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Mulally: Turnaround, Jaguar on Track


 

 

While Ford Motor Co. is selling off its ultra-luxury sports car brand, Aston Martin, CEO Alan Mulally suggested that there are no plans to part with another high-line Ford marque, the troubled Jaguar division.

“Jaguar is on a really good plan,” said Alan Mulally, during the first of a series of speeches and meetings at this year’s New York International Auto Show. “We’re 100 percent behind them,” asserted Mulally, responding to a reporter’s question, “and that’s why we’re investing in them.”

 

During a session marking the opening of this year’s auto show, Mulally went to great lengths to insist that Ford’s turnaround plan is on track, though in response to a question by TheCarConnection.com, he acknowledged that Ford still has some catching-up to do if he hopes to level the playing field with Toyota – which the CEO readily praises as his benchmark.

 

“Our wages are not where we need to be competitive,” said Mulally. Ford hopes to address that issue during contract talks with the United Auto Workers, which are scheduled to begin this summer, though Mulally also praised the union for recent efforts to improve quality and productivity.

 

Mulally acknowledged that Ford is going through a “tough transition,” as it puts the latest in a series of turnaround plans into practice. The most recent version of its “Way Forward” program is resulting in huge job cuts, including the elimination of about a third of the company’s salaried workforce.

 

While plant closings, job cuts, and proposed union givebacks dominate the headlines, Mulally made it clear that sacrifice will touch virtually everyone at Ford, including its retailers. The automaker believes it has far too many dealers in the U.S. , especially as it trims its sales and market share down to more realistic levels – which would not need to be buoyed by hefty, loss-making incentives.

 

How many of the current, 4000-strong dealer body might be eliminated, Mulally wouldn’t say, though he stressed that buyouts likely won’t be used – as they were when General Motors closed its Oldsmobile division – saying "there isn't enough money in the world to do something like that." But there are indications dealers may be acting on their own, merging or selling out and, in some cases, simply closing unprofitable Ford stores and turning back their franchises.

 

While the pain from all the cutbacks is severe, the CEO insisted, "If there is not a competitive Ford, it's not going to be okay for anyone.”

 

While Ford and his top lieutenant, President of the Americas Mark Fields, repeatedly praised the progress at Ford, they also admitted that recent sales numbers have not looked very good. Overall U.S. sales were down nine percent, in March, though retail numbers were off a bit less, reflecting Ford’s decision to sharply cut back on profitable daily rental volume. The biggest hits came on the truck side, which has been hit by twin shocks: rising fuel prices and the impact of slowing home sales. Three-quarters of full-size pickups are sold for work use, most notably in the construction industry.

 

Having just wrapped up his first six months at Ford, Mulally repeatedly joked about being “a car guy,” especially when he openly paused to ask an advisor to fill in some blanks in his knowledge of Ford products. That sense of humor has proved particularly useful, opening up Ford’s dialogue with bankers from whom the company recently sought billions of dollars in new credit lines – which Mulally described as “the biggest home improvement loan in the history of mankind."

 

The former Boeing executive is doing some quick on-the-job training, which includes several recent stints at Ford dealerships. He proudly told reporters how he was able to close a couple of sales. In one case, it required Mulally to call a prospective customer’s wife, who was initially skeptical about who the new salesman really was. “The clincher,” he confessed, “was that I threw in the floor mats.”

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