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Forging a comeback

Ford CEO Mulally focuses on cutting costs, products

The Detroit News

A little more than three weeks into his tenure as Ford Motor Co.'s president and CEO, Alan Mulally had the job Monday of reporting Ford's worst quarterly financial performance in 14 years. But the former Boeing Co. executive expressed optimism that Ford was on a road to recovery through a combination of cost cuts, improved products and better teamwork.

Mulally spoke Monday with Detroit News automotive writer Bill Vlasic and Business Editor Mark Truby about the situation at Ford and what it will take to turn the company around. Here are some excerpts:

Q : Do you feel you are racing against the clock to turn the company around before you run into a cash shortage.

A : I would sure characterize it as a critical time. This absolutely demands decisive action and a clear focus. I hope what we communicated today really gets at that because the priorities have to be absolutely focusing on restructuring to operate profitably at the lower volumes and the changing model mix. And, at the same time, with a laser focus on accelerating our product development to create the more efficient car and trucks that the customers want. And of course the third part we brought up today is financing both of those transformations. And I think we have good plans in place for all three. But time is of the essence, and focus and team work and everyone pulling together around these elements of the plan is just absolutely going to be critical to our success.

Q : How confident are you that what you have in the pipeline is going to reenergize the consumer?

A : Absolutely. I learned from my last 37 years at Boeing and my first two weeks here you work your way to long-term value creation and prosperity by just continually working your productivity. One of the first things that I've really focused on (was) our product development plan. I am very pleasantly surprised and gratified at the strategic decision that Ford made two years ago or so to focus more on (fuel efficient) vehicles to go with their terrific line up of trucks and SUVs.

My assessment is that we're on a positive track, we've got some great platforms. What I've seen in the backroom looks even better, both in the fuel efficiency and the styling, the quality is improving on all of them. We just can't take our eye off continually focusing on the customer and deliver on that promise.

Q : Not to make a comparison with General Motors, but eight to 10 months ago there were some questions among shareholders if there was the sense of urgency that was needed at GM. Some shareholders have questioned whether or not that sense of urgency is evident at Ford from top to bottom. You sound pretty urgent, but what's your team like, and what's different now that should give shareholders confidence that this isn't going to continue to spiral down?

A : This is a really good question. These business results are clearly unacceptable, not just because they're unacceptable, because this is not a viable business going forward with this kind of business model. I think what I focus on with the team is dealing with this reality and looking through clear glasses on product, our production system and our competitors, and deciding to move decisively to act on this reality.

You know what I've been through over the years at Boeing, I've been through a couple of situations where I've faced the same situation we're facing now, especially after 9/11.

The most important thing we do is restructure the capability of this company to the lower demand. We're doing it aggressively. We're doing it decisively. We've laid out the plan, with all the data we've shown you plus a lot more on how we run the place.

Every Thursday, we're meeting the entire team worldwide to review the plan, the status against the plan, our forecast against the plan and take action to get whatever the forecast says to get back on that plan.

The team's feeling the same sense of urgency that I am. But whether you feel it or not, having to report on progress against the plan every week is pretty compelling from a motivational point of view. You can't escape, you can't hide, we have got to do this plan.

Of course, that gets us to a place where we're profitable, where we continue to invest. And in the meantime, we're making a commitment to operate in a way that we're really really focusing on the product development plan so we come out of this on the other side with products and services that customers really value and the production system delivers it with appropriate costs so we can profitably grow this business.

Q : Do you think there may be other products or brands in the Ford portfolio that are losing money or losing favor with customers that you might be inclined to get rid of?

A : Without commenting on any specific model or brand, we are clearly looking at this product line, and rationalizing it, and streamlining it and making it clear what the value proposition is for each. Being able to profitably grow with those products is absolutely key.

Portfolio management has got to be absolutely at the front end of our product development. That's where everything will start. Do we have the right family? Do we have a plan to grow that family profitability? I can imagine us taking action as we move forward.

Q : You mentioned accountability earlier, did you find a lack of accountability and focus toward one plan when you walked in the door.

A : Yes, and no. What I mean by that is that Ford is what it is, it is the way it has grown up. You guys knew this way before you had me telling you this. Ford is a lot of Fords.

There are Fords in different regions of the world, there are different Fords between cars and trucks and between cars and crossovers. It's just a lot of complexity. Everybody is working hard, working on the right things, but clearly the biggest opportunity that we have in Ford is to pull together as Ford and take what we've been doing individually and get the synergy of all of our efforts across the product line and across the world. There is no reason we can't do this.

Q : Most other automakers have considered their luxury brands as real profit centers, but Ford has had difficulty making money on its luxury brands. What can you do at this point to revitalize your luxury operation or at least get it back to a break even? How does Lincoln fit into that now?

A : With our Premiere Automotive Group, we have some real luxury brands in there.

Clearly, within the last couple of years Ford decided to invest in those brands to return them to viable business models. I've reviewed the plans and we have plans in place to make progress toward that.

As I pointed out today, some of the brands will have some new models coming out as soon as this last quarter we're going to continue to evaluate that and push for even better plans in that segment of the market.

In respect to your specific question about Lincoln and Mercury -- I think that's going to be a very important part of our product strategy, looking at the entire family and deciding what should that family look like?

Q : Do you expect to some kind of strategy to share with shareholders and the public on those brands before the end of the year? What's your timetable?

A : No, we haven't put a timetable on it.

What we have decided is that we're going to really focus in our product development planning, because that's really where it's going to take place. What are we really going to do to invest in each member of the family? That will start with the market, the customers, and our ability to make a reasonable return on the vehicles. I think that will just fall out of our continuing focus on product development and what the capital allocation process will be.

We're committed to them now until we decide something different. We're making investments in all of them as we speak

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Stacy94PGT
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....