A Sit Down With Ford CEO Alan Mulally
Tuesday, December 16, 2008SUSIE GHARIB: President Bush said today he's studying all options to keep the nation's big three auto makers in business. But he said an auto industry bailout is not imminent. Meanwhile, Ford Motor is weighing the costs and benefits of taking a government loan. Diane Eastabrook met with CEO Alan Mulally at Ford's product development center in Dearborn, Michigan today and began by asking what sets Ford apart from rivals Chrysler and General Motors.
ALAN MULALLY, PRESIDENT & CEO, FORD MOTOR CO.: First of all we're very far along on our restructuring or our transformation of Ford, especially with our new products. Secondly we have been also restructuring our production system. And thirdly we went for financing a couple years ago to make sure we had enough liquidity to be able to do our transformation, so we believe we have sufficient liquidity to make it through this recession and keep going on our plan.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: But how long could you go before you need some sort of help if market conditions stay the way they are?
MULALLY: Right now with everything that we see, if the market stays the way it is and it doesn't degrade further, then we have sufficient liquidity. The only reason that we were asking to be par of applying for a line of credit or a bridge loan would be if and only if the economy dramatically degraded.
EASTABROOK: You think the economy is going to improve in the next six to eight months or the next year?
MULALLY: Our best forecast right now with everything that we know with the economists is that it's going to be a little bit worse than 2008 in 2009 and then start to gradually recover in 2010 and we're prepared to manage through that.
EASTABROOK: If the government does offer some sort of a bailout within the next month or so, will you look for a bridge loan?
MULALLY: Well, what we are applying for is a bridge loan and our plan is not to access that money going forward and we think we have sufficient liquidity right now.
EASTABROOK: If there's a bailout and we keep hearing about union concessions and if General Motors or Chrysler would be able to get those concessions, what would you do in turn with the UAW if you're not part of the bailout?
MULALLY: We have made tremendous progress, as you know, with the UAW to improve our competitiveness over all the agreements over the last few years plus even between the agreements, so we'll continue to work with the UAW to enhance our competitiveness every quarter forever.
EASTABROOK: You've got some products here today we'd like to take a look at.
MULALLY: This is so fun.
EASTABROOK: And this is the Fusion hybrid.
MULALLY: This is the Fusion hybrid and this will be available for our customers in the spring of next year. And this is just a phenomenal vehicle and when you look at not only the quality being equal to or better than the best in the world, but the fuel economy on this vehicle is six miles per gallon better than the Toyota Camry hybrid. So this is going to be a really, really popular vehicle.
EASTABROOK: Now, obviously, if a consumer buys a hybrid versus a regular Fusion, there's going to be a premium to be paid.
MULALLY: You bet.
EASTABROOK: We're seeing much lower gas prices now. Are consumers going to want to pay that premium for a hybrid?
MULALLY: I think that over time we have a point of view that as the economy comes back, that clearly the demand far exceeds the production of energy and so we believe that over time we will all be paying a little more for energy. So I think these vehicles that we're making, both the hybrids and also our fuel efficient internal combustion engines as well as the electric vehicles will be very, very much appreciated by the consumer.
EASTABROOK: How do you factor gas prices into your overall picture going forward?
MULALLY: The most important thing I think Diane is to have a point of view about the future. And we think that we're going to keep moving beyond petroleum and so our main focus is to improve the internal combustion engine every year, to drive the fuel efficiency up and to CO2s down, but also over time to add more and more electrification of the vehicles. You can imagine getting to a future where you have an electrical system where you're generating electricity clean and now you're using the electricity clean and I think that's a statement of energy independence and energy security that we all would love to get to.
EASTABROOK: Tell us about this car here. This is something.
MULALLY: This is a Fiesta and the Fiesta is probably one of the best starts for a new vehicle. This is sized a little bit smaller than the Fusion and we just launched it in Europe. It's also being launched in Asia Pacific and China. It's doing great. There are few requirements that are unique to the United States that we're incorporating and this will be available for the United States consumers in 2010.
EASTABROOK: What modifications have to be made to this car before it can be sold in the U.S.?
MULALLY: In the United States, we have some unique requirements on fuel efficiency and also on safety and they're different than the rest of the world. So we're incorporating those now and the consumers are going to get a chance to appreciate this fabulous vehicle.
EASTABROOK: Do consumers want to buy small cars? We've been hearing with gas prices being higher that they are looking to smaller cars. But in the long run, is this something that they're going to want to buy?
MULALLY: I sure think so. Of course the Ford plan is to have just absolutely the best in class vehicles no matter what the size. When they're small, medium and large just like our new truck that just was named truck of the year, so whether they're small, medium and large, a car or utility like we are over here with the Escape or a truck, we're going to be there with the best vehicles in each class. With respect to smaller vehicles, I think that all of us are going to take sustainability and energy independence and security. I think that's going to be even a bigger part of our agenda and what we care about. So I think that just well done, high quality smaller vehicles are going to be a very important market segment for us.
EASTABROOK: Mr. Mulally, thank you so much for joining us.
MULALLY: You're welcome. Thank you.
EASTABROOK: My guest has been Ford CEO Alan Mulally.
