When the recession devastated the auto industry in 2008-2009, Ford Motor Co. was the only Detroit-based car company to avoid Chapter 11 bankruptcy protection. With the industry in full recovery mode and the North American market bouncing back and poised to return to pre-recession levels, Ford is reaping big profits, gaining market share and holding on to top spot in the Canadian sales rankings. Joe Hinrichs, president of The Americas, is charged with keeping up the momentum with a steady flow of new and redesigned vehicles, deciding when and if Ford needs to add new assembly plants in and managing growth in the emerging markets of South America.
There are forecasts that U.S. sales will hit a record 18 million vehicles before the end of the decade. Are you that optimistic?
There are scenarios with certain assumptions laid in that you can get to 18 million units in the U.S. It comes down to some key things: What’s the GDP growth rate going to be and will it get back to the 3- 4-per-cent range instead of the 2-per-cent range? What are the millennials going to do when it comes to buying vehicles?
People were holding on to their vehicles longer through the recession. Do we get back to a more historical trend? Those kinds of things can get you to an 18 million unit industry in the U.S. We don’t see that as kind of the base call today, but it certainly is a scenario that could unfold.
If U.S. sales rise to 18 million from about 15.5 million this year, does Ford have enough assembly capacity?
It’s a hard question to answer because we have global capacity, we have regional capacity in North America and so depending on where we have available capacity and what those products are we can supplement capacity if we need to for a while or we can build new capacity. So the devil’s in the details.
It’s a fun subject to work on. It’s a lot better than the other way.
We’re going to be very careful not to repeat what happened in the past and that is have the same model being built at four or five different places. That’s where you easily get into a situation where you have excess capacity that you don’t need.
Where do negotiations stand with the federal and Ontario governments on Ford’s proposal to redevelop the Oakville, Ont., plant to build vehicles there for global markets?
We are having good discussions with the government. They are not finalized yet. Once we get everything worked out with our business [case] and our partners in the government, then at the right time we’ll have some news to share.
Are you getting close to a point where you need to get an answer?
For our planning purposes we have time lines we want to meet. We’re still on those time lines.
How competitive is Canada as an auto producing nation with the dollar near par?
When you look at Canada certainly you have a good, well-trained work force. We have history. We have a good relationship with the governments both in Ontario and in Ottawa and we have an industry in North America that’s continuing to grow.
So we need capacity. But when you look at Canada where it sits globally, it’s one of the highest-cost manufacturing locations with the Canadian dollar where it is today.
That’s a challenge that we all face for the future. Having said that, we’re committed to having a Canadian manufacturing footprint. We have roughly 10 per cent of our manufacturing in Canada for vehicles, which is roughly the same as our sales mix in North America. That, on a relative basis will probably sustain itself over time.
What does Canada need to do to make itself more competitive?
I think we need to look at what’s been going on around the world including in the United States ... look at what the costs are for the next generation of workers coming into the auto industry.
We need government support – that by the way, happens everywhere in the world.
We need to look for unique Canadian solutions, but at the same time move us forward to an overall more competitive manufacturing cost.
Ford recently announced the closing of a plant in Australia, also burdened by a high currency in a competitive market. How does Canada differ?
Australia is isolated with an industry of about 1 million units. Logistically it is not a good location.
The combination of the high Australian dollar and isolated location doesn’t make it a good export base and not a big enough total [sales] volume industry to support manufacturing.
The Canadian situation is a little different than Australia because there is enough volume in the total North American industry to support high-volume plants, which makes up for some of those other issues.
Is Ford seeing any impact in the North American market from the fall in the value of the Japanese yen?
There can be arguments made about cause and effect, but Nissan lowered all their prices and we have seen significant increased incentives on the Prius lineup. So you look for product that’s built in Japan, that’s the ones we’re seeing it on.
How does Ford react to that?
You have to be competitive in the marketplace, which means you have to work on your own cost structure.
At the same time, you make an argument that currencies should be freely traded and not manipulated or affected by government intervention. We continue to make that argument.
Why does Ford oppose the inclusion of Japan in the Trans Pacific Trade talks?
The reason for that is we don’t believe that the Japanese auto industry has restructured to the level that the North American auto industry has. We took out all that capacity.
They have a lot of excess capacity they haven’t taken out. Where does it want to go? It can’t really go to China. It can’t go to Europe right now because Europe’s situation is difficult and the North American market is growing.
We don’t think lowering duties further for Japan makes sense for the American or Canadian auto industry.
Title: Executive vice-president Ford Motor Co. and president, The Americas
Personal: Born in Columbus, Ohio; 47 years old. Married with three children.
Education: Bachelor’s degree in electrical engineering, University of Dayton (Ohio); MBA, Harvard University.
* Spent 10 years working for General Motors, including a job as plant manager.
* President of Ford Motor Co. of Canada Ltd. from January, 2005, to November, 2005.
* Vice-president of manufacturing, Ford North America, and later group vice-president of global manufacturing and labour affairs.
* Appointed group vice-president and president of Asia Pacific Africa for Ford in December, 2009, heading the company’s operations in one of the world’s fastest growing automotive markets.
* Became president, The Americas on Dec. 1, 2012.