luncheon on 10/20/09 at Laurel Manor. About 400 people attended, including Mr. Mulally and only 2 “bag carriers”.
He spoke for about 25 minutes, without prepared text and not standing behind the podium — speaking from the Ford “mantra” card (ONE FORD), and providing supporting information for each of the items — i.e. One Team, One Plan, One Goal. Then he answered questions for about 20 to 25 minutes and left, walking through the crowd, shaking hands of many of the retirees. Each retiree received a Ford “mantra” card, color glossies of the present Ford org chart (with pictures) and a call out sheet of new technology on the 2010 Taurus and a sales brochure about Ford, “Drive One”. There was a new 2010 red Taurus SHO in the room, and many people were looking at it. It looked fantastic.
Earlier, the luncheon coordinator announced that the Blue Cross Blue Shield Blue Care Medicare Advantage C&D Plans were going to be terminated effective 12/31/09 and that Extend Health would be calling the 6,000 people in southeast Michigan who would have to choose different health care plans.
SPEECH
Mr. Mullally said that his first experience with Ford was when Don Peterson called him at Boeing and asked to send a group of Ford engineers to Seattle to Boeing to learn aircraft industry manufacturing technologies and design techniques in preparation to design one of the first (if not the first) Taurus program at Ford. He said this is what led him to bring back the Taurus name at Ford because the name had so much recognition.
The 2010 Taurus has won car of the year and has a level of technology unmatched by any other vehicle near its price range.
He said he believes that he is “standing on the shoulders” of the Ford retirees.
He said that Ford is doing even better now than we know.
He said that Ford has been through so many different strategies in the past and has never stuck with one, clear plan for a long time.
The first time he drove into the Ford WHQ exec garage, there were no “Ford” vehicles parked in the garage. This bothered him.
He said that Ford was the first auto company to reduce production capacity to match the real demand levels when the recession started. This was about a 50% capacity reduction.
He said that now, for the first time ever, Ford can make small cars and other cars in the U.S. and make a profit on all car lines. (I assume this includes the cost savings from the UAW concessionary contracts.)
He is accelerating development of new products across global platforms in all market segments. ( We all have heard this before. Global commonization has been a goal of Ford for at least the last 20 years that I remember; but no one has ever come close before. Maybe now they will.)
He spoke to more than 500 bankers in New York when the Company asked for and received a $23.5 Billion line of credit (kept Ford off the government dole). He said that $10 Billion has been paid back and the remaining $13.5 Billion is due late in 2012.
He believes that within Ford the functions are strong and the different world regions are working together as they never have before.
Ford market incentives are being reduced and the Ford market share is increasing. This is a good thing.
Q&As
Ford has not made a reasonable return on police packages; but Ford wants the visibility and recognition that comes from having police cars and cabs. He believes the Transit Connect Van will become a cab in the future.
More new models will be introduced to the U.S. market from the European market in the next few years. Not just cars. 85% of the Ford product line will be common within 3 years. This means the same bill of materials and the same manufacturing processes will be used.
The 3 surviving car companies in the world will be Ford, VW, and Toyoda.
Production capacity for the new Taurus will be increased as needed based on market demand.
Ford will develop small diesel engines for cars in Europe and Asia Pacific. The regulations in the U.S. make it too difficult to sell small diesels and the continuing improvements in the internal combustion engines close the gap to diesels.
He likes the Ford “story” and history; but he didn’t know what he was getting himself into when he came to Ford.
When he came to Ford, he made it a point to contact all former Ford CEOs and the CEOs of Ford competitors. He spoke with Red Poling and Don Peterson.
He and Ford did not need government money/bailouts; but he went to Washington with GM and XLR to prevent a long term depression from happening in the Midwest if GM would have gone bankrupt and common suppliers would have stopped supplying Ford and other OEMs. Ford marketing people believe the government hearings and Ford not taking money from the government was worth between $5 billion and $10 billion of advertising.
The biggest risk to Ford or his dream for Ford is that the processes that are being developed and used globally now get institutionalized and improved over time. The Company must have a specific plan and cannot lose sight of the plan over time.
Ford having FMCC as a captive finance company is a competitive advantage over GM and XLR (they lost their credit cos), especially when the Ford and FMCC credit ratings improve.
Ford has the best professional talent and can attract the best talent of workers based on the Ford consistency of purpose.
His advice to us is to really enjoy retirement. He says he reads his own e-mails (amulally@ford.com); but don’t send him any long ones.
I hope you enjoyed these notes.
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