Apologies again for my shameless flogging of the Starkman Approved Theory, but I’m waging a one-person campaign to curb corporate PR bullshit emissions and raising awareness of my eponymous maxim is a critical component of my effort. Corporate BS emissions are an environmental and social hazard as they often allow self-proclaimed virtuous companies to do very bad things with abandon.
The Starkman Approved Theory holds there is an inverse relationship between companies and individuals who claim the loftiest morals and ideals and their actual behaviors. Whenever I read about a company engaged in alleged wrongdoing, I immediately research their “Code of Ethics” and without fail I find claims of superior piety. Here’s a sampling of what I’m talking about:
We want to be proud of XX and to know that it enjoys a reputation for fairness and honesty and that it is respected. Gaining such respect is one aim of our advertising and public relations activities, but no matter how effective they may be, XX’s reputation finally depends on its people, on you and me. Let’s keep that reputation high. Gaining such respect is one aim of our advertising and public relations activities, but no matter how effective they may be, XX’s reputation finally depends on its people, on you and me. Let’s keep that reputation high.
Know where I pulled this quote from? It was the intro to Enron’s code of ethics, a company that engaged in a massive fraud so egregious that even the Department of Justice couldn’t look the other way and successfully prosecuted the company’s top executives, rather than the customary lower-level minions who typically take the fall.
Google’s motto was once “Don’t be evil.” That company’s litany of wrongdoings is too extensive to mention here, but the potentially nearly $8 billion privacy violation settlement Google just agreed to is but one example. I’ve previously written about how Centene, a company I regard among the most evil in U.S. healthcare, and American Express, which also has engaged in a myriad of wrongdoings and questionable behaviors, professed to adhere to the highest ethical standards.
But in the annals of corporate BS, Ford Motor Co. is in a league of its own.
I urge you to click on this link to Ford’s website, so you can see for yourself how the company professes to be “All In On America.” It’s a recurring message I’ve read Ford’s spinmeisters and executives claiming in the media.
“We’re Ford, and we’re all-in on America,” Chris Smith, Ford’s chief government affairs officer and the company’s point person with Congress, told the Wall Street Journal.
I’d expect that a company claiming to be all in on America would have virtually all its manufacturing plants in the U.S. Ford proudly manufactures the electric version of its iconic Mustang in Mexico, where it also manufactures its red-hot Maverick pickup and its off-road oriented Bronco Sport crossover. Ford CEO Jim Farley has signaled he might move more of Ford’s operations outside the U.S., where half the company’s workforce is already located.
In November 2022, Ford unveiled the opening of its “new global technology and business center” on the outskirts of Mexico City, the largest engineering facility in Latin America. It was reported that more than 70 percent of the Bronco Sport’s engineering took place in Mexico, and nine Mexican engineers worked on instrument panels for the 2022 Ford Expedition and 2022 Ford F-150 Lightning electric pickup.
“Ford Mexico’s Engineering Center has evolved so much in recent years that we have become a fundamental arm for the company’s global projects,” said Marcos Pérez, director Product Development at Ford of Mexico. “For many years, we thought that Mexican talent was mainly related to manufacturing, but today, we have shown that we are equally or more valuable (emphasis mine) than the design engineers in countries like Germany, Australia or the United States.”
While Ford boasts that it employs more UAW workers than any automaker, when the origins of the parts it uses and other critical considerations are factored in, the company hardly bleeds red, white, and blue. The Ford F-150 pickup, the company’s cash cow, ranks 66 on Cars.com rankings of most American-made vehicles. The top 10 positions are occupied by Tesla (1-4), Honda/Acura (4, 6-10) and VW’s electric ID.4 (No. 5).
Ford’s best showing on the most American-made vehicles rankings was its electric F-150 Lightning pickup, which ranked at 38, despite being manufactured in Detroit.
Still, being based in Dearborn outside Detroit and recording annual revenues of more than $170 billion, one might expect that a company that’s “All In On America” would be a proud and meaningful contributor to the U.S. Treasury.
Think again.
An organization called Americans For Tax Fairness (AFTF) a few weeks ago released a list of U.S. companies that paid its top executives more than they paid in taxes. Wouldn’t you know it, but Ford ranked on AFTF’s “Terrible Ten” list of U.S. corporate deadbeats.
Ford Motor
5-year Executive Pay: $355 million
5-year Corporate U.S. Profit: $7.8 billion
5-year Federal Income Tax: $121 million (1.5%)
Ford loves to tout its “unbreakable connection” with America, but when tax day comes the company always seems to be missing in action. Even though 70% of the company’s assets are located in the U.S. and nearly two-thirds of its revenue is domestic, less than half of their pre-tax income is ascribed to the United States. Partly as a result of these accounting maneuvers, Ford paid a meager 1.5% effective U.S. corporate tax rate for 2018-22, far less than the vast majority of its workers and customers pay.
Ford paid its executives three times more than it chipped in to Uncle Sam over the five years studied.
The disparity in what Ford pays its top executives and what it contributes to the U.S. Treasury has likely increased given the company’s compensation disclosures last week. While I naively believed that CEO Farley was in danger of getting axed for his failed EV promises and his inability to improve Ford’s shoddy manufacturing, the board showered him with a 26% raise and increased the value of his compensation to $26.4 million from $21 million.
Farley’s total 2023 compensation amounted to 312 times the median annual total compensation of all Ford employees, up from 281 times in 2022.
Farley’s compensation also included $611,174 for personal use of private aircraft, which Ford said was required for security reasons. That claim is also debatable. Stellantis CEO Carlos Tavares, who oversees a bigger and more profitable company, not only flies commercial, the Wall Street Journal reported he sometimes flies budget airlines to keep costs down. Transportation Secretary Pete Buttigieg also insists he flies commercial whenever possible.
Regardless, AFTF only measured the paltry taxes Ford pays, not the billions the company mooches from U.S. taxpayers. According to Good Jobs First, an organization opposed to government handouts, Ford has sponged $7.7 billion from federal, state, and local governments, trailing only Boeing and Intel.
Not included in Good Jobs’ ranking is the below market $9.2 billion loan from the Department of Energy Ford received last year to finance construction of a massive EV facility in Tennessee and two battery plants in Kentucky. That loan was from a DOE fund earmarked for innovative projects that wouldn’t qualify for traditional financing. Chris Smith, the Ford lobbyist, previously worked at the DOE and was named an advisor to the agency’s fund just weeks before Ford received its sweetheart loan. Steve Croley, Ford’s general counsel, also worked at the DOE as well as serving in the Obama White House.
The loan likely saves Ford tens, if not hundreds, of millions in interest payment costs, which in turned allowed it to buy back its stock and raise its dividend payouts to shareholders. A risk often cited for Ford’s stock is that the company doesn’t generate enough surplus cash from its operations to cover its dividend payouts.
It’s not clear if Good Jobs First’s table was updated to include the $1.7 billion in subsidies and grants Michigan Gov. Gretchen Whitmer last year awarded Ford to tear up fertile farmland and century old trees to build a lithium battery plant in partnership with a China-based company. The Center for Economic Accountability, which also opposes government handouts, ranked Whitmer’s Ford giveaway the biggest taxpayer rip off of 2023.
Ford’s partnership with a China-based company also is inconsistent for a company that claims it is all in on America. Many critics, including GM CEO Mary Barra, believe that Ford’s partnership was designed to circumvent the restrictions and intent of the Inflation Reduction Act that provides significant tax rebates for electric vehicles manufactured in North America. Barra reportedly warned Congressional leaders that if all automakers pursued the same dodgy arrangements as Ford, it would cement China’s control of global EV manufacturing.
Some political leaders, including former CIA Director and Defense Secretary Leon Panetta, have warned that China will use its Michigan operations for espionage and other purposes.
Ford’s Mexican-made electric Mustangs for years qualified for $7,500 tax rebates, as did some of its electric Lightnings, likely resulting in billions more in lost tax revenue. Ford also has benefited from the billions the Biden Administration has shelled out to build a national charging network.
By any measure, Ford can’t legitimately argue it’s “All In On America.” The dishonest claim is symptomatic of a culture responsible for knowingly selling vehicles with faulty transmissions and Super Duty trucks with roofs that allegedly didn’t meet internal rollover standards, allegedly botched air bag repairs, allegedly lying in its advertising, and becoming far and away the industry leader for safety recalls.
What’s alarming is that most Americans have become so inured to corporate wrongdoing that they no longer are alarmed or care. Most people reading this post will simply shrug and say, “All U.S. companies are fundamentally dishonest.”
The national apathy is why there is so much corporate wrongdoing. Companies today knowingly engage in dishonest behavior because they know they can get away with it.
Ford’s business model is predicated on this knowledge.
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