FEATURE STORIES

Minutes with Ford President & CEO Alan Mulally

Minutes with Ford President & CEO Alan Mulally image

Text: Iñigo S. Roces / Photos: Iñigo S. Roces, Ford Press | posted February 03, 2012 11:56

An interview with the man behind One Ford

Just a few weeks ago, Ford launched their latest niche-busting subcompact SUV, the Ecosport at the New Delhi Auto Expo in India. It was the world’s first glimpse of the compact SUV produced under the One Ford Global product strategy.

And while the EcoSport may still be over a year away from arriving in the Philippines, it is hoped to be a key model in expanding Ford’s presence in the country as well as neighboring ASEAN markets.

For many, this is the first time they’ll hear of the One Ford Global Product Strategy. Whether you see it as Marketing term, media hype or just a more pleasing alternative to “badge engineering”, it’s certainly worth hearing what it really means from the very head of the Ford Motor Company.

Travelling to India to see the EcoSport in the flesh also gave us an excellent opportunity to interview FMC President and CEO Alan Mulally.

He starts off with a bit of an introduction. Prior to joining Ford in September 2006, Mulally served as executive vice president of The Boeing Company, and president and chief executive officer of Boeing Commercial Airplanes.

Alan Mulally: People ask me what’s the difference between Boeing and Ford. I believe that they’re more similar than they are different. The vehicles are very sophisticated, same kind of materials, electronics, aerodynamics, safety features, power and systems integration - very same things in cars.

The big difference is scale. Someone said cars are very complex and very sophisticated. A car has around 10,000 parts with very complex integration.

I pointed out that a Boeing 777 has four million parts and it even stays in the air.

The size of the vehicles is very similar. 60% of the cars are C and B size and about 60% of airliner sales are 737’s. 25% are C and D sizes like the Fusion and Mondeo while 25% of our airliner sales are 777’s and 787’s. 15% of cars are D size and bigger and 15% of airplanes sold are 747’s.

At Boeing, we sell the airplanes to airlines but we always look past the airlines to the travelling public and see what people really want and value.

In Ford, we sell vehicles to Ford dealers but look past to address the drivers and what they value.

What’s also similar is the global scale. At Ford, we’re doing the One Ford plan so that we act a lot more like Boeing. You don’t make different vehicles for different parts of the world, much like you don’t make different planes for different parts of the world. Majority of people want quality products, safety and a full line-up of vehicles.

When I first arrived, somebody asked me, "Do you have any plans to merge with any other company?" I said, "Yes. And they all leaned forward in keen anticipation, hoping to get a scoop. So I said, "We're gonna merge Ford with Ford." There were puzzled looks all over the audience. There’s Ford in so many countries.

You should use your global scale where you can to operate more affordably. We’re dealing in a global industry where thousands and thousands of people work together on creating fantastic products. We had a whole family of vehicles and needed to match our production to demand and utilize all our resources worldwide. Once we did that, we were on our way together. We moved pretty decisively with Ford on the One Ford plan. That happened within our first 2 or 3 months and then we borrowed money to finance the plan. Now every one of these companies is One Ford.

Interviewer: So where is Ford headed in the future? What alternative fuel will it bank on?

AM: Universally around the world, no matter what size vehicle, people want the best quality and most fuel efficient vehicle with the best safety features, smart design, fun to drive and very best value. Based on that, we really believe there’s a lot of room to improve the internal combustion engine for both petrol and diesel. The best example is "Ecoboost".

We had direct injection and turbo charging for years but we never had the scale or tech to make it reliable, dependable and affordable. "Ecoboost" engines will go across our entire product lineup and improve petrol and diesel consumption.

We’ll continue researching in alternative fuels especially with ethanol and biomass fuels. We’ll use natural gas especially on bigger vehicles especially because of the infrastructure they need.

Of course, we'll look into electrification too. We’re not making one-off technologies. We're electrifying entire platforms.

The new Focus and C-max body styles have the same C1 platform with hybrid petrol, hybrid, plugin with large battery and pure electric versions with the largest battery.

Hybrid is the most affordable while plugins are more expensive. Pure electric cars are the most expensive and heaviest because of batteries.

The big breakthrough will be a different chemistry from lithium ion. We'll need a breakthrough with size, weight and cost. Ford has worked on electric power since the days of Henry Ford. He was a good friend of Thomas Edison.

The last technology is also hydrogen. Electric cars need infrastructure to recharge them that is convenient and accessible to everybody. With hydrogen, we need a breakthrough on batteries, fuel cells and infrastructure.

The idea of a hydrogen tank with a fuel cell and electricity - water comes out the tail pipe - is a very compelling vision but we need a breakthrough. For now we have lightweight materials and digital technology. Continuing integration of these will help advance it.

The main difference is we have the volume now to bring those to market. You’ll see them move very quickly across all markets and countries. In next 10 years, the world, the customers are coming together on what they want.

We believe the consensus that 60% of all vehicles will be B and C size (Fiesta and Focus), 25% will be C and D (Fusion and Mondeo) and 15% will be D and plus size, the trucks.

That’s our strategy with global platforms with the Fiesta, Focus, new Fusion and all. In Ford's case, you will see us have 85% of our total product line on 5 platforms. You look at the Ka, Figo, Fiesta, Focus, Fusion, Taurus, Mustang, Edge, Explorer, Expedition and Transit; that’s our line-up right now. It takes care of 100% of the automobile market worldwide. That allows us to bring this technology to market and update a vehicle to be able to bring it all across the world - more value products from us in each segment; vehicles packaged in different price points so people can get the value and features they really want. Because we can do this so much faster, people all around the world can get vehicles they never thought they could get so quickly.

Interviewer: In your own words, how would you explain how the One Ford plan to the casual consumer?

AM: Being best in class is a brand promise. When you walk into that Ford showroom, you know you get the very best in the world.

There's not another brand in the world with that clarity of the brand promise. Think of Ford before with all the brands under it. "What was really Ford?" You look at the blue oval today and the customers know what it is. Fiesta is best in class operating all over the world. Every year, it continues to improve.

What allows us to move so decisively is this clarity to aim for best in class. And we can do it with scale.

We offer more tech than luxury brands. Direct injection turbo: everyone is doing it now. The reason is, with volume, it becomes easier. The seatbelt airbag, we added it way above the requirements of safety to provide more value for the customer. If we didn’t have volume or scale, we couldn’t offer that in an affordable way.

Interviewer: Any lessons learned from the Thailand flooding?

One lesson is that diversity is really important; the fact that we align our production, operation and engineering around the world. We can move vehicles, parts and minimize destruction from these two tragedies.

As reliable as you want this business to be, it's important to react quickly. When something like that happens, everybody needs to respond and respond quickly. We have business like Europe and the Americas that have really strong functions like manufacturing and engineering. We meet everyday with them so we can meet with regional markets and help them deal with those tragedies. It’s important to deal effectively and decisively because you don’t know when it will happen next.

Joe Hinrichs (JH), Group Vice President and President, Asia Pacific and Africa, and chairman and CEO of Ford China chimes in.

JH: When we fully realize the global platform worldwide, we’re better protected from isolated natural disasters. The Fiesta is built in Thailand, our supply base was affected in Thailand but our manufacturing wasn't. We were able to utilize the supply base in China to supply components to Thailand to build the Fiesta while Thailand came up from the flood situation. Supply is set up so that we can utilize the same parts around the world to keep producing. That’s the benefit of our global platform strategy because we have multiple supply centers and different manufacturing locations which are an important part of our supply strategy.

Interviewer: Would you say this is Ford’s biggest challenge to date?

AM: From my perspective, the most important thing is to continue to stay focused on the customer and where the world is going.

If we stay market driven (customer in first and never go back to being product out first). Because the customer decides everything - where’s the world going, where’s safety going, where are the consumers going and what’s our strategy to exceed their expectations in price and value. That’s the real challenge. The most important thing is to stay focused on the customer and stick to this One Ford plan. The dealers know, the suppliers know and the customers know exactly what they’re getting.

It sounds like a big challenging thing but it’s so important to have a brand concept and brand clarity. The world is going to change, things are going to go up (fuel, congestion), people are going to want to move up that hierarchy and experience the freedom of driving a car.

Interviewer: Is tis new subcompact SUV the start of Ford going into smaller cars? Will we see Ford Micro or Nano cars in the future?

AM: I don’t think so. Our strength is being a volume and affordability value proposition. The only way to do that is with scale. The moment we start dropping to niche vehicles with no volume, not connected, then we are not true to that promise. With the current market, we are addressing 90% of demand.

They’re interesting and maybe someday we’ll see that and Ford will be there. For now, we are laser focused on the center of the market. That starts at the B size (Fiesta). We can expand the brand down a bit and give people lower price points but with fantastic quality.

Interviewer: Any plans to acquire other brands?

AM: Let me say this really carefully. No.

Interviewer: What do you personally drive?

AM: I drive a different car every night. When I first arrived and left Boeing to come to Ford, they picked me up in a Land Rover. I drove into the world headquarters garage and there were very few Ford vehicles there. Now you drive into the garage and it’s all Ford and competitor vehicles.

We said we’re gonna focus and Ford and focus on being best in class. You can only know best in class if you see the competition.

Every night, I drive either a new Ford product or a competitor and so does the rest of the team. And every member of the team knows everything about the competitors.

We are going to stay laser focused. You look at the Ka, Figo, Fiesta, Focus, Fusion, Taurus, Mustang, Edge Explorer, etc. That line-up right now takes care of 100% of the automobile market worldwide. What allows us to move so decisively is this clarity to aim for best in class. And we can do it with scale.