The chief economist for Ford Motor Company said Friday the current state of the global economy has been problematic for automakers, but also offers students a valuable opportunity to study why domestic and foreign markets are struggling.
Ellen Hughes-Cromwick, who joined Ford in 1996, spoke before a crowd of more than 130 students and faculty in Lorch Hall in a lecture sponsored by the Michigan Economics Society.
Hughes-Cromwick started her presentation by stressing to students that now is a great time to study economics because of the instability of both domestic and foreign markets.
She said a number of economic woes plaguing the U.S.’s economy – the sub-prime mortgage crisis, price inflation and the declining value of the dollar – have created trouble for the ailing automaker and for worldwide markets.
“You couldn’t ask for a worse combination,” she said. “It’s very difficult to have the U.S. slow down and everyone else humming along just fine.”
Hughes-Cromwick said significant price increases for commodities like oil and steel have further hurt Ford. She presented a graph showing an increase in the world’s hot-rolled steel prices – a key component for automobile production. Before 2004, U.S. steel prices were just below $400 per ton, the graph read. This year, that price has reached $760 per ton.
Hughes-Cromwick said this “surge” in prices might have stemmed from steel tariffs imposed by the Bush administration in early 2002.
These tariffs limited the amount of foreign steel that could be imported into the U.S. and served as a “protection umbrella” while the U.S. steel industry restructured, she said.
By the time the government lifted those same tariffs in Dec. 2003, she said, the U.S. steel industry emerged with a significantly increased amount of market power.
Hughes-Cromwick said the leading economic indicators in the U.S., like consumer spending and income levels, suggest current market conditions will worsen in coming months.
But she said there are some promising signs both at home and abroad for Ford, citing a recent increase in vehicle sales in places like China and India, where many people are purchasing vehicles for the first time.
Hughes-Cromwick said the decline in the auto industry has forced manufacturers to become more innovative, for example by developing gasoline-saving technology for cars.
Engineering senior Prateek Chourdia said the presentation was “very decent,” criticizing Hughes-Cromwick for not being more specific about Ford’s future plans.
“She had a lot of uninformed opinions about the auto industry, the industry she works in, and no strong opinions on what really needs to be done by one of the biggest contributors to the U.S. economy – the auto industry,” he said.
LSA freshman Agnes Kucharski said she too wanted to hear more about Ford’s plans.
“I feel like she couldn’t tell us a lot of stuff about Ford specifically, because it’s probably confidential,” she said.
LSA junior Vikrum Vora, the vice president of MES, said the presentation gave a realistic outlook on the nation’s economy.
“We haven’t hit rock bottom yet, which I think is the main point to take home from this,” he said.