Norman F. Ehlers exuded optimism. The vice president of facilities and non-production purchasing for Ford Automotive Operations-a keynote speaker at the Nov. 17 meeting of the Rubber Manufacturers Association-was excited about the reorganization of Ford. He spoke enthusiastically about the excellent global competitive position this gave his company, and the global market itself.
``Eighty percent of the world's people live outside North America, Japan and Western Europe,'' the executive said. ``Yet these people drive only 8 percent of the world's cars ... If we could sell vehicles to only 1 percent of the population of China, that would be 14 million vehicles.''
A tantalizing prospect, indeed, for Ford, any other auto company and any tire or part manufacturer supplying those companies. But if Ehlers saw anything other than profits, he didn't let on in his speech.
He didn't, for example, mention the experience of American Motors Corp., which in 1984 announced a joint-venture project in Beijing to build Jeep Cherokees.
The venture, AMC proclaimed, was the move which would ensure the ailing auto manufacturer's long-term success. Two years later, however, only 300 of a projected 6,000 Cherokees had been built in Beijing, and the following year, AMC ceased to exist.
AMC executives hadn't considered the consequences of doing business in a country with a culture wildly divergent from the West, a bureaucracy as Byzantine as any in the world, widespread currency exchange problems and a largely impoverished populace.
Of course, things have changed somewhat in China; its economy is the fastest-growing in the developing world. But even if the U.S. can sell 14 million cars to China, what of the sudden Chinese demand for gasoline, tires, replacement parts and paving materials, and how will this affect the rest of the world?
China already is a major purchaser of natural rubber, and-combined with a production shortfall-Chinese demand has caused NR prices to nearly double in less than a year. That has had an effect on all U.S. processors of NR. When or if prices will come back down is anyone's guess.
This does not mean that the U.S. shouldn't try to sell vehicles to the Third World. But it does mean that doing so will have consequences, and U.S. companies should be prepared to deal with them.