Bill Ford Sheds Light on Turnaround Success

Nov. 10, 2010
Says government and universities need to play a role in future success of manufacturing.

Ford Motor Co's move to global platforms that streamlined the way the company builds cars for markets worldwide was one of the key cost restructuring initiatives that helped return the Dearborn-based automaker to profitability, said Executive Chairman Bill Ford.

Ford discussed his company's turnaround and other key auto industry and manufacturing issues during Ernst & Young's Strategic Growth Forum in Palm Desert, Calif., Nov. 10. The Q&A hosted by journalist and talk-show host Charlie Rose included Ford's thoughts on the GM bailout, the state of U.S. manufacturing and his decision to hire Alan Mulally as the company's current CEO.

The Turnaround

The company's move away from building cars uniquely for individual countries along with successful collaboration with its union leaders brought costs down significantly, Ford said.

Attendees applauded Ford when he said the company's latest Ford Explorer model is being built in Chicago and will be exported to 93 different countries.

"Our plan is to continue to export from the U.S. to around the world," Ford said.

Ford also attributed the company's success to its focus on research and development and innovation. While competitors slashed R&D budgets during the downturn to cut costs, Ford significantly increased spending, he said.

Hiring Mulally

Ford said he discussed the strategy with Mulally when he first hired the current chief executive.

"The last thing I wanted to do was bring in somebody who was going to slash and burn and destroy the fabric of the company," Ford said. "You may end up saving the patient and what do you have left? One of the things Alan and I talked about in that first meeting is I said there's no point in going through all the pain we're going to go through if we don't keep investing in R&D and product development, and he agreed."

Ford recalled his first meeting with Mulally prior to hiring him was at his house.

"It was clear to me within five minutes that we were intellectually on same page," he said.

Ford decided in 2006 he no longer wanted to serve the multiple roles of president, chairman, CEO and COO. Mulally was attractive because of his experience dealing with similar suppliers and manufacturing issues as head of commercial airplanes at Boeing.

Auto Bailouts and Manufacturing

Ford said he supported the government bailout of General Motors. A GM collapse would have impacted the nation's entire industrial base, he said. Ford remarked that he was taken aback by the positive response the company received by not accepting any bailout funds.

On the negative side, the company maintains a mountain of debt while competitors who took the money have a clean balance sheet, Ford said. But he said the company is enjoying a level of freedom and flexibility that government-owned competitors don't have.

On manufacturing as a whole, Mulally said the country began to devalue the importance of industry's role in the economy and opted for a high-tech, service-based economy. The nation suffered because the "multiplier effect" for service-based jobs is much lower than it is in manufacturing, he said.

If there's a silver lining in the economic downturn, it's that politicians and Main Street are beginning to realize the importance of manufacturing in the economy, he said.

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