The Least, First

Monte Asbury's blog

Ford CEO’s foresight may save the company

with 3 comments

When’s the last time you read an inspiring story about a U.S. automaker?

Today’s New York Times has one.

Turns out that Ford’s CEO, Alan Mulally, saw a crisis coming back in 2006.   He led the company into sweeping—and, no doubt, highly controversial—transformation:

clipped from www.nytimes.com

On Nov. 29, 2006, the Ford Motor Company made a surprising pitch to the nation’s biggest banks. In a packed ballroom at a New York hotel, Ford’s chief executive, Alan R. Mulally, said he would mortgage all the company’s assets for billions of dollars in loans to finance an overhaul of the troubled automaker.[…]
Although the economy was healthy then, Mr. Mulally said the money would give Ford “a cushion to protect for a recession or other unexpected event.” […]
[T]he $23.6 billion in loans it received turned out to be Ford’s saving grace […]
Ford, because of the money it borrowed in the private sector nearly three years ago, is in far better shape than its two crosstown rivals. The loans have kept it independent, and on a course to survive the worst new-vehicle market in nearly 30 years. […]
“It was a defining moment for us,” Mr. Mulally said in an interview. “But they never would have been willing to lend us the money if we weren’t on a different path.”  Ford has accelerated along that path, pursuing a top-to-bottom transformation into smaller cars, fewer brands, and a leaner cost structure. […]
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Ford Motor Company

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Pretty courageous, seems to me. There’s lots more to the story – follow the link for many more intriguing details – but the upshot is that Ford today gets to say things like this:

“From Day One, we had no desire to access the government money,” […]

“Ninety-seven percent of the people know that Ford is not taking taxpayer money to create a viable company,” Mr. Mulally said. “This is America. This is about making products people want and being self sufficient.” […]

Think this CEO deserves a bonus?  He’s no saint, and he gets paid way too much money, and no one knows for sure yet if Ford can survive plunging car sales.

But at least he’s doing his job.

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3 Responses

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  1. I agree with you that the moves of Ford management are what have helped the company navigate through troubled waters. An example of this is Ford’s investment into small and medium-sized cars that occurred prior to the truck and SUV market slowdown. Another is Ford’s push into social media.

    I just wrote a blog post about the Fiesta Movement, and I have another about social media and Ford at my blog. You can view my blog here:

    http://nmanser.blogr.com/stories/

    Neal Manser

    April 23, 2009 at 8:52 am

  2. Since my first car was a Ford, I’ve been glad to see from the start of the whole auto bailout mess that Ford was not in need of government money. They made their tough choices early, and I applaud them for that. I’m hoping they do well.

    Rich Schmidt

    April 9, 2009 at 10:37 am


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