FT: Ford Cost Cuts Limit Military Hybrid Development

London April 8, 2003; Jeremy Grant writing for in Cost-cutting pressure has forced Ford Motor Company to pull out of a key project with the US army to develop a new generation of military vehicles that run on alternative sources of energy.

The development is a blow to Ford's efforts to share some of the cost of research and development on fuel-efficient technologies, such as fuel cells and hybrid electric vehicles.

Detroit's "big three" carmakers - Ford, General Motors and Chrysler, the US unit of Germany's DaimlerChrysler - have developed hybrid vehicles powered by a combination of petrol and electricity as consumers in the US become more interested in more environmentally friendly vehicles.

Ford plans to launch a hybrid version of its best-selling Escape sport utility vehicle later this year.

The carmakers have recently stepped up collaboration with the US army on developing such technologies to keep research and development costs down.

By working with civilian carmakers, the military hopes to be able to take advantage of Detroit's ability to efficiently mass-produce vehicles.

Such collaboration, which has reached levels not seen since the second world war, has taken on fresh urgency for the military because of the high cost of transporting fuel to Iraq and Afghanistan. Fuel being used in tanks and armoured vehicles in Iraq is costing about $150 a gallon.

Ford has withdrawn from the Commercially Based Tactical Truck (Combatt) programme, established in 1998 to develop a replacement for the army's ageing Humvee. Ford's role in the project was to develop high-strength steel and a hydraulic power system that would help reduce a vehicle's fuel consumption by using a hydraulically-driven motor.

The carmaker's decision to withdraw stems largely from Ford's efforts to accelerate a $9bn restructuring that aims to restore the company to annual profitability by mid-decade.

Part of the effort has seen Ford re-assign engineers to product development cost-cutting projects, leaving fewer available for other activities.

Ford's withdrawal from Combatt prompted the US government to stop funding a related project in which Ford was the leading participant. That project, known as Impact, looked at reducing vehicle weight and other fuel-saving technologies.

Sarah Tatchio, a Ford spokeswoman, said: "We didn't feel there was a strong enough business case for that [Combatt] technology at this time to be able to pursue it. We don't see it as a priority." However, she said Ford was working on two new proposals for the NAC on hybrid and fuel cell technology.