After four straight profitable quarters, Alan Mulally’s forecast today of a “solidly profitable” 2010 shouldn’t come as a huge surprise. But, as Executive Chairman Bill Ford put it to Ford shareholders at the company’s annual meeting [via AP],
It is the very early days in our recovery. We still have a lot of debt
And he’s not kidding. As of the end of Q1 2010, Ford was carrying $34b in debt. And though Ford faces a higher cost of borrowing because of its staggering debts, Bill Ford was clear that he wouldn’t trade places with Ford’s Detroit competitors, which cleaned out their balance books, at the expense of government bailouts and accompanying PR problems. After all, while GM and Chrysler were rebuilding, Ford managed to outperform both of them last year by gaining sales and market share. And Ford’s leadership sees that momentum carrying forward into next year.
With about $34.4b in debt and a selling rate that’s being propped up by incentives and fleet sales, Ford ain’t out of the woods yet by a long shot. But compared to the ongoing debacles in the RenCen and Auburn Hills, things are looking downright sunny under the sign of the Blue Oval. Most of the credit for that tends to go to CEO Alan Mulally, who left Boeing to assume control at Ford in 2006. There are people who want him gone.
For all the praise and positive comparisons he earns, Ford’s Alan Mulally still refuses to man up and acknowledge that at least one of his firm’s brands is as meaningful to the American consumer as Kaiser or Cord. And it’s not like Mulally can just ignore the brand’s slide into ignominy: after all, people notice when you never introduce new products for a brand that was wholly comprised of cheap rebadges in the first place. Well, Inside Line noticed, and they cornered Mulally at the Washington Auto Show to get his take on the brand with no purpose.
“The plan right now is (to develop) Ford, Lincoln and Mercury,” Mulally answered.
He said Ford is working to more effectively position Mercury with smaller vehicles that occupy the void between the mainstream Ford brand and Lincoln, which directly targets the luxury-premium market. “That’s our plan — to continuously improve the Mercury and Lincoln brands,” Mulally said.
But after a little more discussion, Mulally felt compelled to reiterate: “That’s the plan right now.”
Despite his genial, affable manner, Alan Mulally is a businessman and, by all accounts, a businessman not to be crossed with. One story goes, when he first started with Ford, he let them know, in the clearest possible terms, “Everybody says you can’t make money off small cars,” he said. “Well, you’d better damn well figure out how to make money, because that’s where the world is going.” Long protected from the brutal rationalisation of the global market, Australia might be about to get a taste of the man’s darker side as he attempts to drag Ford’s Australian ops into the 21st Century.
GM’s New Chairman and CEO, Ed Whitacre may not be talking to the press about his plans for the state-owned automaker, but he’s talking to someone. Reuters reports that Alan Mulally, CEO of Ford, has already had a chat with GM’s chairman and CEO, Ed Whitacre. Mulally didn’t disclose what they talked about, but did mention his reasons as to why they had the chat. “You want to be supportive because we have a lot of industry issues that we work together,” Mulally said, “He’s reaching out just the way that I did when I came in.”
Car guys know exactly what’s wrong with GM: car guys like them aren’t running the show. Otherwise, every Chevrolet, GMC, Buick, and Cadillac would look “great” (no need to be more specific) and dust the competition. Hence Bill Ford’s decision to hire Alan Mulally to take over as CEO came as a real disappointment. Obviously, he would have done better hiring anyone who truly knows and loves cars better than a Lexus-driving Boeing executive.
Sorry, CarNut4CEO. It just wasn’t so in Ford’s case. And it’s just not so in GM’s case, either.