NEW YORK ? At his first news conference as CEO of Ford, Alan Mulally was asked how he could run such a complex company with no experience in the car business.
The former Boeing executive responded that cars, which have around 10,000 parts, are indeed very sophisticated. Then he smiled and noted that a jumbo jet has 4 million parts ? and it flies.
If there were doubters when Mulally joined Ford in 2006, there aren't many now. The year he took over, the company lost $17 billion. Last year, it made $6.6 billion, its biggest profit in 11 years. Within weeks of arriving, Mulally took out a huge loan and began pushing through a restructuring that continued even as the recession sent rivals General Motors and Chrysler into bankruptcy.
Behind his sunny demeanor and fuzzy red sweater vests, the 66-year-old Kansan had the steel to rein in the bureaucracy and infighting at Ford. He promoted managers who could work together and fired those who couldn't. He shed money- losing brands like Jaguar, Volvo and Mercury. He closed six U.S. plants, cut thousands of jobs and saved billions in engineering costs by developing fewer cars for the global market, such as the Fiesta and Focus, instead of unique models for each region.
Mulally still faces big challenges. Ford is struggling to overhaul Lincoln, which was the nation's top-selling luxury brand a decade ago but fell victim to underfunding and more stylish rivals. Its sales in China, the world's biggest car market, are about one-sixth of GM's. And slow growth in the U.S. is hindering a comeback in car sales.
Mulally spoke with the Associated Press about the economy, the car industry and his management style. Excerpts appear below, edited for length and clarity.
Q: What are your biggest worries about the economy?
A: We're generally on the right track, but it is going to be a slower recovery than we've ever had before. The private sector leading us out of this recession is the most important thing.
Q: President Obama called you when he was on Martha's Vineyard. Did he ask for advice on the economy?
A: What he wanted to know, because we interact with so many customers, (was) how consumers (are) feeling about everything. They're looking for both near-term action on jobs and the economy, but they're also looking for longer-term solutions on our debt, on our budget deficits, our trade imbalances. They're looking for more clarity on where the United States is going, so that they can plan their near-term actions against the long term.
Q: Why aren't companies using their cash stockpiles to hire more?
A: The consumer has pulled back. We're ready with the products and services that people really do want, but we're going to match our production of goods and services, cars and trucks, to what the real demand is. We're very disciplined about that. The worst thing you could do is make more than what the market wants, which our industry has done sometimes in the past. The demand is still very, very low.
Q: Is it a permanent trend that people want more fuel-efficient cars?
A: I sure think so. Most of us in the United States and around the world know that we are going to pay more for energy going forward. There will be ups and downs but, in general, it is more expensive to find oil and bring it to market than ever before. So fuel efficiency has just continued to move as the number one consideration. It doesn't make any difference whether it's a new Ford Fiesta or an F-150, the customers want the most fuel-efficient vehicle.
Q: Take us through how, inside your company, that changes things.
A: If you look at Ford historically in the United States, we were about 70 percent trucks and bigger SUVs and made 30 percent cars. Around the world, the percentage is the opposite way. But in the United States, we are moving to a tremendously balanced portfolio of small, medium and large vehicles. Over the next few years, we'll be at the place where nearly 60 percent of our vehicles are small- or medium-sized cars, and about 40 percent will be the larger SUVs and trucks. It really is a tremendous transformation of Ford.
Source: http://www.kansas.com/2011/09/24/2030135/ceo-fuel-efficiency-a-top-consideration.html
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