundreds of dollars for air bags. This is unfair. A more cost-effective approach-one that would show immediate results-would be for the 50 states to pass legislation requiring all occupants to wear safety belts. This approach has been successful in a dozen countries, including Australia, Czechoslovakia, France, New Zealand, Sweden, and Canada's province of Ontario. Since the law went into effect in Australia, for example, the accident fatality rate has dropped a dramatic 25%. And in Ontario, highway fatalities dropped 33% during the law's first three months. Perhaps establishment of carefully focused, Federally-supported educational campaigns would pave the way for mandatory belt-use laws. Actually, a central question on highway safety is: How much attention should be focused on the car alone? A few years ago Ford spent millions of dollars building an experimental safety vehicle under a $1 contract with the federal government. The
Engine test. For cleaner, more fuel-efficient operation 34
Environmental Science 8 Technology
car was designed with the goal of protecting "occupant" test mannequins in a barrier crash at 50 mph. Such a car could not be sold-its so-called "protection" features make it far too heavy. Instead. Americans' needs today are for lighter, more fuel-efficient cars, not cars that would resist impacts of military tanks, and costs that would put them out of reach for most people. Other safety suggestions It is time for Washington to turn its attention to factors other than the vehicle in highway safety. For example, imposition of the 55-mph speed limit has shown that significant fatality reductions are achievable by means other than setting vehicle standards. Highway deaths in 1975 were down 18% from those of 1973, the last year before the 55-mph law. Roads should be made safer, with more effective traffic signs and signals, and fewer unnecessary roadside hazards. Traffic law enforcement should be improved, and periodic inspection of cars and trucks should be required. Driver licensing requirements should be strengthened-mainly to get drunk and otherwise irresponsible drivers off the roads. Incidentally, with regard to licensing, there are 75- and 80-year old Americans whose driving ability hasn't been tested since they got their first driver's licenses at the age of 14. Understandably, the government's preoccupation with vehicle changes causes problems. These problems do not stem solely from Washington's telling the industry, in effect, how to design cars. Rather, problems result from Washington's philosophy in establishing vehicle safety standards-a philosophy which is apparently vastly different from that envisioned by the Safety Act, which empowered the NHTSA to set reasonable standards for motor vehicles. Perhaps the NHTSA sometimes loses sight of that word "reasonable." A case in point is Air-brake Standard 121 for large trucks and buses. The auto companies received about 20 rulemaking proposals and changes on this standard from NHTSA, none of which explained why such excessively difficult requirements were necessary. Justification was lacking-especially when buyers of complying trucks would have to pay an additional $1500 to $2000 for the mandated features. It was not until the standard had been in effect for several months that NHTSA relaxed the requirements for stopping distances to a more realistic minimum. Months later, it relaxed the requirements still more. Be that as it may, if NHTSA had initially established the requirements eventually promulgated, there would not have been all the "backing and filling" that caused significant confusion and problems, to say nothing of the engineering effort wasted on a number of designs required to meet the earlier standard. Truck makers and truck buyers would not have had to pay millions of unnecessary dollars to meet original requirements, which the industry and the truckers argued, vainly, were not needed to begin with. Nevertheless, although portions of the air-brake standard are points of argument, it.is re-emphasized that car makers have not disagreed with a// safety requirements from Washington. Actually, they generally have agreed with the overall purpose of safety regulations. They take issue only with regulations or regulations that are believed not Dractical or cost-effectivefrom the customer's standpoint, The automobile in the future The public-and, hopefully, the government-often profit from the industry's exchange of ideas with Washington. Standards achieved through such exchanges usually advance the cause of vehicle safety, while respectingthe genuine needs of the auto makers, vehicle drivers and their passengers, and the American economy. Except for the change to military production in World War 11, the automobile industry is now in the midst of what is probably the most extensive product revamping in its history. New families of smaller, lighter, and more'efficient cars are near at hand. Bringing them to market wiii require an all-out effort involving
new capital investment, new design and engineering, installation of new tools, and the construction or renovation of numerous manufacturing and assembly plants. For instance, for 1977 Ford has introduced a trimmer, sleeker Thunderbird. Later in the ’77 model year, a new “mini,” the Ford Fiesta, which will be smaller than the subcompact Pinto, will be coming out. Moreover, by 1980, standard-size Ford cars will be about two feet shorter and 700 to 800 pounds lighter than their present-day counterparts. Development of alternatives to the internal combustionengine are also in progress. Back in May 1973, a US. Senate subcommittee was given a pledge that Ford Motor Company would build a new type of engine that would give superior fuel economy and good emission control if the federal government would change the statutory NO, standard from 0.4 g/mi to 2.0 g/mi. After all, no prudent business people can invest hundreds of millions of dollars in a product that might not be marketable because it does not comply with a government regulation. Once rational long-term emission standards have been set, the company will know which of its development programs offers the best opportunity to meet those standards with a clean, highmileage engine that represents a good buy for its customers. As conditions change in automobile markets, the products will change, as they have all along. Ford entered the European market 70 years ago, and today is the leading seller of new cars in Europe. It holds this position because it has long had the engineering and management skills to respond to changing customer priorities. The same is true in North America and elsewhere around the world. In the last analysis, people place much importance on the automobile and what it can do for them. They spend much of their
earnings on motor vehicles. To be sure, expenditures for compliance with government regulations and for paying increasing labor and material costs have resulted in higher car prices, but the car still represents an excellent buy. Twenty years ago, it took 6.6 months of the median US. family income to buy the average Ford car. Ten years ago it took 5.1 months of income. Now it takes only 4.7 months. Also, that average domestic new car of today has more standard equipment than those of 10-20 years ago. Further, it offers more optional equipment, and is quieter, cleaner, safer, more comfortable, and substantially more maintenance-free. To acquire objective judgments on the future of the automobile, Ford recently asked an outside research group to study the prospects. The study came up with a key conclusion: that the market for automobiles has not reached the saturation point; in fact, the future growth rate for the car population will exceed the growth rate for the “people” population, with annual sales of new cars doubling by the year 2000. Ford Motor Company believes that the future looks good for the automobile-especially if government regulators eventually fix on cost-effective requirements that give the new car buyer a dollar’s worth of improvements for a dollar spent. Lee A. lacocca is president of Ford Motor Company. He first joined Ford in 1946, and was elected to his present position in December 1970.
Coordinated by JJ Volume 11, Number 1, January 1977
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