Ford May Shift Some Car Parts Work Abroad : Firm Pressures U.S. to Ease Fuel Economy Rules

From Reuters

Ford Motor Co. may move some parts-making operations overseas unless the government agrees to lower car fuel-economy standards, a senior Ford executive said Monday.

Louis Ross, executive vice-president for the company's North American car and truck operations, said the decision to move may come by year-end unless so-called corporate average fuel economy requirements are lowered for cars built in the United States.

"It will come up (before Ford executives) in September," Ross told a press conference. "It seems to be the most efficient way to meet the standards."

Both Ford and General Motors have acknowledged that they will not meet the government-mandated 27.5 miles per gallon fleet average for their domestic-built cars this year.

Companies that miss the standards face heavy fines unless they use credits for exceeding the standards in previous years.

Proposes Relaxation

Federal authorities have proposed a one-year relaxation of the standards in response to petitions from Ford and General Motors, but Ford has said it wants long-term relief to aid in its future business planning.

By moving some production overseas, Ford would be able to exclude its less fuel-efficient large cars from calculations to determine the company's compliance with fuel-economy targets for American-built cars. This would give a higher weighting to smaller, more fuel-efficient cars when average compliance standards are calculated.

Ross said Ford might turn to Mexico and other foreign sources for up to 30% of the content of its Ford Crown Victoria and Mercury Grand Marquis large cars. He said other large cars, such as the Lincoln Town Car and Continental models, could later be included in the foreign-sourcing scheme.

"If a customer wants to buy a large car basically produced in North America--the very symbol of the automobile in this country--they will have a difficult time of it," Ross said.

Reluctant to Shift

"As you can imagine, we would not be happy about taking jobs out of a U.S. plant and shifting them to another country."

He said the components that could be shifted to foreign sites could range from engines to windshield glass and plastic parts.

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