Ford president and CEO Alan Mulally today told British business leaders how he saved Ford from the worst recession for a generation. He also outlined how the Ford range will shrink from 97 models sold globally to just 20.
Mulally gave the keynote speech to the Confederation of British Industry in London, where business bigwigs heard how Ford became the only Detroit car maker not to collapse into bankruptcy. The address was titled Ford’s Renaissance.
Just 20 Ford models globally? That’s some cut!
Indeed. It’s all part of the One Ford plan kicked off by Mulally soon after his appointment in 2006. ‘We decided to focus on the Ford brand and divest Aston Martin, Jaguar, Land Rover and Volvo and dilute our stake in Mazda,’ he said. ‘Not because they weren’t great brands but because we had to focus on Ford that was 85% of our business.’
Mulally said the new Fiesta achieved 60% parts commonality around the globe – while the new 2011 Focus managed 80%.
‘When I arrived we had 97 different nameplates around the world – but we’re moving to less than 30, on the way to 20 to 25.’
He said that the streamlined range cut away wasteful duplication yet ‘still covers 100% of the markets worldwide.’ Mulally said the efficiencies were felt across the board, from reduced R&D costs to lower supplier bills – transforming Ford from a chubby, uncompetitive car maker to a much leaner, more aggressive manufacturer.
What else has Mulally done to transform Ford?
The Blue Oval CEO admitted the business was overcomplicated and his priority has been on simplification and focus. Mulally said he drew many parallels between his old employer, Boeing, and Ford; he realised that the plane manufacturer didn’t sell different 737s around the world, so why should Ford produce different small cars globally.
He sought inspiration in a 1925 newspaper ad by Henry Ford, titled ‘Opening the highways for all mankind’. ‘He wanted to make automobiles and highways affordable for all of us, and that’s Ford’s aim once again,’ said Mulally.
He talked of closing excess plants in the US soon after his appointment as he sought to balance supply and demand, but claimed that since new union deals with the UAW he was now reopening shuttered truck plants as car factories and making them profitable.
Ford was the only Big Three car maker in Detroit not to go bust. Is the credit Mulally’s?
He has to take the lion’s share of the credit. He admitted the economic crisis took Ford to the brink and said he persuaded New York bankers to loan the company $23.5 billion to avoid taking government bail-outs. ‘We had originally asked to borrow $10bn,’ Mulally said.
He acknowledged that Americans respected Ford for dodging bankruptcy and that sales boomed as a result. But he warned that Ford shared 70% of the supplier base with imperilled GM and Chrysler and ‘the recession could have turned into depression.’
Mulally: the background
Mulally joined Ford in September 2006, poached from his role as president and CEO at airline giant Boeing. He serves on the US president’s export council, formed in 2010 to advise Barack Obama.
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