Senator RIBICOFF. Why do you think so many foreign cars are being bought in the United States?

Mr. MILLER. Largely I think it is a matter of economy of initial price and economy of operation. What has happened in this country is that our firms quickly reached economies of scale-they grew large fast. And so our car prices in this country came down, and reached sort of a low plateau. In other countries-I am thinking primarily about Western Europe-as they increased their production, they were able to bring down their prices more rapidly than ours, as they acquired our know-how, and actually we exported some of our know-how. Many of the managers of these other plants worked on our payroll, and were hired away from Ford, or from other companies of the Big Three. A serious threat today, Mr. Chairman, exists from the Japanese, because here they are moving up in their economy of scale. Their wages are a fifth of ours. We are particularly disturbed about the Japanese competition because they do not reciprocate and permit us to participate in their market the way they participate in ours.

U.S. PRODUCERS CUT OFF FROM JAPANESE MARKET

Senator RIBICOFF. I was in Japan. I was amazed at the number of automobiles I saw. They were very attractive-looking cars. I understand they are very good cars, too.

Mr. MILLER. The Japanese are tough competitors, sir. We would, however, welcome the chance to compete with them in their markets, which effectively is denied to us now.

Senator RIBICOFF. You mean compete with them in Japan?

Mr. MILLER. Yes, sir. For all practical purposes we are not permitted to own any significant share of a Japanese producer. We would not be permitted to produce there, let us say, through a 100-percent-owned subsidiary, such as they could do in this country.

Senator RIBICOFF. They do not manufacture cars in the United States. They can own subsidiaries here, and we cannot in Japan.

EXHIBIT 28

[Journal of Commerce, Thursday, May 16, 1968]

Statistics Deceiving

U.S. AUTO IMPORTS ARE ANALYZED

By Paul W. Freedman

The widespread impression that the U.S. market was swamped by an "invasion" of imported cars last year is questionable, an analysis of 1967 import statistics reveals.

It is true that 1967 was the first year in which more than a million new passenger cars were brought into this country, nearly double the import figure of 1964 and almost four times that of 1961. It is also true that 1967 was the first year in which the total value of all automotive imports (cars, trucks, buses and parts) soared above $2.5 billion.

The rise from 1966 to 1967 was indeed striking-22.5 per cent in the number of vehicles imported, and 40.5 per cent (a jump of $740 million) in the over-all value of automotive imports. Yet these impressive figures are misleading to the casual observer who is apt to think of European or Japanese brand names when car imports are mentioned.

The imports which account for practically the entire 1967 increase were not manufactured overseas. Most of them were produced just north of the border,

in Canada, by carmakers from Detroit. They took advantage of the Automotive Products Agreement concluded by President Johnson and then Canadian Prime Minister Lester Pearson, in early 1965.

TARIFFS ABOLISHED

Under this accord, tariff duties on cars, trucks, buses and parts were abolished. This free-trade regulation led to a more efficient distribution of manufacturing facilities between the two neighboring countries, and furnished a strong impetus to Canadian production.

Bilateral automotive trade soared in conequence. U.S. exports to Canada, of motor vehicles and parts needed for their assembly, doubled from 1965 to 1966. Between 1965 and 1967, they nearly trebled to $1.56 million. Traffic in the two directions has come to be nicely balanced, with 1967 shipments from Canada near the same level when automotive accessories are included in the statistics. Imports of passenger cars from Canada climbed to 324,000 last year and spurted by 121 per cent in value to $818 million. Truck and bus imports rose 91 per cent in value and 59 per cent in number. Automotive parts imported from Canada were worth $536 million.

MARKET LEADER

Thus, every second dollar paid out last year to purchase an imported passenger car went to American auto makers in Canada, and every third imported car was of Canadian manufacture. The great bulk of imported automotive parts came from Canada. As for the import of trucks, it has become almost a Canadian preserve, with 83 per cent of the money spent for imported trucks flowing north to Canada.

General Motors imports chiefly light-duty Chevrolet trucks from its truckbuilding Canadian factory. The Ford Motor Co. last year brought 80,500 heavyduty and light-duty trucks to this country from its Canadian plants.

Chrysler, on its part, sold Canadian trucks in the weight range from 18,000 to 27,000 pounds in this country.

Were it not for the vast number of cars, trucks and parts manufactured in Canada to U.S. specification by U.S. automakers and then sold here, less talk would have been heard last year of an upsurge in imports, and an invasion by foreign cars.

When Canada is excluded from the computation, the total value of cars, trucks, buses and parts imported in 1967 showed a 4.7 per cent rise. Passenger cars alone showed a 1.3 per cent rise in value, but a 6.2 per cent drop in number, from 764,000 to 717,000.

Imports of non-Canadian trucks and buses, however, show a 35 per cent gain in units and nearly 50 per cent in value. Most popular are Japanese panel trucks and half-ton pickups. Some 11,500 of them were brought in last year, more by half than in 1966.

For customs purposes, the Japanese trucks were valued at $9.7 million. Practically the same value, $9.6 million, was recorded for 300 Belgian buses. These are 46-passenger Silver Eagle motorcoaches built for Continental Trailways by a subsidiary of theirs in St. Michel near Bruges. Trailways sold some of these imported coaches but added most of them to the fleet of more than 1,000 it already uses on its routes.

West Germany is the only other substantial truck and bus exporter to the U.S. Last year, 2,500 units worth $3.3 million were shipped here, a slight decrease in units but a 21 per cent increase in value.

Although the number of imported trucks and buses nearly trebled in 1967, and better than doubled in value, the U.S. trade balance in that field is still a positive one. The margin, of course, has shrunk.

In 1966, imports of trucks and buses totaled $104.4 million while exports stood at $360.5 million. Last year, imports-mainly of Canadian vehicles-soared to $229.5 million while exports, including military vehicles, reached $417 million. Mr. MILLER. They could own manufacturing subsidies here.

Senator RIBICOFF. Whose responsibility is that? Is that the State Department's?

Mr. MILLER. We have discussed this with high officials in the State Department. They are aware of the problem. When we talk about the

threat of increased imports, I think we should keep in mind the threat from the Japanese, which to me will become increasingly important. They get a much higher share in California than nationally. But as they increase their distribution, and if we permit them to sell in here at much lower tariff duties than we have to pay getting our cars into their markets, we are facing a problem that will have an impact, a further serious impact, on our balance of payments.

Senator RIBICOFF. Did the GATT negotiations go toward this problem you have just stated?

Mr. MILLER. In a fashion; yes. But they started from a much higher base. The Japanese cars pay since the first of the year 51⁄2 percent duty. I think duties on ours are in the order of 35 to 40 percent in Japan. The larger size cars that we export to Japan are subject to additional internal taxes that we think are discriminatory.

Senator RIBICOFF. What is the difference from the competitive standpoint as far as the American producer is concerned between a Japanese car and a German car? Is there a difference there?

Mr. MILLER. We have indicated that the German car makers have increased their exports to this country as they have reached higher levels of production that permitted these economies of scale. In Japan they are going up the curve. They have just passed Germany to become the largest automobile manufacturing company outside of the United States, I believe. But additionally, the Japanese wages are lower than Germany's, so that the future threat from Japanese imports is greater than that from Germany or England or any other country.

Senator RIBICOFF. When you complain about this to people in the State Department, what answer do you get?

Mr. MILLER. We receive a cooperative attitude. They recognize the problem. They realize the balance-of-payments problems. There was an official mission, sanctioned by the State Department, accompanied by members of the automobile industry, that did visit Japan last December. Negotiations are continuing and we are hopeful that something favorable will come out of them.

Senator RIBICOFF. How about Jerry Flint's article in the New York Times?

Mr. MILLER. Which part specifically?

FORD ACKNOWLEDGES CONSUMER'S RIGHT TO PRICE DATA

Senator RIBICOFF. The one-where he says that you are planning to merge all these extra costs of luxury items, so that no one is going to quite know what he is paying for-whether he is paying for the carpet in the trunk of the car or the chrome bolts and chains, as against the safety features that will be in there.

Mr. MILLER. I was present this morning, Senator, and heard you ask the question, "Does the public have a right to know the cost of safety?" We would like to give a very definite yes to that. I think that they should know. In our judgment, the way to receive this answer is to rely on the Bureau of Labor Statistics. I was extremely gratified this morning to hear you state your reason, your understanding of the reason for maintaining the confidentiality of our cost data.

Since the public does need to know, however, each of the companies can submit to the Bureau of Labor Statistics this confidential data on the cost of meeting the safety standards. The Bureau of Labor Statistics can put it all together and release it as an average figure that retains confidentiality, and yet puts in the public domain the cost of safety features.

Senator RIBICOFF. In other words, you believe you have a responsibility-you are talking for Ford, and you would feel that all the automobile companies should make their data available to the Bureau of Labor Statistics? They should be able to collate and analyze these figures, and then come up publicly with what these cost?

Mr. MILLER. Yes, sir.

Senator RIBICOFF. Make them public?
Mr. MILLER. Yes, sir.

BLS REACHES INDEPENDENT JUDGMENTS

Senator RIBICOFF. Now, as I understand the Bureau of Labor Statistics-one of the problems is that the automobile industry does not give the Bureau all the information it wants. The Bureau does not have independent investigators, or cannot look at your figures, but takes what you give them. Is that how it works?

Mr. MILLER. That is not so, Mr. Chairman. The Bureau of Labor Statistics sets out ground rules in considerable detail specifying the data we must supply. They are an independent and a professional agency. They do not accept our data; they challenge our data. By and large, they include in their average figure lower amounts than we submit to them, Senator.

Senator RIBICOFF. Would you be willing to be bound by those figures as what you consider the fair prices for safety equipment?

Mr. MILLER. Yes, sir. We have enough confidence in the independence and the integrity of the Bureau of Labor Statistics to accept their judgments. Last fall, as you may recall, when they added up the product value of new safety features, they came out with a wholesale-price figure of $29.65. The shoulder belts added on January 2 were evaluated at $8.20.

Senator RIBICOFF. The shoulder belts, they came up with $10.30. Mr. MILLER. At retail. And the figures that I would like to use the rest of today, unless modified, Mr. Chairman, would be at wholesaleto avoid confusion. It was $8.20 wholesale. And we would accept that as a reasonable, professional, independently-arrived-at number.

Senator RIBICOFF. How about the other 19 standards? This is the shoulder harness. This feeling of yours would apply to all basic safety standards?

Mr. MILLER. Yes, sir. This is the way we think we can meet the right to know that you, the public, and the buyers have. This is the way we think we can meet the test and still maintain confidentiality.

Senator RIBICOFF. Frankly, as far as I am concerned, if something could be brought out voluntarily, I would much rather have it that way than to be done by legislation. You are the first one that came up with that suggestion. I do not know whether the Bureau of Labor Statistics feels they need any legislation to make this possible. I have

not thought of that. But I am very pleased to get your reaction. You think this would meet with the approval of the other manufacturers? Mr. MILLER. I hestitate to speak for them, but I would in this case make an exception and say I hope the answer is yes.

Senator RIBICOFF. Now, the Bureau of Labor Statistics take their aggregate based on certain samples. How many models are there? Mr. MILLER. Five models from Ford Motor Co. And these are, we believe, representative of the 85 models that we produce.

Senator RIBICOFF. In other words, basically if they took five from you, and five from Chrysler, and five from General Motors, and two or three from American, they would be able to average this out fairly well.

Mr. MILLER. Yes, sir. They are very independent, professional, and this is part of their ongoing job because the price of cars is a component of the cost-of-living index-Consumer Price Index-that they publish monthly.

Senator RIBICOFF. So basically you feel this whole problem of the inability to give the price of various items is no bar to providing the information. You can make these figures available.

Mr. MILLER. There was a good deal of confusion this morning, I thought, between what we know and what we are going to tell. And I would like, if they could, to clear that up.

Senator RIBICOFF. Thanks for the breath of fresh air.

ITEM-BY-ITEM COST INFORMATION AVAILABLE

Mr. MILLER. On the question of costs, first let us talk about the costs of the items, these 14,000 items in the car. We have these in great detail, either readily available or we can get them in a hurry. These are items like radiators, hood ornaments-that is in the past-seats, or belts, anything you want to take.

Secondly, on some safety items that fall in the classification of separate pieces, we can do the same thing. This would be seat belts, shoulder belts, windshield defroster, the extra lights that are required by the standards-yes. But on most of the safety standards, meeting the standard requires a change of something that is an integral part of another piece. For example, meeting a standard on the impact absorbing front end, or improving the lights, or stronger seat belt retainersthis is a part of a structure of a bigger component, and there is not any readily available piece cost. Our detailed costing of each screw, down to the third decimal point, does not tell us how much it costs us to improve the steering column to limit intrusion into the passenger compartment. Now, this does not mean safety is not important, because there are lots of important functions of a vehicle that we do not price out either. We do not price out durability; we do not price out reliability; we do not price out low cost of operation; we do not price out ease of handling; we do not price out style. We price out pieces, not functions or objectives.

But because of the importance of safety and because you first asked these questions when I was down here in 1965, we have made a special attempt to break out statistically what the costs of meeting the standards are. This is the information that we have and are willing to make available to the Bureau of Labor Statistics, so they in turn can