NOBODY LIKES to gloat over others' misfortune, even among the cut-throat top echelons of the international car industry. But for a fleeting few seconds, Ford's boss, Alan Mulally, struggles to resist the temptation, writes ANDREW CLARKin Dearborn, Michigan
Alone among Detroit’s “big three” motor companies, Ford is standing upright without a financial crutch from the US government.
Chrysler has slumped into bankruptcy and General Motors, once the world’s biggest carmaker, is limping in the direction of the insolvency courts.
“Everybody, everybody – I mean all the survey data, everybody you talk to knows Ford is in a different place,” says Mulally in an interview at Ford’s headquarters. “That they’re managing their business as a business and they’re on the way back to profitability, which is again different from most of our competitors.”
Ford, a 106-year-old survivor of the globalised motoring industry, lost $14.6 billion (€10.7 billion) last year. But bizarrely, given the cataclysmic condition of the automotive industry, that means the firm – famed for its blue oval logo – is having a “good” economic crisis.
The company was in the red by a relatively modest $1.4 billion (€1.02 billion) in the first quarter of the year – compared with GM’s eye-watering $6 billion (€4.4 billion) deficit and a mammoth 766 billion Japanese yen (€5.7 billion) loss at Japan’s Toyota.
Mulally says: “Did you see our $1.4 billion compared to Toyota and GM? Gee, well, I mean. . . Write that stuff down!”
Adorned with model cars and signed University of Kansas basketballs, Mulally’s desk is on the 12th floor of Ford’s corporate tower in Dearborn, a blue-collar car-building town 27km west of Detroit, where every third building seems to be named after Henry Ford.
Mulally doesn’t have to look far to see his competition. Through his window is a panoramic view of Detroit’s industrial skyline where the cylindrical Renaissance Center, which houses GM, towers over all its neighbours.
An affable midwesterner, Mulally (63) was a 37-year veteran executive at the aircraft maker Boeing when he was tapped in 2006 to revive Ford’s fortunes. He is cheerfully blasé about the financial tornado sweeping through the motor industry.
“I’ve been through geopolitical and economic cycles,” he says. “For 39 years, I’ve been doing this. I’ve just seen it all – I’ve seen the bird flu, I’ve seen the Asian economic meltdown, Sars, 9/11, economic cycles.”
With the support of chairman Bill Ford, who is the great-grandson of Ford’s founder, Mulally has streamlined the once sprawling company.
Shortly after his arrival, he sold luxury operations such as Land Rover, Jaguar and Aston Martin to focus squarely on the Ford name. He inherited 97 vehicle models – and he has cut the list to fewer than 20, which he insists on rattling off: “The Ka, the Fiesta, the Focus, the Fusion, the Taurus. . .”
Mulally clipped back production at Ford’s factories, ending a culture where output remained steady, irrespective of the market’s ebbs and flows: “That was a big deal because that was a new thing for the automobile industry. We used to keep production up and discount the vehicles to below their residual values.”
Crucially, Mulally raised $23 billion (€16.8 billion) in late 2006 by mortgaging almost everything the company owned – from vehicle stocks to factories and even the corporate logo. That money has tided Ford through the recession and Mulally is not shy of boasting of his foresight.
“I know how inter-dependent the world is,” he says. “If [the economy] was going to slow down in the US, I knew that it was going to slow down around the world, which is exactly what has happened.”
Restructuring has been painful. Ford has shed more than 50,000 jobs since 2005 and has shut 17 plants. Mulally is bluntly unapologetic, describing himself as a “business person” who can both build and shrink companies, as needed.
“You have to look at the world the way it really is and then deal with it. I’ve done that a number of times, both at Boeing and here. Where you really get in trouble is if the market is dropping and the economy’s slowing down and you don’t take action.”
Mulally is insistent that Ford can return to a break-even point in 2011, without the assistance of any public money.
But as Ford stutters ahead while its rivals go into reverse, he faces a delicate balancing act. GM and Chrysler are losing customers as car buyers worry about the trustworthiness of warranties from companies that are teetering on the edge of a financial abyss.
Ford is gaining ground – its share of the US retail market, excluding fleet buyers, has risen in six of the past seven months and was 13.2 per cent in April, compared with 12.2 per cent a year earlier.
But it would neither be tactful nor politically savvy for Ford to lure custom aggressively from its weakened rivals while the Obama administration desperately uses taxpayers’ funds to keep them alive.
Mulally stoically insists that Ford’s rising share is simply down to the standard of its cars, “the best in quality, the best in fuel efficiency, the best in safety and the best value”. Asked whether Ford is gaining from its rivals’ misfortune, he clams up: “I’m not going to talk about GM and Chrysler. It’s just not my place.”
Ford’s European operation is playing its part. Aided by a new version of the Fiesta, Ford recently moved from third to second among Europe’s biggest car sellers, behind Volkswagen, and it is the market leader in Britain.
European favourites, including the Fiesta and the Focus, are soon to appear in US showrooms to satisfy demand among American motorists for smaller cars.
Last week, Ford announced that it was re-tooling a Detroit factory from heavy-duty trucks to make a hybrid electric version of the Focus.
When Mulally switched from Boeing to Ford, he faced scepticism about whether he was a “car guy”. Mulally, who has a private pilot’s licence, even had to change his signature, which used to end with a little drawing of an aircraft as a flourish.
The motor industry’s political antennae aren’t always well tuned. In November, Mulally and his counterparts at GM and Chrysler were hauled over the coals in Congress for flying to Washington in corporate jets to beg for government aid for Detroit.
On a second visit to the capital, the trio were humbled into making the 615-mile (989km) trip in eco-friendly cars. So did he enjoy the long drive?
"I think that's why they invented aeroplanes," replies Mulally, dryly. "Being an aeroplane guy, I'd just as easy fly." – GuardianService