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Hard Choices

Alan Mulally on Ford's Amassing Debt in the Downturn

“I couldn’t let the economy get in the way of what we needed to do”

Illustration by Jimmy Turrell

“I couldn’t let the economy get in the way of what we needed to do”

W e were on track to lose $17 billion when I came in 2006. The business was slowing down, fuel prices were going up, a lot of people were reducing their investment in new products. We needed to decide on a new strategy and then immediately get the financing to do it. We could have asked the banks for just enough money to restructure the business. Some felt we should have done that. But we also wanted to accelerate new products to develop a complete family of vehicles and have extra money in case the economy slowed down. It meant adding $23.5 billion in debt as profits were going down. That was a really hard decision. I knew we’d be generating less profit, but I couldn’t let the economy get in the way of what we needed to do. We needed to invest in our product line.

I was new to Ford (F), so I didn’t know if we had the talent and drive to do this. I sought advice from everyone. I met with everyone. What made me confident were the similarities between Ford and Boeing (BA). A car might have 10,000 parts and an airplane 4 million, but both deal with very complex engineering solutions, with thousands of people working on them around the world. I also saw this love for Ford that was similar to what I’d seen in people at Boeing. These are two American icons: Bill Boeing, Henry Ford. Any huge turnaround is hard work. We’ve transitioned from survival to growth, but it’s an ongoing process.

You don’t stop investing when times are tough. In Europe [where Ford expects to lose $1 billion this year], we just announced 15 products that we’ll introduce over the next five years. Everybody’s down. The economies are down. Auto sales are down. We’re investing in smaller vehicles. We’re investing in the Fiesta and bringing over the Mustang, the EcoSport SUV. We’re dramatically expanding into new market segments where others are holding back. I love serving Ford and I have no plans to do anything else. Ever since I turned 65, which I think is the new 50, people are interested [about the date of my retirement]. People just ask. But there’s no news to report. I enjoy this so much. There are always tough decisions in this industry. Sometimes we forget how much fun it is. — As told to Diane Brady

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