Interview transcript: Alan Mulally
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Interview transcript: Alan Mulally
TEXT OF INTERVIEW
Kai Ryssdal: Alan Mulally, welcome to the program.
Alan Mulally: Glad to be here.
Ryssdal: Do me a favor and give me the three-sentence consumer version of this company’s business plan.
Mulally: Transformation would be my first word. And what I mean by that is that this is an American icon, the Ford Motor Company. 1903 . . . safe and efficient transportation for everyone, tremendous innovation over the years. Arguably the finest truck, large-SUV company in the world, and the transformation now is to take that solid fundamental and compliment that with some more exciting fuel efficient, smaller vehicles, and provide a full family of cars, utilities and trucks for the traveling motorist.
Ryssdal: No pressure here but this company’s been around for 100 years and it’s fallen on really hard times. How are you going to do that transformation?
Mulally: Well, it’s got a tremendous, tremendous foundation. And the hard times, clearly there’s an aspect to that that’s associated with our strategy of staying in the big trucks and SUV’s a little bit too long. Maybe not appreciating as well as we could that the fuel prices were going to stay up, that the consumer was going to continue to move toward smaller cars and utility vehicles. And so we are a little bit behind of where we maybe could have been. But clearly we have a point of view about the future and the way that, and what the customers really do value and we have a real good plan to accomplish that.
Ryssdal: Why did it take this company . . . and it’s not just Ford. I mean General Motors and Chrysler and you know a good part of the rest of the American auto industry had trouble recognizing the coming shift to more fuel-efficient cars. Why did you guys stick with the big things that use so much gas for so long?
Mulally: Well, I think if you look historically, the answer is there because over the years we’ve had two or three kinds of oil crisis. You know, starting in 1975 where we had that oil embargo — and many of us remember those long lines at the filling stations — and we took a lot of action as a country. The three Detroit companies took a lot of action to deal with that. Then after a few years, then the oil prices came back down. The United States is a big country, lots of land, and you combine that with the low fuel prices and we ended up since 1975 having three times the number of automobiles as we have now than we had then, and we’re driving four times the number of miles, and we had a chance to enjoy these wonderful larger SUV’s and trucks to transport our families safely, be part of the business, the farming, the construction. And so over the years we’ve had two or three of these cycles. But it always came back, the fuel prices came back down. So it’s really . . . looking back it’s pretty understandable to see why the three companies, they stayed with their strategy. The vehicles that they were absolutely world-class at making. But I think what’s different now is, that I think we all appreciate that maybe the world really has changed and you add in energy security, the energy availability, the sustainability and our growing thoughtfulness about the environment and I think we have seen a sea change. And the customers are going to want and demand smaller and more efficient vehicles and we want to be there to support them.
Ryssdal: What specifically is Ford doing to meet that demand in terms of smaller, fuel-efficient cars?
Mulally: Well, it really is pretty exciting and it really started for Ford in Europe. And in Europe the citizens, as we all know, chose to tax their gasoline, whether it was petrol or diesel. And the reason they were doing that is to get at the use of fuel and energy security and also the environment. And so they started a few years earlier and they figured the best way to do that was to tax the fuel because then you . . . the consumers would be involved and you’d make an economic decision about what kind of vehicle to drive. And so if you look at Europe today, the average-size vehicle is around a Ford Fusion size, kind of a midsize sedan. And they are beautiful, they are wonderful vehicles. We in the United States growing up used to associate a smaller vehicle as being a cheap vehicle. Well, as soon as the consumers moved to wanting smaller, more efficient vehicles, they also want really neat vehicles so the fit and the finish, the comfort, the driveability . . . they’re just phenomenal vehicles. I’ll just give you one little example, when the latest James Bond movie came out, it starts out with a Ford Mondeo. It’s the first car, remember that red car and it’s coming down the road . . . and we just had hundreds and thousands of e-mails arrive and said, “When can we get that car in the United States?” So there’s their average-size car.
So in the United States with the energy prices going up and the customers moving to these smaller vehicles, the good thing about Ford is that our Ford operations in Europe have been very successful, are either number one or number two in all the markets that we serve. People love the Ford vehicles and so we have that to build on and what we’re doing now is starting to bring in those smaller vehicles into the United States. And the latest thing we’re going to introduce in the North American auto show is a concept called the Verve, which is a B-size car which is a little bit smaller than a Fusion. And I think with the buzz that we’re getting and the initial evaluation by the customers, they’re just going to love this smaller, neat car.
Ryssdal: But if you need James Bond to help you sell cars, what does that tell you about what you are trying to sell?
Mulally: Well, I think that it’s a pretty neat message because we’re all so aware. The Internet makes all the information available on all the cars. And so the advertising, the marketing to let everybody know that Ford is back, they are worthy of consideration, they’ve been a tremendous company over the years, they’re expanding their product line into smaller vehicles. And so I think that sales and marketing to get the awareness out there is a very important part of our plan.
Ryssdal: What do you think as the guy in charge of this entire car company. . . . What do you think people are looking for when they go to the dealer or the lot and shop for a new car?
Mulally: Well, I think I’m not any different that all of those people that you’re asking about because at the most fundamental level we want safe and efficient transportation. The most important thing. This is our life, these are our families, and that’s what Henry Ford established the Ford Motor Company on . . . was safe and efficient transportation, and to make it available for everyone. They’re not niche products, they’re for all of us so that we all can afford it and appreciate a safe and efficient transportation. In addition to that, that clearly on the efficiency side, that fuel efficiency and reliability and quality have moved way up on all of our purchase agenda. And then on top of that, we want it to be fun. I mean, it’s a statement about ourselves. We want it to be exciting, we want the outside lines to be exciting. When people get inside we want it to feel good, and smell good, and have impeccable quality and fit and finish. And so those are the four or five things that have not changed over the years. The priority will move a little bit just like it is now with the fuel efficiency, but the fundamental things that we’re looking for in a car are safety, and performance, and styling, and reliability, and resale value. And add in the fuel efficiency now and I think that most of us are interested in that.
Ryssdal: What you didn’t say was they’re looking for a Ford.
Mulally: Looking for a Ford . . . My favorite expression is a tag line or an advertising and marketing campaign that Ford ran a number of years ago. They ran it for almost 12 years, and it was “Have you driven a Ford lately?” Now you’re so young you probably don’t remember it, but it was such an exciting . . .
Ryssdal: I could probably even hum it for you . . .
Mulally: It was so exciting because the real message was that Ford over the years has made tremendous vehicles. Everyone knows what the blue oval is. It was safe, it was efficient, it was affordable. There’s a Ford dealer in every city around the United States. They’re the fabric of the community. They’re either head of the chamber of commerce or the priest, or I mean they’re just the fabric of America, and they took care of us. And so over the years we’d have our high points and then we’d have our low points and so the part of “Have you driven a Ford lately?” was we were bringing back the Taurus and a bunch of neat cars. Number one car in the United States for nine years. Number one car in the United States. So the idea is that now we have a set of cars and trucks that are worthy of consideration and we got to get that message back. “Have you driven a Ford lately?”
Ryssdal: Yeah, but you had the Taurus, the number one car in the United States for nine years, and then you stopped making it. How much sense does that make?
Mulally: It makes no sense! And one of the first things that I appreciated when I came here, just to tell you a little story . . . At Boeing, you know, it’s a designer and manufacturer of commercial airplanes. But very, very similar business worldwide. And Don Peterson who used to be the chairman of Ford was on the board of directors at Boeing. And over the years I had a lot of interaction with him as a board member.
Ryssdal: We should point out that you were at that company for 37 years, you ran Boeing commercial aircraft.
Mulally: Exactly. You bet. Highlight film. Every Boeing airplane. Fly Boeing, you’ll get there. And Don told me one time at a board meeting that Ford was getting ready to design the Taurus, and he said, “Would you like to meet the Taurus team and maybe compare notes on technology and the voice of the customer and manufacturing techniques?” and I said “Absolutely!” So we invited Lou Veraldi, who is the head of the program and his entire team to Seattle. And for three days we went over everything about the design, what the customers wanted, digital program . . . definition, digital pre-assembly, designed it on a computer, fit and finish, everything. And Ford went back and designed the Taurus: number one car in the Unites States for nine years. And we designed the Triple 7 — 80 percent worldwide, some argue the finest airplane ever made. So, when I got a call from Bill Ford . . .
Ryssdal: About this job . . .
Mulally: About this job . . . for a moment I thought, “My God, I’m going home! I’m going home, I’m going to get a chance to hang out with the Ford people. It’s Taurus, it’s the latest technology, blah, blah, blah.” . . . And I arrive here on the first day and they tell me they’re going to kill the Taurus. And I say “The hell you are! We’re not going to kill the Taurus because, as I said to the team here was, “We’re the ones who made it look like a football.”
We could’ve changed the topic and brought out another neat car, but my point to our team was that it was disrespectful to the customer. Because the customers knew 7 million cars later, they knew that that Ford Taurus was the family sedan, the best car in the world. You could count on it: reliable, fun, great value. And because we didn’t keep up with it, we didn’t keep improving it, then we killed it. And we bring out another car with another name thinking we’d have enough money to re-brand it and get everybody back in the car. And I got so many letters when we switched the Ford Taurus name over to the new one. And what we have in the pipeline now for the new Tauruses coming out are going to make our customers, their eyes absolutely water. But I, just if I might add, in this business, just like in the airplane business, in any consumer business . . . that consistency of purpose and absolutely focusing on the customer, having a product line that they understand, they value, that you improve it year after year forever, to not mix them up. They get familiar with it, they know what it stands for, they know what the value proposition is. In this business, that’s probably the most important thing. So, it’s a fun story but it really is the essence of our business to respect the customers.
Ryssdal: There was a lot of speculation and analysis when you got this job, that part of the reason you got it was because you had been so successful in your time at Boeing. You had done great things there. You had taken the company through September 11th and brought it back. A very tough time and the hope, I guess, was that you’d be able to do the same thing here. I’m wondering though, if cars and airplanes, and the making and selling of them really are that similar? I mean, in a lot of ways baseball and football are sports but they’re completely different.
Mulally: Sure, I understand, and it’s a fun thing to discuss because the similarities are incredible. And part of my, a big part of my decision to join Ford was the fact that my experiences, I really believed, and believed that my experiences in the airplane business would be so transferable to Ford and I’d actually be able to help make an immediate impact. And that was a big part of my decision.
Let me just tell you a little bit about that. Both are global businesses. Eighty percent of all Boeing airplanes go outside the United States to customers. They know no boundaries. You have customers and you also have the airlines. In the automobile industry you have the customers and you have the dealers. So very similar distribution system on the design and the production. Very similar. Safe and efficiency, performance, propulsion, lightweight materials, avionics. Very, very, very similar. But probably the most important similarity is the importance of having a point of view about travel. It gets back to our safe and efficient, and in the automobile industry, it’s just paramount importance and in the airplane industry, safe and efficiency are just of paramount. So very, very similar.
Now you brought up a really key point of my decision also is that they are both cyclical industries. They’re global, they move with economic conditions around the world. They also move with the geopolitical forces around the world. And the example that you raised is really, really a good example. I mean, as an airplane designer, in my wildest dreams I never thought that a commercial airplane would be used as a weapon. I’ve had the honor to help design every Boeing airplane except the 707. I’m not quite that old, but a 727, a 737 and the 747, a 757, a 767. I was the lead designer and the general manager of the triple 7, and of course the dynamite 787.
And through all of that design, never thought that it would be used as a weapon. And that, and 9-11 changed all of our lives, including the design of airplanes. And yet from a business point of view, we had to respond immediately. And I’ll never forget being in Sapporo and watching on TV those airplanes hit the tower. And I knew it was going to be over as we knew it. And I remember being on the telephone with Jim Goodwin who was the CEO at United Airlines, and he was describing to me all of the scopes that are down in the basement that are watching all of the airplanes around the world and all of the airplanes being put down on the ground — never before in the history of aviation. And I knew that business as we knew it was going to be dramatically different.
For the first time in the history of air travel, the year-over-year improvement didn’t happen. It actually went down. And so we knew we had to move decisively to reduce the production to the real demand. We needed to accelerate the production of new products that would deal with these kind of terrorist actions and be more efficient. Go point to point and be non-stop. Get away from the big hubs. And we had to do it by pulling everybody together. Our customers, with our Boeing people and our suppliers. Does this sound familiar with the Ford strategy? Wait! One more thing I got to add . . . and so we moved decisively and in two years we decreased our production from 620 airplanes to 280. And can you imagine what that meant to our employees, to our suppliers, to the airlines themselves? We remained profitable because we took the action to restructure aggressively. We kept investing in new airplanes, we didn’t let up one bit about designing the new airplanes for the future. We came through that, the travel came back. We were there with more efficient, even more safe commercial airplanes and Boeing has just returned to the number one airplane company in the world. So, your example is really a good one because . . . for me because . . . having been through that and knowing what it’s like to make it through it, has given me a lot of confidence to come in and help Ford make it through the very same situation.
Ryssdal: Let me do a little point-counterpoint here though, OK, and get back to your issue of how much of this is not in your control. OK, first of all this is not now presently, Ford, a profitable company. You don’t have to worry about maybe a dozen customers as Boeing did. You have to worry about millions and millions of customers who make decisions based on an entirely different set of criteria than big companies buying or leasing airplanes do. Right? I mean, when people think about buying a car, it’s money right out of their . . . straight out of their pockets. How are you going to be able to bring Ford through that with those different set of constraints?
Mulally: You bet. Now let’s start where you started about the environment. And probably to me one of the most important things in business is to know what reality is, what the business environment really is; the risk and opportunities, and then develop a strategy and plan to deal with that and create value. That’s what business is about. And Ford’s situation . . . you know clearly the market has changed dramatically. Plus we have a lot of headwinds with the economy, and the housing, the unemployment, the subprime and the credit tightening. So the most important thing about the plan is to reduce the production of the new vehicles to the real demand. In the automobile industry, especially the Detroit, the three Detroit companies, that has not been their plan. They would keep production up, they’d discount the vehicles, and they’d wait for another day. So the most important part of the plan is to move aggressively and size the business to the lower demand in the near term. Now secondly then is to accelerate the development of new products that we . . . the customers really want: smaller, more efficient cars and utility vehicles. So that as the market comes back, that we’re there with cars and trucks that people really do want and they really do prefer. One last comment about your customer comment. When we design commercial airplanes, we really design it for the traveling public, not the airlines. And so, in a way, in a big way we are designing for the customers in the airplanes just like we were in cars. I’ll give you an example about that. In the airplane business, we all grew up getting on an airplane and flying to different hubs. Right?
Ryssdal: Uh . . . hm.
Mulally: So we’d fly on a smaller airplane, fly to a hub, get off that smaller airplane, get on a bigger airplane, fly to another hub, get off that airplane and get on a smaller airplane and fly to where we want to go. And we at Boeing took a point of view that if you could make a smaller airplane that could go long distances, and could go point to point non-stop, efficiently, there’s no reason to go to the hubs. Because right now in Chicago 70 percent of the people that are at O’Hare aren’t going to Chicago.
Ryssdal: Well, they’re not going anywhere because they’re stuck at O’Hare, but that’s neither here nor there.
Mulally: Easy, easy now. At Heathrow, at Heathrow 70 percent of the people that are at Heathrow aren’t going to London. At Narita, 70 percent of the people that are there at Narita aren’t going to Tokyo. So the reason the 767, and the triple 7, and the 787 are so successful is that they have the capability to go point-to-point with efficiency of a big airplane and they don’t have to stop at a hub. Bring that over to the automobile industry. The point of view about safe and efficient. The world has changed. Consumers want safe and really efficient automobiles. So that’s why you’re going to see significant advances in petrol and diesel, you’re going to see hybrids, you’re going to see electric cars, you’re going to see hydrogen cars. And my point of view is that the company that develops that point of view about the future and then marshals its resources and its technology to deliver that promise are the companies that are going to be successful going forward.
Ryssdal: That’s a lot of good stuff. That’s a lot of good stuff. How worried are you as the guy that’s running forward about the prospects of a recession.
Mulally: Well it’s something that we watch very carefully. Worried . . . not worried. Would I like to always have an economy that is expanding? Absolutely! Would I like not to go through a recession? Absolutely! But the important thing is, is to keep watching the data and take aggressive action to size ourselves to that real demand and if we . . . if the economy continues to slow down, then we’ll continue to reduce the production of the new vehicles, keep the residual values up, keep the net pricing up, keep the incentives down, and take the action that we need to take inside Ford to make sure that we stay profitable. And then again continue that investment in the future so then as it comes back that we’re there with the new vehicles that people really do want.
Ryssdal: You’re happy with a smaller market share so long as it gets you back to profitability?
Mulally: Absolutely! And because the purpose of business is to, is to create value. And it’s not about market share, it’s not about size. It’s about creating value. And great companies, great companies are profitable because that allows you fund the new product development. If you go into a cycle, and you keep your production up, and you discount the vehicles, and you lose money . . . then you lose your ability to keep investing to come out of the cycle in a positive way. So as hard as this is, the most important thing is to deal with the reality, take the aggressive action and keep investing for the future.
Ryssdal: By all accounts, one of the hallmarks of your time here in the past 15 or so months has been to increase focus on accountability and visibility of problems, so that nobody is surprised by what’s coming down the pike. I’m going to turn that back on you and I’m going to ask you to give me an honest appraisal of your time here. Do you think you’re moving fast enough with the restructuring plan and do you think you’re going to be able to get it done by 2009, which is when you promised to come back to profitability?
Mulally: Well, starting with your last question. We’re absolutely on plan to return to profitability in 2009 and we are going to keep taking decisive action to get there no matter what happens. Now, it’s easier you know if the economy doesn’t slow down too much more but we’re on plan to achieve that objective. That’s the number one objective because that fuels our growth going forward. On the pace of movement, I think about that daily because this is a big organization, this is a big company, it’s got a lot of heritage, it does a lot of things really well, hundreds of thousands of people involved. And it really is an important judgment call about how fast to go. Because if you go too fast, then you lose everybody. If you don’t go fast enough, then you don’t get the job done.
In my overall assessment, I’ve been looking at all the data, looking at the restructuring, looking at our progress on getting back to profitability, on the launches of our new products: the Edges, the Escapes, the F-series, all of that acceleration of product development. And then looking at the team’s morale which has gone up tremendously in the last year. Our employers survey . . . the employees believe in us and in the direction we’re going. And when I look at all of that together, I think that we are just about right as far as the pace of change, but this is a lot of change. I might just comment on your culture change comment because when I did arrive it was different than the way, kind of environments that I have . . .
Ryssdal: He says with a smile on his face.
Mulally: . . . have created. And I can remember that I use a lot of data. Everybody that’s associated with the business — whether it’s engineering, manufacturing, sales, marketing — needs to be at the leadership team, needs to be at the table, needs to be reviewing the data, reviewing where we are as a business every week. We didn’t do that every week here at Ford. And so I started that process. I streamlined the organization tremendously, got every function, every skill at the table. And we started our business plan reviews about how it was going. We use a lot of data, we use a lot of stoplight charts — like red, yellow and green. So you can very quickly see what the status is, then also if you have a change in that status in the next week, then the square will be a slash with half a green and half a red. So you know really quickly, not a lot of words are needed, exactly what needs special attention, then you offer your help.
I remember the first couple weeks, we got the process going, everybody is kind of getting familiar with it, and it seemed like it was OK. And then all the stop light charts started to get filled in and everything was green, and I stopped the meeting and I said, “Fellas and ladies, we just lost $12 billion! And everything is green? Aren’t there just a few things that need special attention?”
Ryssdal: Did you have any hands go up around the table?
Mulally: And in the next week . . . because you’ve got to make it safe ’cause the minute that you’re intimidating, the minute that it’s not comfortable, to show you how it is, and everything will be green, right? So the next week, boom. Up comes a bright red. And we’re launching a new vehicle and it was behind schedule, they had a couple of little technical issues, so they had a thousand of extra vehicles that they had to recycle before they could send them back out and up comes this big, red color on this launch. And nobody said anything. And they were all looking at me like what’s he going to do? So, I started to clap. And I said, “Mark,” — who puts up the data, who leads all America — “Mark, I think that’s important visibility that you’re providing. Is there anything we can do to help you more?” He said, “We could use a couple of more quality people. We need a technical specialist on this one problem here. Maybe some more manufacturing support would be good to get the cars out.”
So everybody took a note. Everybody rallied and got Mark what he needed and three weeks later the red slash mark turned to yellow. Two more weeks later, slash mark turned to green. But the neat thing was at that next meeting, half the charts now were at yellow and they were red. And we were on our way. And it was OK. But I just want to emphasize the minute that people don’t feel safe, the minute they get yelled at, or it’s them (not the issue) that you’re going after, then everything will always be green and you’ll know nothing. So it is a big culture change, but it’s exciting and it’s fun.
Ryssdal: It’s great for the leadership team to feel safe around that conference table with you sitting up here on the 11th, 12th floor of this building. Take that down to the shop floor with me now, though. For the people who are actually trying to make the cars for the people who are not going to be with this company too much longer or have been already asked to leave. How do you get that spirit and that sense of purpose down to them?
Mulally: Exactly the same way. And it’s very interesting because we invite guests every week to the business plan review and they are guests that are off the factory floor. They could be in assembly. They could be in finance. They’re from all across our, the empire of Ford worldwide. Then we invite them in as guests. We introduce them as guests of the leadership team. This is the meeting. This is the business plan review where everything is shown. And then at the end of the meeting we go back around through the guests and we ask the guests for their feedback for what they thought. I know it is the most incredible experience, it makes your eyes water, and they’ll say . . . let’s say . . .
We had I think on one of those meetings about the launch of that vehicle, we had one of the assembly workers that was going through that process and she said, “You know, this is so exciting because what you are looking at here with that red is exactly where I am and it is red. But I know that we are getting help now because you know it, we know it, you listened to us.”
So you can imagine how that goes through an organization, and then of course everybody that’s come into the room on a business plan review, imagine what their review was like with their team before they got there. And so this alignment happens so fast if you have this consistency of purpose and you met every week. And we go through the entire business across the entire world in 2 1/2 hours with 300-plus charts all networked and “Internetted” across the world. So, it’s like you can’t hide the expectation of, if you’re red this week or if you’re yellow this week that you are not going to come back next week or the week after and say you are not going to do anything about it. Right? So you get all the help you need but also everybody expects to have, each of us holding each other accountable for having a can-do, make-it-happen, find-a-way attitude. But, people have asked me, “With this kind of a culture change or kind of a business performance change, where, Alan do you see you are? You’ve been doing this for 37 years, all these different airplane programs, you do it the same way.” My assessment is that we are two to three years further ahead than what I thought we would be at this time.
Ryssdal: Do you think Ford has bottomed-out yet?
Mulally: Well, I think the answer to that question goes a lot with the current economy — and not just in the United States but worldwide — because we had been gradually slowing our market share decline. Because we had been starting to add in the new smaller and midsize cars and utilities to complement the bigger SUV’s and the trucks. And so we are getting a portfolio now that is allowing us to arrest the market share decline, and with a few more vehicles on the smaller side I think we’ll get a chance to profitably grow. The exact timing of that over this next couple of years is going to be very dependent on the economy worldwide. But we are taking the right actions for the long-term.
Ryssdal: When was the last time that you sat down and had a cup of coffee with Ron Gettelfinger the head of the United Auto Workers Union?
Mulally: I talked to him a couple of days ago. I don’t think I had a cup of coffee with him. The last time I called him on Christmas Eve to wish him Merry Christmas.
Ryssdal: What’s your take on relations now between Ford and it’s unionized workforce?
Mulally: It’s a true partnership. You know, Ron himself has been associated with Ford for over 43 years. And he has a Ford badge. He can move anywhere around inside Ford that he wants. We meet regularly. He has on his Ford badge. He has our safety plan. He has our productivity plan. He has our quality plan. He is passionate about the business. He knows as well as I do that the only opportunity for all of us is if we have a viable, growing, exciting Ford. He brought that attitude and that approach into the last negotiations. And the actions that we both took together were the right things for Ford, and the right things for the employees of Ford. So, in my opinion, we couldn’t have a better relationship and it doesn’t happen just every two or three years when we have a negotiation. The work that we do every month on the quality, on the reliability, on the productivity that we do every month year in and year out is a tremendous testament to the partnership to create an ever improving Ford Motor Company.
Ryssdal: I want to talk for a second about the environment and climate change and the Ford Motor Company’s commitment to fixing that very serious problem. You have said that you do believe global warming is a very serious problem and that we do need to do something about it. In that light I’m curious as to why Ford and the rest of the auto industry was fighting so hard against the energy bill the new fuel economy standards that just passed the House, the Senate and just got signed into law?
Mulally: We did not fight against the energy bill. And I’d like to sure give you my perspective about it, because as you pointed out, I was the first industry leader that came out and said that we absolutely believe in fuel efficiency and we absolutely believe that we should be improving that year after year on every vehicle we make. Because it sure is the right thing to do. It’s right for the business, it’s right for the customer. And the conversation that we had on the energy bill was not on what should be done but what was the methodology that we should follow? So that we include the experts, we take into account safety, we take into account efficiency, and we have a very thoughtful plan that also takes into account the technology that’s available and win . . . the cost of it and win so that we have a plan that’s viable and we actually deliver the commitments we make. And Ford specifically, one really neat thing about Bill Ford himself, is that he has been a steward of the environment. He absolutely believes that we ought to be using the minimum amount of resources in the minimum amount of time in our design and our production, we ought to make recyclable cars. 70 percent of our cars are recyclable now. He was the first one to come out with a hybrid, with the Escape, which is one of the most popular hybrids we have out today. And the conversation that we are having now to me is absolutely exciting because we’re now getting to a place that we are involved in the consumer, you and me. What do we all think about energy and dependence? What do we think about energy security? What do we think about sustainability? And are we ready, as the citizens of the United States, are we ready to have policies and take action that will make progress on all those fronts? And that’s what that energy bill was all about.
Ryssdal: If you believe that and if your boss Mr. Ford believes that, then why not move just as fast as you possibly can?
Mulally: Well, we are moving just as fast as we possible can. When you look at the improvement we made since 1975, we have improved the fuel efficiency of our automobiles by over 100 percent. And we have improved the fuel efficiency of out trucks by over 72 percent. So we are moving aggressively. Now the plan going forward is even more aggressive, because we are going to use all the enabling technology that we can bring to bear. Let me just give you a few pieces. It will be exciting for all us. We still have a lot of improvement to make with the internal combustion vehicle, both with petrol and diesel; especially turbo-charging and direct fuel injection. The neat thing about that is that it can go across all the vehicles whether they are small or large. And it’s affordable and it makes a big improvement with a lot of volume so it makes a big difference on CO2 and efficiency. Then we’ll move to the Hybrids, and the key about the hybrids is that we continually improve the battery technology to miniaturize it, it can be recharged quickly, it doesn’t degrade in extreme heat or extreme cold, and we can package it inside the car with a gasoline and a diesel power train and do it very efficiently. So that’s the next breakthrough and we are starting to see some of those vehicles today in the Hybrids. Then the next will be the plug-in Hybrids, and to me this is a very exciting development because . . . of course in the end, it’s going to be about a systems solution . . .
Ryssdal: spoken like a true engineer . . .
Mulally: Well, absolutely. And one of the neatest things that we’re doing is that we’re have . . . we have 20 plug-in hybrids that we are going to deliver. We’ve already delivered the first one to Southern California Edison, the power company. And we are looking at the power grid across the United States, and of course what you want to have long-term is a power grid that generates electricity, clean. And then in the off-peak hours . . . could you imagine a world where you had batteries where you could store up that electricity when it’s off-peak and you could regenerate it, and then use that batteries to power your home and also power your car. Can you imagine driving into the driveway, drive it into the garage, you plug it in, you’ve got batteries that can recharge quickly. And you can get to the place where you’ve got a very efficient hybrid. Now another nice possibility to me is we’ve built up the hydrogen infrastructure that you take when you get very capable, affordable fuel cells. You can combine nitrogen with platinum, produce electricity, goes over to a lithium ion battery, water comes out the tail pipe . . . absolutely clean! But to get to that, we’re going to have to develop the infrastructure of hydrogen that will compliment what we have with gasoline today. So, these are very exciting developments and they have a chance to make a significant, significant contribution to energy efficiency, to energy security, and being good stewards of the environment.
Ryssdal: On what I am sure is a very long list of intractable problems that winds up on your desk every day, which is the one that keeps you up at night?
Mulally: Well, I try not to stay up at night because I wake up so early because I am so excited to come to work, and so I don’t really stay up at night worrying about things because I really believe that the most important thing is to keep executing on the plan. Like we started on this conversation . . . looking at the world the way it really is, looking at the business realities, having a plan that deals with that that creates a viable Ford; and then every week, every month implementing to make progress on that plan. And the neatest thing about that is that it is self correcting, because if you run into a problem or the plan needs to be adjusted a little bit; the fact that you meet every week and you meet every month . . . and you look at this and you look at the plan and you look at the progress . . . then you can make the kind of changes you need. So the most important thing is to keep the team together, keep it safe, keep making progress, and then keep adjusting the plan accordingly. That’s the most important thing.
Ryssdal: A couple more and then I’ll let you go; you can have a sip of water there if you want.
Mulally: Really, that’s good.
Ryssdal: Let me hold you to the same standard that you hold your leadership team to and get some visibility on your role in the companies’ turnaround and so forth. What’s the number one thing that you’ve contributed to get this company back where you think it needs to be?
Mulally: Well, maybe the most important thing is coming from the outside. And having a chance to do this. I know what it feels like. I know how hard it is. I know that if you take these actions, and you have this consistency of purpose, that we can get through this and we can come out the other side. So maybe at the most fundamental level, having an experienced leader here with the confidence that it can be done . . . I’m sure my team appreciates that. Maybe another one is the discipline of running the business. That is . . . it has just liberated everybody. I mean, we know what the problems are, we don’t have to worry everybody about it, the areas that need special attention . . . people can help with. And, it might not sound like a big skill or a contribution, but we all know what it’s like to be associated with the team or with the process that has the consistency of purpose and has the consistency of operation . . . an operating rhythm. So, so no matter what happens, you have a method of operation that allows you to deal with the new things that come up. I think, I hope that another one is a passionate love for the business. I, everybody, the questions they would always ask me is why would I leave, how could I ever leave Boeing — which I loved and I had a wonderful time contributing to and an honor of serving — come to an automobile company that was having a little bit of a tough spot?
And of course that is exactly why I came because it’s about making vehicles that people really want and love and it’s competition, and it’s technology, and it’s working together, and it’s large scale, and it’s global. And I love that. And I love competing. And maybe, I don’t know, maybe the other one is I’m . . . I really appreciate and I stand for a team sport. Everybody playing their position, everybody helping each other, performing as a team, performing individually, technical excellence, working together. Because, where I came from, you know, a commercial airplane has 4 million parts, and our dynamite cars have 10,000 parts. This is not rocket science but this is about working together. It’s about using everybody’s skills around the world and coming together as a team and so maybe, I don’t know . . . Well, maybe one more is that . . . is the love of the product because I’m a designer. I just keep thinking of all the e-mails I get and the conversations with all of our team is that they are just so happy to have a designer here — an engineer that understands the business, understands what they are going through, understands when a test doesn’t work out, that it’s not a failure, that that’s a celebration. Because we found at the end we’ve got to validate it and consumers are going to get a reliable product. And they are appreciated, their love for what they do and so maybe those are a few things, but it would be fun for you to talk to some of our employees . . .
Ryssdal: Yeah, and see what they think.
Mulally: And see what they think.
Ryssdal: Detroit sort of has a history of not taking it well when outsiders come in to try and run some of these companies . . .
Ryssdal: How come you are going to be different?
Mulally: Well, one really fun thing about this to me is the chance to learn so much and it’s so fun and I think I have read just about every book I could possibly get my hands on about the automobile industry, especially about Ford. And what a . . . what a fabulous story of an industry and going through the cycles we have, and not taking the competitors seriously, and kind of walking away from the smaller vehicles, and concentrate on these wonderful larger vehicles, and now coming back . . . it’s just a tremendous story. And so, I’ve been a student of it. And the most important thing is that the love of the people that are involved in this business, that they have for this business — they want to win, they want to make cars and trucks that people really do want. And I think that from the feedback I get that the most important thing for me to help Ford be successful is also the most important thing where they would appreciate me . . . that is to focus on the business, to focus on creating a viable business, and that just means opportunity for a lot of people. And I’ve never been welcomed more warmly or felt so useful or appreciated. So I think any time you move into a new organization, it’s just so important that you respect the history. You respect the people. You learn as much as you can about it. You seek to understand before you seek to be understood. And then you move very, very decisively but very sure-footedly into a new world. Because you know there is nothing worse than somebody coming in and acting like they know everything when you know they don’t. They start handing out all of the assignments and it’s just not the way I approach it. And the changes we’ve made: every one of them has been thoughtful, has been careful, and we’ve gotten a great response from the team.
Ryssdal: What did you drive to work today?
Mulally: I was in a 2008 brand new Fusion. And I try to drive a different vehicle every night.
Ryssdal: Oh, do you really?
Mulally: Either a Ford one or our competitors’ — which kind of causes a little consternation . . .
Ryssdal: A little bit when you pull into the parking lot.
Mulally: . . . start driving with a Camry and stuff, but clears up . . .
Ryssdal: Humble research?…
Mulally: . . . my little message was that not only do I want to know, but I think we all should know about the competition to make sure that we are designing the best cars and trucks. And the night before that I had an M.K.X. which is a Lincoln product, and it’s a crossover. It’s on a wonderful Volvo platform with the utility . . . the wonderful utility of an S.U.V . . . and both have 4-wheel drive. We have a little bit of snow here in Detroit. They are the best driving vehicles in the snow and their ride, and their fit, and the finish . . . we just ran a . . . I think it was Road and Track . . . a head to head competition against the Toyota Camry, the Honda Accord, and the Ford Fusion . . . and the Ford Fusion won out with just about everybody as a better car than the Camry or than the Toyota or the Honda . . . and it is just one, one neat vehicle! Now it’s only been in production for two years. You know we’re up against the Camry. It’s been in production for 35 years. And so it’s back to that consistency of purpose and proving that year after year, not changing the name, not mixing anybody up, and just making them neater every year forever.
Ryssdal: Alan Mulally is the president and CEO of the Ford Motor Company. Mr. Mulally, thanks a lot for your time.
Mulally: You’re welcome.
Ryssdal: I appreciate that sir. Thanks very much.
Mulally: You’re welcome.
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