Mulally: Ford's challenge is smoother launches
Alan Mulally: The new process-driven culture has led Ford back to profits.
Photo credit: JOE WILSSENS
DETROIT -- Ford Motor Co.'s biggest challenge is "going up in production and delivering all the launches," CEO Alan Mulally said after his Automotive News World Congress speech.
As Ford has boosted production to keep pace with three straight years of rising U.S. sales, the company launched three major vehicles last year: the 2013 Fusion, Escape and C-Max. But two of the launches have been marred by recalls, two on the Fusion and four on the Escape. One recall on each vehicle resulted from a software glitch that caused engines to overheat. Ford learned that it needed to add a couple of software modes to testing procedures, Mulally said.
"We'll fix the process," he said. "All those are lessons learned in continuous quality improvement."
In a free-wheeling and occasionally humorous presentation, Mulally, 67, recounted the story of how he brought processes and accountability to Ford when he arrived from Boeing in 2006.
He also recalled Ford's "gut-wrenching restructuring."
"I remember the first estimate of profits I saw at September 2006 was a $17 billion loss -- and we achieved it," he said with a laugh. "That was an incredible accomplishment. We all knew this was not sustainable. You can't lose $17 billion a year and stay in business that long."
He got a laugh when he said: "We borrowed a small home-improvement loan of $23.5 billion. Then we had to take down production to match real demand." But eventually, he said, "we were able to go through this recession and not access precious taxpayer money."
Asked how he persuaded Ford's employees to dedicate themselves to his global One Ford plan that consolidates most of Ford's global lineup on five platforms, Mulally joked, "with my sparkling personality."
More seriously, Ford executives learned to admit mistakes once they realized there would be no culture of blame, but one of cooperation.
The new, process-driven culture has led Ford back to profits, he said.
"We have terrific margins appropriate for the business. We have repaid all the $23 billion. We have now returned to investment grade," Mulally said.
Before the recession, Ford was shipping a rising number of jobs overseas because it couldn't profitably build vehicles in its home market. Now it's a new day, he said. "We can also make smaller and medium-size vehicles in the United States and make them profitably," Mulally said.
This month, Ford said it plans to hire 2,200 salaried workers this year in the United States as it continues to beef up payrolls to handle rising sales and production in North America. Ford declined to disclose its current U.S. salaried head count, but said it ended 2012 with 28,000 white-collar employees in North America, with most of them in the United States.
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