JOHN FLESHER - Associated Press - 05/30/09

MACKINAC ISLAND, Mich. -- Economic prosperity during the next century will require preserving a strong manufacturing base while using technology that protects the environment, Ford Motor Co. Chairman Bill Ford Jr. said Friday.

Ford said his company was leading the way and going head-to-head with foreign automakers in producing fuel-efficient vehicles, but acknowledged some consumers still regard American cars as gas guzzlers.

"I think our quality, our fuel economy and our safety story is real and that will get out in time," he said in an interview. "Sometimes it's frustrating because there isn't necessarily a recognition, but it will come because once you deliver the goods, word gets out."

On another issue, Ford said his company was continuing to consider dealership reductions but did not need to match deep cuts announced by rivals Chrysler LLC -- which is undergoing bankruptcy reorganization -- and General Motors Corp., expected to announce a bankruptcy filing Monday.

"We're working with our dealers to rationalize our dealer network," Ford said. "This is not a new thing for us. We're not putting a specific number out here. ... I don't think it's necessarily the same number that our competition's going for."

GM has announced plans to end its relationship with about 1,100 dealers, while Chrysler wants to terminate 789 dealer franchises.

Ford and Lincoln Mercury have been downsizing their network in recent years, reducing their dealership total from 4,440 in 2004 to 3,787 at the end of last year -- a 15 percent cut. The company has said it plans another 1 to 2 percent reduction this year.

Speaking to Michigan business and political leaders during the Detroit Regional Chamber's annual policy conference, Ford said protecting the environment and boosting the economy -- which many have regarded as competing goals -- "are melding into one."

After decades of experimentation with alternative fuels such as ethanol, compressed natural gas and hydrogen, "today our green technology is moving out of the lab and into showroom," he said.

Ford is doubling production of hybrid electric vehicles while stepping up efforts to bring battery operated vehicles and plug-in hybrids to market, he said.

"We are committed to the commercialization of battery electric vehicles as a critical element for improving U.S. energy security and reducing greenhouse emissions," Ford said.

He praised President Barack Obama for proposing national emission limits for cars and trucks and average mileage requirements of 35.5 miles per gallon by 2016.

"We could not have lived with a patchwork of state-by-state regulations," Ford said. "A national framework is going to give us greater clarity, certainty and flexibility to achieve our nation's goals."

But persuading customers to buy green vehicles remains a challenge, especially with seesawing gasoline prices, he said. "If gas is at $2 they make one decision and if it's $5 it will be another. ... We have to have a policy that starts to put some price certainty into the marketplace."

Ronald Medford, acting deputy administrator of the National Highway Transportation Safety Administration, said he was optimistic that automakers could make vehicles more fuel-efficient without sacrificing safety.

"It won't be cheap," he said. "But the social benefits that come from these improvements are dramatic."