Ford Inspired by Israel, Advocates Self-Help
•
In Providing Automotive Parts for Industry

(Continued from Page 1)
ponents to European manu-
facturers. Ford would wel-
come the opportunity to do
business on this basis not
only in Israel but throughout
the area."
Outlining t h e industrial
needs, defining the U.S. role,
expressing opposition to the
Arab boyCott, Ford made the
following declarations in his
speech:
"There is no substitute, in
today's world markets, for
economies of scale. To sell
at competitive prices requires
substantial investment in cap-
ital equipment which can be
operated profitably only at
high volume. This creates a
particularly difficult problem
for a small country, such as
Israel. In a large country,
the home market provides a
base for high-volume produc-
tion. A small country can af-
ford to invest in mass produc-
tion equipment only if it can
develop substantial export
sales very quickly.
"I can best illustrate this
problem and some of the po-
tential solutions by referring
to the industry I know best.
As you may know, one rea-
son for my visit to Israel at
this time is to participate in
the launching of Ford com-
mercial vehicle assembly at
the Nazareth plant of Auto-
motive Industries Limited,
where Ford Escort cars have
been assembled since 1968.
"This step makes sense for
us, for Israel and for the Is-
raeli businessmen who - own
and operate the Nazareth
plant and distribute Ford ve-
hicles in Israel. Together
with other steps which I un-
derstand Israel Automobile
Corporation is taking to ex-
pand its distribution and ser-
vice activities, it will permit
Ford vehicles to play a larger
role in the expansion of Is-
rael's transportation system
and the growth of its econ-
omy.
"We are, of course, pleased
to have this opportunity. I
should add, however, that it
is not a step toward the de-
velopment of a complete au-
tomotive manufacturing com-
plex in Israel. The home mar-
ket is not nearly large enough
to justify the massive invest-
ments that would be required,
and external markets are al-
ready crowded with efficient,
established manufacturers.
"In similar circumstances,
some countries have forced
the development of a small-
scale national automotive in-
dustry by effectively banning
importation of vehicles and
components. The result, how
ever, is to raise the price and
slow the growth of motor ve-
hicle transportation, with ad-
verse effects on the whole
economy.
"A much better way for
small countries to participate
in the growth of motor ve-
hicle manufacturing is to spe-
cialize in large-scale produc-
tion of particular components
for export to established ve-
hicle producers abroad. One
advantage of this approach
is that it permits local manu-
facturers to sidestep the la-
borious process of penetrat-
ing foreign er:;
provi{, - z2n imme-
diate outlet for ip:luirte pro-
duction.
"In the Asia-Pacific area,

.

'4 Friday, June 1, 1973

—

Ford is currently developing
plans to expand motor ve-
hicle manufacturing on, the
basis of what we call the
complementation coneep t.
This involves the establish-
ment of manufacturing plants
in a number of associated
countries which, together,
constitute a viable market.
No one country would pro-
duce all the components of a
complete vehicle, but each
country would produce par-
ticular components in suffici-
ent volume to serve the needs
of the entire area.
"This concept could prove
applicable to other areas of
the world as well. In the
Middle East, with its prox-
imity and economic ties to
Europe, the expansion of mo-
tor vehicle manufacturing can
probaly best be accomplished
through integration with the
established European motor
vehicle industry. Much needs
to be done to achieve eco-
nomies of scale and compe-
titive prices along with com-
petitive quality. But there is
no reason why Israel and
other Middle Eastern coun-
tries could not eventually be-
come efficient suppliers of
automotive components to
European manufacturers.
Ford would welcome the op-
portunity to do business on
this basis not only in Israel
but throughout the area.
"The integration of the
Middle East into the Euro-
pean industrial economy will,
of course, be facilitated if
the European Community is
extended to include the en-
tire Mediterranean basin
through one form of associa-
tion or another. This process
is already under way. As you
know, a preferential trade
agreement with Israel has
been in effect for several
years. Similar agreements
have now been negotiated be-
tween the EEC and Egypt
and Lebanon, and I under-
stand that Syria, Jordan and
Kuwait have also indicated
an interest in concluding
trade agreements.
"It would be impossible to
exaggerate the economic ben-
efits that would flow to all
concerned as a result of the
development of close econom-
ic ties among the countries
of the Middle East, and be-
tween the Middle East and
Europe. Needless to say,
these potential benefits will
not be fully realized as long
as the conflict between Is-
rael and her neighbors re-
mains unsettled.
"I have no particular ex-
pertness in Middle Eastern
affairs, but it does seem to
me that the opportunities for
peace have improved.
"Insofar as the great pow-
ers affect developments in
the Middle East, the im-
provement of relations be-
tween the United States and
the Soviet Union is a favor-
able omen. Other faNiorable
signs include the willingness
of some Arab nations to as-
sociate themselves with an
economic union which is also
associated with Israel, the
ability of Israel and Jordan
to live side by side in peace,
if not in friendship, and even
the survival, however shaky
it may be, of the UN cease
fire.
"If the opportunity for

HENRY FORD II

peace is greater, so, it seems
to me, is the need for peace.
"The absence of peace
shuts Israel out of the mar-
kets of its neighbors at a
time when Israel needs to
find outlets for its industries,
and when the rising oil reve-
nues of its neighbors are cre-
ating greater need for indus-
trial products and greater
purchasing power than ever
before.
"The absence of neace and
the Arab boycott force for-
eign companies such as Ford
to choose between doing bus-
iness with Israel, and doing
business with certain Arab
countries, when we would
rather contribute to the ec-
onomic development of both
sides. We are more than
willing to do business with
any country, but we are un-
willing to refrain from doing
business with one country
as a prerequisite to doing
business with others—particu-
larly when no strategic inter-
est is at stake. The fact re-
mains, however, that the ab-
sence of peace interferes
with -trade not only between
the countries of the Middle
East, but also between the
Middle East and other na-
tions, to the detriment of the
entire region.
"It seems to me that the
Middle East is approaching
a critical turning point as a
result of the growing world-
wide shortage of petroleum.
Rising petroleum sales and
prices are making Israel's
oil-rich neighbors wealthy.
Israel's neighbors also know
that Israel's friends must
have access to Middle East-
ern oil on reasonable terms.
How this wealth and knowl-
edge may be used, I cannot
say, but it does seem evident
that these developments will
tend to shift the balance of
power to Israel's disadvan-
tage.
"On the other hand, Israel
is also growing as a result of
its economic expansion, its
growing self-sufficiency in de-
fense production and the in-
creasing sophistication of its
weapon systems. The continu-
ing ability of Israel to defend
its security cannot be ques-
tioned.
"If peace remains elusive,
however, both sides will al-
most certainly feel com-
pelled to devote a major por-
tion of their growing strength
to military preparation. In
these circumstances, a re-
newal of hostilities on a larg-
er and more destructive scale
would be a constant peril.
"Peace in the Middle East
would not only avoid these
consequences, but w o ul d
bring enormous positive ben-
efits. Israel's technical, sci-
entific and managerial lead-
THE DETROIT JEWISH NEWS ership and its modern indus-

trial economy could provide opment Tuesday night, Fi- with Israeli industry. The
a natural complement to the nance Minister Pinhas Sapir conference opened in Jerusa-
vast manpower reserves and inaugurated Israel's second lem Monday night and split
the growing financial re- o:I refinery at Ashdod. The into 11 committees Tuesday
sources of the Arab world. If plant will have a 4,500,000- for working sessions in Tel
the nations of the Middle ton capacity ner annum Aviv.
East can find a way to com- which, when added to the
So far at the sessions there
promise their differences, 6,500,000-ton capacity of the has been criticism of the red
make peace and work togeth- Haifa Oil Refineries, will en- tape that hampers invest-
er, they will have an oppor- able Israel to export a sur- ments in Israel and a diver-
tunity to raise the standard plus of refined petroleum sity of opinion among leading
of living and improve the products. Israel's domestic Israeli bankers on how for-
quality of life for all their consumption at present is eign investments can best be
7,250,000 tons per annum.
people.
channeled.
Sapir said the opening of
"I am, of course, well
At a meeting of the finance
aware of the many futile ef- the new facility indicated the committee chaired by Sapir,
forts that have already been momentum of Israel's indus- Ernest Yaffe, a director P'
made to achieve peace in the trial growth. About 65 per Bank Leumi, suggested ti
Middle East. I am equally cent of the equipment at the investments be made througn
aware of the enormous dif- new refinery was made in the Israeli Stock Exchange.
ferences that remain to be Israel. Sapir said that some
Jacob Levinson, of Bank
settled before peace with se- IL 660,000,000 would be re- Hapoalim, proposed the crea-
quired in the next decade for ton of a trust fund to sell
curity can be achieved.
"I can only repeat my im- the• expansion of the Haifa shares to Israeli and foreign
pression that the need for and Ashdod refineries.
investors, thus limiting the
peace, and the opportunities
His remarks were ad- risks of the latter. Benno
for peace, have never been dressed to many of the 1,200 Guetter, of the Israel Dis-
greater. I earnestly hope that foreign businessmen current- count Bank, suggested that
new initiatives toward peace ly attending the prime minis- investments be channeled to
will be forthcoming in the ter's third economic confer- specific projects, supervised
near future. It has now be- ence here which is aimed at in Israel. "It is no good to
come obvious that neither bringing foreign capital and supply funds and control
side can possibly achieve— know-how into partnership
(Continued on Page 35)
either through war or through
negotiation—all that it has
previously regarded as es-
sential. If this fact is recog
nized by both sides, peace
may finally be possible.
"Whatever happens, I am
confident that Israel will sur-
vive and make progress in the
future as it has in the past.
But I shall continue to hope
that Israel and its neighbors
will first make peace, and
then begin to link themselves
together in peaceful com-
merce.
"During the 25 years of Is-
rael's existence, the nations
of Western Europe have de-
veloped economic bonds so
firm that a renewal of hostil-
ities among themselves would
be unthinkable. During the
next 25 years, the nations of
the Middle East can do the
same."
Ford slipped in his
hotel room and broke his arm
Tuesday. But the accident
did not interfere with his
schedule of meetings with Is-
raeli industralists and other
activities. Ford was at the
Caesarea Amphitheater Tues-
day night with his left arm in
a plaster cast.
He heard speeches by
Premier Golda Meir and
Marc Moshevich, president
of the Manufacturers Associ-
ation.
Mrs. Meir said Israel was
satisfied with its industrial
development to date, that
the country has reached a
stage when its exports are in-
creasing without the benefit
of Zionist sentiments. Israel's
products are sought on the
world markets for their own
merits, she said.
Moshevich lashed out at,
critics of Israel's industrial
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