The automotive industry has a keen interest in and a unique perspective on a safe and efficient highway system: good roads are vital for both the production and use of our products.
The automotive industry sells "mobility." Some years ago, a former GM chairman characterized the role of the industry in this way: "We may think we sell cars and trucks. But what we are really selling is mobility. Our cars and trucks must be well designed and well built, but if they cannot be used efficiently and enjoyably, they will be of no more value than a canoe in the desert."
While our customers need good roads for the safe and efficient use of our products, we as manufacturers must also have good roads to build and distribute our products. Global economic competition has changed the way we conduct every aspect of our business and that includes how we use our highways. U.S. maps may show that Interstate 95 runs from Maine to Florida and that Interstate 80 goes from New York to San Francisco. However, for America's car companies, these roads extend directly from our 276 manufacturing facilities to Europe, to Asia and beyond.
In order to compete in our global economy, AAMA member companies have instituted quality control and lean manufacturing processes to reduce costs and increase productivity. These improvements have resulted in a significant change in the auto industry's material delivery network. Auto manufacturers now ship the majority of their parts and components just-in-time to meet very precise production schedules. The data dramatically illustrate this change: in a decade, just-in-time deliveries have increased, on average, from 25% to 95% of all deliveries.
For example, at one of our member companies, 32 plants operate on a just-in-time inventory system. That means that throughout every single working day, about 2,500 trucks travel more than one million miles on the nation's highways delivering parts and components to those 32 plants just at the point they re needed in the production process.
At another one of our member companies, one typical plant receives and unloads an average of 120 truckloads of component parts and supplies daily. The plant then ships approximately 480 vehicles (one half of its daily production) directly to dealers using 60 haulaway trucks. An additional 480 vehicles leave the plant site loaded on multilevel rail cars destined to rail unloading ramps located in major market areas. Upon arrival, the rail cars are unloaded and the 480 vehicles are delivered to dealers by another 60 haulaway trucks.
Finally, another manufacturer uses a scheduled delivery process to assure that parts and materials are delivered to its plants in just the right quantity, at the right time. Trucks must pick up parts at suppliers within a 30 minute window and deliver them to the manufacturer's plant under the same time constraints. The objective is to have no more than two hours inventory on the line at any one time.
It is clear that any disruption in highway service, such as congestion or bad roads, will cause disruption in the manufacturing cycle, resulting in lost production and sales. As Henry Ford put it: "Ordinarily, money put into raw materials or into finished stock is thought of as live money. It is money in the business, it is true, but having a stock of raw materials or finished goods in excess of requirements is WASTE which, like every other waste, turns up in high prices and low wages."
Just-in-time was a goal in the 1980's, but in the 1990's, it is a necessity in order to be internationally competitive.
Mr. Chairman, I would like now to address some specific issues related to ISTEA. One of the most crucial responsibilities for Congress in the reauthorization process is to provide adequate funding for the highway program. There are sufficient funds in the Highway Trust Fund but they have not been spent in the past several years, to the detriment of our roads and bridges. I know the Subcommittee is well aware of this problem. In fact, all of you signed the recent letter to Budget Committee Chairman Domenici urging the committee to provide a $6 billion increase in highway funding for FY 1997. AAMA's members strongly support and appreciate your efforts.
As a global industry, the automobile industry also believes that future U.S. competitiveness must address global transportation trends. With the national commitment in some major overseas markets to advanced surface transportation modes and to Intelligent Transportation Systems programs, continued U.S. development of innovative highway transportation approaches is important in assuring the long-term viability of the U.S. transportation system. In this context, the automobile industry supports development of Intelligent Transportation Systems, or ITS, a mix of both vehicle and highway technologies which are designed to assist all roadway users in the smooth movement of traffic in congested areas. ITS can help improve air quality, increase safety for highway users, as well as help reduce fuel use.
America's car companies believe that maintaining and improving our nation's highway system must be one of our national priorities if we are to compete internationally in the 21st century. We know you will work toward that same goal as you authorize ISTEA this year.