Automotive News - November 17, 2008 - (Page 22) 22 • NOVEMBER 17, 2008 TA L K F R O M T H E T O P Mulally: Small cars will drive Ford’s future EO Alan Mulally has steered a steady course for Ford Motor Co. since joining the company in September 2006. Quickly mortgaging assets to build cash reserves, he has focused on integrating Ford’s global operations and building a strong lineup of small and midsized cars in the United States. Mulally continues to stick to the plan, rejecting talk of alliances or mergers to concentrate on the automaker’s core brand, which he refers to as “our Ford.” Mulally spoke with Editorial Director Peter Brown, Editor David Sedgwick and Staff Reporter Amy Wilson. Can your turnaround plan work if we see sales as low as 11 million or 12 million units industrywide in 2009? Yes, because the key element of our plan is to always restructure to the real demand. So every month we have been taking action during this economic slowdown. And so we’ll keep taking that action incrementally. The most important thing we do is get back to profitability by sizing ourselves to the real demand. Speaking of the move to smaller vehicles, we’ve seen the price of gasoline as low as about $2.50 per gallon. Does that change your strategy to move to small cars? We’re even more committed to our strategy because I think that over time the fuel prices are going to be relatively higher compared with where they were a couple of years ago. At the most fundamental level, we have a mismatch between the demand worldwide and the capacity or the production. So the prices are going to stay relatively higher even though they’re down right now. A business challenge is that as buyers go toward smaller cars, transaction prices per vehicle have dropped. Do you just have to live in a world where vehicles on average are going to be less expensive on the pricing end? Clearly the larger vehicles have commanded larger prices — or customers have valued them more in the past. But they’re also valuing smaller vehicles that are more fuel-efficient with higher quality, better comfort and easier to drive. But clearly in the United States over the near term, it takes awhile to fill in that loss of the revenue on the larger vehicles with the full portfolio of cars. Over time, our plan is to grow in the United States in addition to around the world and make money on them and make a reasonable return. That is one of the reasons why the transformation agreement with the UAW is such an important piece. With what we’ve done on this last agreement, we can now make a reasonable return on the smaller vehicles. Are you afraid that the sales rate for October is going to keep up through 2009? We were talking 11 million or 12 million units. I’m not so much worried about the exact number, but with everything we see, we think that 2009 is clearly not going to be better than 2008. I Alan Mulally What’s the danger of Ford being in a situation where it has to consider Chapter 11? In the automobile industry, where the consumers have all these great choices, it just doesn’t make sense. People are not going to buy cars from bankrupt companies when they have great choices. You remember we had Ford 2000, but we didn’t have a way of implementing it. And now we have a leadership team you know — (Group Vice President, Marketing and Communications, Jim) Farley’s now joined (Group Vice President, Global Product Development) Derrick (Kuzak), and they’re working marketing and product development. (Group Vice President, Global Manufacturing and Labor Affairs) Joe Hinrichs is down on the manufacturing side and just driving these global plans by really strong business units with the Americas and Asia-Pacific and Europe to drive the results and support the customer in each segment. So we’ve come a long way fast. You’ve done dramatically better on supplier surveys. What did you do? Two things. One, we made a decision inside Ford that it was absolutely critical to take suppliers to a partnership. And that means sharing data with them, including them early in the process, getting their ideas, protecting their intellectual capital but including them as partners. And the second part is we acted on it. What can we look for in the next year or two in improved supplier collaboration? Just more of the same. The suppliers will have even more system responsibility. They’ll be even closer to us. There will be longer-term relationships, more sharing of the data, so that we can plan our production accordingly. But the biggest thing, I think, will be at the front end on the design and the creation of the vehicles, the content of the vehicles, the simplification of the vehicles, plus the normal enabling technology. The F series is coming out with a huge segment shift and in a massive recession — at least in the auto industry. How does it play into your profit projections, relative to what it was when you were selling 900,000 of them? We think that that market segment is going to be less, but it’s still going to be substantial. There’s never a bad time to have a new truck, and the response we’re getting is phenomenal. The only reason we delayed a little bit was to sell down the previous year’s model because we had the extra inventory. You have talked about the potential of a lightweight, fuel-efficient pickup. I’ve heard since that you might no longer be pursuing that. We have a number of great choices. One is we could take weight out of the 150 and make a lightweight 150. We could also make another vehicle the size of the Ranger. But we also have a vehicle that’s based on the T6 platform that’s around the world, which is a Ranger size that is fabulous that we’re just bringing out. So another thing is we could make that here. Is that under active consideration? All of these. I don’t know exactly where we are and what we have said outside, but those are the things that we are evaluating. We could do any one of those three. c GLENN TRIEST autonews.com/mulally2008talk Go to our Web site to see video excerpts from Alan Mulally’s interview. think everything we see is that people are forecasting around 13.5 to 14 for the total year for 2008. Light vehicles? Light. And we don’t see that being much better or being better than that in 2009. Because I think the new news over this last six months is that everybody believes that this is going to be a little deeper and a little longer than what we all thought nine months ago. So that’s the world that we are sizing our business for and putting our business plan against, but it doesn’t change anything about our plan. Because the most important thing is that we size to the real demand in the near term, and the changing model mix and we continue to invest in the future. And the third part was the financing. It’s turning out very fortuitous that we obtained the financing a year and a half ago, and we were anticipating a slowdown. As you remember, because I think at the time, we needed about $17 billion, and I think we raised about $23.5 billion. What’s the outlook for Volvo and Mazda in an era when cash is of such paramount importance? Our strategy for Volvo is to continue to improve their business performance, and you’re seeing a lot of that action there. We just asked Stephen Odell (former COO of Ford of Europe) to take over. And he is taking the necessary action on the revenue side, the branding side, the fit and finish, the quality of the premium Volvo brand and also working the cost and the productivity. So our priority for Volvo is to improve the business performance of Volvo. And we have a mutually beneficial relationship with Mazda. Are there other asset sales that you could consider to shore up your cash position? We’ll continue to divest the ACH (Automotive Components Holdings) assets per the plan. But it’s a pretty tough environment for moving assets, although they’re good assets. It also makes you appreciate the implementation of the plan before we got this place, right? We’ve come a long way to focus on our Ford. No, there aren’t any other big ones. Why did you say no to overtures from GM and Chrysler earlier this year? Let’s see, we believe more than ever in our plan to integrate Ford around the world as our strategy. Do you remember when somebody asked me, “Don’t you need to merge with somebody?” and I said, “Absolutely.” And everybody in the whole room got out their pen. So I said, “Absolutely, we are going to merge and integrate Ford.” http://www.autonews.com/mulally2008talk
Table of Contents Feed for the Digital Edition of Automotive News - November 17, 2008 Automotive News - November 17, 2008 Automotive News - November 17, 2008 - (Page Intro) Automotive News - November 17, 2008 - (Page BB1) Automotive News - November 17, 2008 - (Page BB2) Automotive News - November 17, 2008 - (Page 1) Automotive News - November 17, 2008 - (Page 2) Automotive News - November 17, 2008 - (Page 3) Automotive News - November 17, 2008 - (Page 4) Automotive News - November 17, 2008 - (Page 5) Automotive News - November 17, 2008 - (Page 6) Automotive News - November 17, 2008 - (Page 7) Automotive News - November 17, 2008 - (Page 8) Automotive News - November 17, 2008 - (Page 9) Automotive News - November 17, 2008 - (Page 10) Automotive News - November 17, 2008 - (Page 11) Automotive News - November 17, 2008 - (Page 12) Automotive News - November 17, 2008 - (Page 13) Automotive News - November 17, 2008 - (Page 14) Automotive News - November 17, 2008 - (Page 14a) Automotive News - November 17, 2008 - (Page 14b) Automotive News - November 17, 2008 - (Page 15) Automotive News - November 17, 2008 - (Page 16) Automotive News - November 17, 2008 - (Page 17) Automotive News - November 17, 2008 - (Page 18) Automotive News - November 17, 2008 - (Page 19) Automotive News - November 17, 2008 - (Page 20) Automotive News - November 17, 2008 - (Page 21) Automotive News - November 17, 2008 - (Page 22) Automotive News - November 17, 2008 - (Page 23) Automotive News - November 17, 2008 - (Page 24) Automotive News - November 17, 2008 - (Page 25) Automotive News - November 17, 2008 - (Page 26) Automotive News - November 17, 2008 - (Page 26a) Automotive News - November 17, 2008 - (Page 26b) Automotive News - November 17, 2008 - (Page 27) Automotive News - November 17, 2008 - (Page 28) Automotive News - November 17, 2008 - (Page 29) Automotive News - November 17, 2008 - (Page 30) Automotive News - November 17, 2008 - (Page 31) Automotive News - November 17, 2008 - (Page 32) Automotive News - November 17, 2008 - (Page 33) Automotive News - November 17, 2008 - (Page 34) Automotive News - November 17, 2008 - (Page 35) Automotive News - November 17, 2008 - (Page 36) Automotive News - November 17, 2008 - (Page 37) Automotive News - November 17, 2008 - (Page 38) Automotive News - November 17, 2008 - (Page 39) Automotive News - November 17, 2008 - (Page 40)
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.