Decision to pass on bailout good for image, but firm now must get people to showrooms.
Bryce G. Hoffman / The Detroit News
It is hard to imagine the head of any automaker -- foreign or domestic -- being optimistic about 2009. But Ford Motor Co. CEO Alan Mulally is downright ebullient.
While he is all too aware of the dangers posed by the deepening recession, Mulally says Ford's decision to pass on the initial federal bailout of the U.S. auto industry has resonated with many Americans. The challenge now is getting them to come into the showroom and buy a Ford car or truck.
"This has turned out to be quite an opportunity for us, because it has put a real spotlight on Ford," Mulally told The Detroit News in an interview Monday. "We just need to continue to tell our story."
General Motors Corp. and Chrysler LLC will spend the first three months of 2009 trying to implement restructuring actions that will assure their long-term viability -- a condition of the $17.4 billion loan package President George W. Bush approved earlier this month so they could stave off bankruptcy. That will mean wresting significant concessions from workers, suppliers, creditors and investors. They also will have to seek approval for major expenditures of $100 million or more.
Ford is bound by no such restrictions. The automaker is only required to return to Washington in March with GM and Chrysler to provide an update of its turnaround efforts.
But Mulally said the company is working closely with Washington. Congress and the incoming Obama administration want a reorganization of the entire U.S. auto industry -- not just GM and Chrysler --and Ford still hopes to secure a $9 billion line of credit from the government as a hedge against a worsening economy.
Industry watchers say Ford's decision to forgo emergency federal loans has given it an advantage over its Detroit rivals, but only if Ford can gain enough traction in the market to stay off the public dole.
"They might have a competitive advantage if things turn around," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "The problem is that, if sales remain as poor as they've been for the past couple of months, it's going to drain their pot, too. If things stay like they are, they're going to be in the sewer with everybody else."
Ford has sidestepped that fate largely because of a $23 billion financing package Mulally secured shortly after taking over as CEO in late 2006 that gave the automaker a sizable cash cushion. To stay out, he says Ford needs more than money; it needs the American people to fall in love with its cars and trucks again.
"The fact that we obtained financing for this transformation is one key piece, but there are a number of pieces to the transformation plan that are very unique and that differentiate Ford," Mulally said.
He names several factors that he sees as key differentiators between Ford and its Detroit rivals: the company's decision to sell its foreign brands and concentrate on fixing the Blue Oval; its efforts to consolidate its global operations and focus them on that goal; the progress made on quality and safety and new products like the fleet of small, fuel-efficient cars that will begin arriving from Europe in a little more than a year.
Mulally cited recent surveys by J.D. Power and Associates and Consumer Reports that put Ford's quality on par with the best Japanese automakers as "proof points" of the progress Ford has made.
"We are competing with the very best in the world," he said. "That is a very marketable, very exciting development."
Ford does not expect auto sales to rebound in 2009, but sees an opportunity to steal market share from its struggling competitors. Over the past two months, Ford has gained a point of U.S. market share after yielding share to foreign rivals for the better part of two decades.
To sustain that gain, Mulally said Ford needs to play offense.
"We're going to use every medium we can. It's all about getting the message out," he said. "It's going to help people know that they've got great choices with Ford -- that we're well on our way, that we're financially viable, that we've got great products, a great production system and that we're making tremendous progress."
Mulally is eager to enlist employees, dealers and suppliers in that effort. But Wall Street says he also must hit them up for the same kind of concessions that GM and Chrysler will have to negotiate under the terms of the federal loans if it is to remain competitive.
Ford is confident that the UAW, at least, will give the automaker any deal the union gives the other two Detroit automakers.
That confidence is well-founded, said UAW member Brian Pannebecker, a worker at Ford's axle plant in Sterling Heights.
"There is a special relationship between Ford and the UAW, and that's largely due to the (Ford) family," he said. "There's a lot of loyalty there. A lot of workers put their 401(k) money into Ford stock. They want to see the company succeed."
Bryce G. Hoffman / The Detroit News
It is hard to imagine the head of any automaker -- foreign or domestic -- being optimistic about 2009. But Ford Motor Co. CEO Alan Mulally is downright ebullient.
While he is all too aware of the dangers posed by the deepening recession, Mulally says Ford's decision to pass on the initial federal bailout of the U.S. auto industry has resonated with many Americans. The challenge now is getting them to come into the showroom and buy a Ford car or truck.
"This has turned out to be quite an opportunity for us, because it has put a real spotlight on Ford," Mulally told The Detroit News in an interview Monday. "We just need to continue to tell our story."
General Motors Corp. and Chrysler LLC will spend the first three months of 2009 trying to implement restructuring actions that will assure their long-term viability -- a condition of the $17.4 billion loan package President George W. Bush approved earlier this month so they could stave off bankruptcy. That will mean wresting significant concessions from workers, suppliers, creditors and investors. They also will have to seek approval for major expenditures of $100 million or more.
Ford is bound by no such restrictions. The automaker is only required to return to Washington in March with GM and Chrysler to provide an update of its turnaround efforts.
But Mulally said the company is working closely with Washington. Congress and the incoming Obama administration want a reorganization of the entire U.S. auto industry -- not just GM and Chrysler --and Ford still hopes to secure a $9 billion line of credit from the government as a hedge against a worsening economy.
Industry watchers say Ford's decision to forgo emergency federal loans has given it an advantage over its Detroit rivals, but only if Ford can gain enough traction in the market to stay off the public dole.
"They might have a competitive advantage if things turn around," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "The problem is that, if sales remain as poor as they've been for the past couple of months, it's going to drain their pot, too. If things stay like they are, they're going to be in the sewer with everybody else."
Ford has sidestepped that fate largely because of a $23 billion financing package Mulally secured shortly after taking over as CEO in late 2006 that gave the automaker a sizable cash cushion. To stay out, he says Ford needs more than money; it needs the American people to fall in love with its cars and trucks again.
"The fact that we obtained financing for this transformation is one key piece, but there are a number of pieces to the transformation plan that are very unique and that differentiate Ford," Mulally said.
He names several factors that he sees as key differentiators between Ford and its Detroit rivals: the company's decision to sell its foreign brands and concentrate on fixing the Blue Oval; its efforts to consolidate its global operations and focus them on that goal; the progress made on quality and safety and new products like the fleet of small, fuel-efficient cars that will begin arriving from Europe in a little more than a year.
Mulally cited recent surveys by J.D. Power and Associates and Consumer Reports that put Ford's quality on par with the best Japanese automakers as "proof points" of the progress Ford has made.
"We are competing with the very best in the world," he said. "That is a very marketable, very exciting development."
Ford does not expect auto sales to rebound in 2009, but sees an opportunity to steal market share from its struggling competitors. Over the past two months, Ford has gained a point of U.S. market share after yielding share to foreign rivals for the better part of two decades.
To sustain that gain, Mulally said Ford needs to play offense.
"We're going to use every medium we can. It's all about getting the message out," he said. "It's going to help people know that they've got great choices with Ford -- that we're well on our way, that we're financially viable, that we've got great products, a great production system and that we're making tremendous progress."
Mulally is eager to enlist employees, dealers and suppliers in that effort. But Wall Street says he also must hit them up for the same kind of concessions that GM and Chrysler will have to negotiate under the terms of the federal loans if it is to remain competitive.
Ford is confident that the UAW, at least, will give the automaker any deal the union gives the other two Detroit automakers.
That confidence is well-founded, said UAW member Brian Pannebecker, a worker at Ford's axle plant in Sterling Heights.
"There is a special relationship between Ford and the UAW, and that's largely due to the (Ford) family," he said. "There's a lot of loyalty there. A lot of workers put their 401(k) money into Ford stock. They want to see the company succeed."
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