Automotive News - January 28, 2008 - (Page 37) JANUARY 28, 2008 • 37 If turnaround needs it, Mulally will cut again Amy Wilson awilson@crain.com DETROIT — If the United States sinks into a recession, Ford Motor Co. is prepared to make new cost cuts to keep its turnaround on track, CEO Alan Mulally says. “If demand goes down substantially more than what we are predicting, then we’ll continue to restructure our business to that new demand,” Mulally said last week during a presentation here to the Automotive News World Congress. Even in the event of further restructuring, Ford will continue to follow the basics of its turnaround plan and continue to invest in new products, Mulally said. After arranging a $23.4 billion financing package in late 2006, Ford is in “good shape liquiditywise,” he said. The automaker borrowed that money because it expected to burn through cash reserves as it absorbed operating losses and funded plant closings, employee buyouts and other restructuring actions. Mulally said he was pleased to hear last week’s announcement of a cut in the federal funds rate by the Federal Reserve. “It’s going to be a positive, but I’d also like to continue dialogue to work on other pieces of the economy because there’s just a lot of elements that can be worked,” Mulally said. “But a move decisively like this, I think, is a very positive thing for all of us.” He added that he’s glad that government Alan Mulally says Ford will watch the economy carefully and, if needed, “move decisively and not build up extra inventory.” Alan Mulally Title: CEO Company: Ford Main point: Ford has a plan to turn itself around, but it is prepared for further cost-cutting if necessary. Quote: “If demand goes down substantially more than what we are predicting, then we’ll continue to restructure our business to that new demand.” JOE WILSSENS leaders also are considering an economic stimulus package. Whether Ford needs to close manufacturing plants beyond the number already announced depends on whether consumer demand and industry volume drop significantly. “We’re going to watch it carefully like we have been and move decisively and not build up extra inventory,” Mulally said. In his presentation, he noted how crucial it is for Ford to track market changes. “It’s just so important in business to always be looking through clear glasses — looking at the world and the way it is, the way it’s going and have a point of view and then responding,” Mulally said. “The worst thing is to not look (at reality) and not have a point of view about the future and then not have a strategy and plan that delivers profitable growth in that environment.” In other comments, Mulally said: While Ford plans to increase its small-car offerings, it won’t get into the tiny-car segment that’s drawn recent attention with the introduction of the $2,500 Nano by Indian manufacturer Tata Motors. “I think the smallest we’ll operate in is the sub-B and B,” Mulally said. Ford already partic- ipates in those segments with the Ka and Fiesta, both sold in Europe. “We’ll be in about 85 percent of the total market with the vehicle lineup we have,” he said. Ford has a next-generation Taurus coming “in the next year or so,” and “it’s what we should have had originally,” Mulally said. “It’s just fabulous.” Mulally wouldn’t comment further about the timing or features of the car. Ford suppliers and industry analysts have said Ford is working on a re-engineered and restyled Taurus for the 2010 model year. Ford desperately wants to improve its relationship with suppliers. Mulally pointed out that Ford now surpasses General Motors as the worst automaker to work with, according to supplier surveys. He sarcastically called being ranked worst “one of the highlights” of his career. “I was really proud to be the worst person you guys deal with,” he said. “It’s something I can’t even imagine with my background.” In his previous career running Boeing’s commercial-airplane unit, Mulally was known for the improvements he made in the company’s purchasing network. At Ford, he said, the improvement in supplier relations will come as the company and the industry make progress on trimming overcapacity and reducing vehicle complexity. Said Mulally: “I’m going to do everything I can to move up that list.” c Mark McNabb: “It’s a new world economy and, with it, a rising global demand for luxury products and experiences.” Continental CEO: Our diversification worked Rick Kranz rkranz@crain.com JOE WILSSENS Infiniti to extend global reach Mary Connelly mconnelly@crain.com Mark McNabb Title: Global Infiniti corporate vice president Company: Nissan Main point: Infiniti will expand globally as worldwide demand for luxury products rises. Quote: “We expect that Infiniti will continue to experience doubledigit sales increases well into the future on a worldwide basis.” graphic reach will extend to 93 percent of global luxury markets,” he said. In contrast, in 2006 Infiniti was represented in 43 percent of world luxury markets, he said. A new generation of younger luxury buyers is changing the market, McNabb said. “We foresee a continuing transition of the buyer base in the luxury mar- DETROIT — Infiniti will expand globally to meet rising worldwide demand for luxury products. “We expect that Infiniti will continue to experience double-digit sales increases well into the future on a worldwide basis,” Mark McNabb, Nissan North America’s marketing chief, told the Automotive News World Congress. Currently, 240 Infiniti dealers work in 15 countries in Asia, Europe and the Middle East, McNabb said. Infiniti will compete in western Europe by the last quarter of 2008, he said. “It’s a new world economy and, with it, a rising global demand for luxury products and experiences,” said McNabb, who oversees marketing and sales for Nissan and Infiniti divisions. By the end of 2008, Infiniti’s “geo- ket over the next five years, a transition that presents many opportunities for Infiniti,” he said. McNabb said young buyers are becoming major players in three segments: luxury crossovers, luxury-utility and near-luxury. By 2012, buyers born between 1965 and 1994 will account for 35 to 40 percent of sales in the three categories, he said. Performance, style and technology are pivotal in reaching young luxury buyers, McNabb said. Infiniti will keep products and powertrains fresh to meet global demand. But not every product is suitable for every market, he said. “You can’t build long-term demand by taking shortcuts in customer service or product quality,” McNabb said. “The other critical requirement as we expand into new markets is an enlarged product and powertrain range.” c DETROIT — Continental Automotive is positioned well for what its North American CEO calls changing times that require innovative products. William Kozyra, CEO of Continental Automotive Systems of North America, said diverse acquisitions over the past decade were the result of identifying three trends in the mid1990s that would be popular this decade and next: safety, sustainability and connectivity. “Call it Continental’s ‘age of turbulence,’ ” Kozyra told the Automotive News World Congress last week. “We knew that if we wanted to stay in business another 100 years, we couldn’t just ride on our tire business. We needed to reshape, redefine and re-emerge with diverse product offerings. “For us, the time was right. The technology was right.” Kozyra said the result is that “while many of our competitors and other suppliers have lost money or gone bankrupt, today we have profit margins in excess of 10 percent.” In 1998, Continental’s automotive business totaled about $750 million, Kozyra said. “Within 10 years, our sales are more than $24 billion. That’s a thirtyfold jump.” He said nearly every vehicle on the road has some kind of Continental product. Those products include tires, chassis components, safety systems, telematics and powertrain components. Continental expects its powertrain technology to gain popularity by reducing emissions and improving fuel economy through diesel engines, hy- JOE WILSSENS William Kozyra: Continental’s “age of turbulence” has paid off. William Kozyra Title: CEO Company: Continental North America Main point: Continental reinvented itself and emerged successfully with diverse product offerings. Quote: “We knew that if we wanted to stay in business another 100 years, we couldn’t just ride on our tire business.” brids and battery-powered vehicles. In the coming years, Kozyra also expects growth in such areas as car-tocar and car-to-infrastructure communication designed to reduce accidents. Such systems can warn drivers of road hazards such as another car or slippery roads ahead. The system also can warn of approaching emergency vehicles. c
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