This fact was reinforced in my mind earlier this month when I visited the Dearborn Rotary Club to listen to John Sagan, treasurer of Ford Motor Company, give an update on his company’s struggle to survive and prosper.

Mr. Sagan was impressive. He did not try to paint a pretty picture when there wasn’t one. He said pointedly: “1982 was a lousy year.”

Yet, with the red ink still gushing, he expressed total optimism about the future of his company. Why? How could Ford look to the future on such a positive note after such brutal financial reports over the past couple of years?

The reason, as outlined by Mr. Sagan, was that the bad economy and fierce competition had forced Ford to shed a complacency that was born from years of success and profit. Doing “business as usual” no longer was good enough.

The company reacted to adversity with a massive effort to cut overhead and improve the quality and performance of its products. In other words, Ford is committed to working smarter and becoming more efficient. And, because of this, the company will be more competitive in the world market.

I could not help but think of the ironic parallel between Ford Motor Company and the City of Dearborn as I listened to Mr. Sagan’s remarks.

We are all aware that Dearborn established a worldwide reputation for providing fine and unique public services during the three decades following the outbreak of World War II. Year in and year out, it was “business as usual” as the city leadership buoyed by seemingly endless resources, sought new ways to expand services even further.

There never was any thought about cutting overhead. Each year, from 1942 to 1978 the number of employees on the city payroll increased. And the homeowners did not seem to mind since they were enjoying one of the world’s great bargains. …

… Then, in the early 1970s, city government began to feel painful tremors caused by years of doing business as usual. The era of inflation was upon us.

Every homeowner knows what inflation can do to a budget…a style of living. Inflation has the same impact on city government, a thousand fold when you think in terms of fuel and utility costs.

Our dilemma was heightened by skyrocketing personnel costs which outstripped inflation... and the tremendous increases in costs for medical and pension benefits.

All time high interest rates stifled investments by the private sector, directly affecting the city's property tax base and the jobs of many residents charged with paying taxes. …

It really doesn't matter that almost all causes of city government's financial problems are beyond local control. What matters most is how we are dealing with this adversity.

Well, today I would like Ford, our highest taxpayer (37.2 percent of all city and school taxes) and all other Dearborn businessmen and homeowners to know that we are matching the company’s effort. We have applied and are applying new and innovative methods to deliver services at less cost.

We recognize that there really is not much difference when you talk of efficiency in government or quality in automobiles. It’s some-thing we must aspire to whether the economy is good or not.

Since taking office five years ago, this administration has eliminated or combined nine departments. We’ve gone from 22 to 13. We have reduced the total number of full-time employees more than 25 percent, from over 1,300 to the current 940.

…and be aware that these economies will have a direct affect on the level of public services. Some “nice to have” programs will go by the wayside as we concentrate on maintaining top quality for basic services. …

Much of the credit for Dearborn’s successes in reducing overhead must be shared with Dearborn citizens. Every time we have asked for help, concerned citizens have responded.

Last year, at about this time, we faced a $3-million hole in our budget. Aware that using so-called “one-time money” to solve an immediate problem would lead Dearborn down the same disastrous path followed by Lansing, I opted to form a citizen task force to examine our financial situation.

Chaired by J. Ralph Wagner and comprised of business leaders, management experts, professionals, labor leaders and concerned homeowners, this hard-working group delved into every facet of our operation. As might be expected, this impartial review of city government produced some remarkably workable suggestions.

I am proud to report that we have been able to implement or initiate all of the committee’s major recommendations – to the great benefit and relief of local taxpayers.

Chief among these was the elimination of what they termed “nice to have” programs, accelerating our contractual services effort and making more city services programs and facilities self-sustaining.

Typical of the “nice to have” programs cut is the plowing of snow from sidewalks... the program had reached the point where it simply cost too much, especially when weighed in comparison to other street maintenance efforts. …

Camp Dearborn perhaps is the best example of our effort to make programs and services more self sustaining. In 1982, we initiated a series of personnel and service cutbacks designed to soften an annual tax supported deficit of better than $400,000. …

Perhaps the chief lesson we have learned through the past eight years of financial adversity is the need to permanently discard the natural tendency of governmental agencies to staff for the peak periods. ...

What we need to do and what we have to do is to determine staff levels when the need is the lowest. Then, we must develop a system of covering emergency periods through judicious use of overtime and contracting.

Another major area in which we are utilizing the finding and recommendations of a citizen task force is planning and development. …

First, we have to recognize and live with the fact that Dearborn is an aging city. Millions are needed annually to maintain our roads repair bridges, replace sidewalks, repair city buildings and replace sewer and water lines. …

… We completed our seventh swimming pool bottom replacement – at a cost of more than what it took to build the entire pool in the 1950’s. …

Of course, the aging process affects many other areas of city operation, particularly in personnel costs. For example, because we are an older city, we now have a situation where we have seven persons drawing pension benefits for every 10 employees that we have on the payroll. That’s expensive. Also, we have to live with the fact that our medical insurance costs zoomed from $2.1 million in 1982 to $4.8 million in 1985. …

You will note that in outlining major capital improvement projects there was very little mention of new projects. That’s because, by financial necessity, we have been forced to give top priority to protecting what we already have. There’s precious little left for other purposes.

And that’s why we have to move our planning effort into the 20^th century – that is, if we want to leave our children a 21^st century Dearborn of which they can be proud.

We have the tools at hand to help offset the burden of maintaining the old while planning for the new. …

Despite Michigan’s dire economy, Dearborn remains a prime commercial area in the minds of investors. …

Obviously, I share Mr. Sagan’s optimism about the future. There is much hard work to be done and we certainly need an upturn in the economy. But when all the factors are added up, the future of Dearborn, Michigan is indeed, very bright.

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