Ford CEO: We're bringing Henry Ford's original strategy to China

WILMINGTON, DE - MAY 10: Ford President and CEO Alan Mulally(L) and Chairman of the Board William Ford (R) address the media during a news conference after the Ford 57th Annual Meeting of Shareholders May 10, 2012 in Wilmington, Delaware.The annual meeting invites shareholders to listen and speak with the board.
William Thomas Cain/Getty Images

(CBS News) For Alan Mulally, chief executive officer of Ford Motor Company, innovation in the auto industry calls for implementing a strategy that's over a century old. Mulally said Ford is set to roll out founder Henry Ford's original business strategy from 1903, this time in China. Put simply, Ford Motor Co. will operate where the company sells its vehicles. 

Tuesday on "CBS This Morning," Mulally explained, "The Chinese market is even larger than the U.S. market today. We have a very good partner in China...So we have a very strong operation in the United States, we have a growing operation in China."

Asked about the American auto industry's positioning in the world market -- particularly in Europe where Ford sales have dipped -- Mullaly said Ford is ready to compete with the best car companies in the world. He said, "I'd just like to say again that what we have done with the unions, with the UAW, with our dealers, with everybody associated with Ford, we have fundamentally restructured this company, so that now we can compete...Europe clearly is an issue for all of us. It's the biggest decline in the economy in the market that we have ever seen, but we'll continue to deal with that like we have in the past."

Reflecting on that past, Mulally defended the company's risky move to come to the aid of fellow automakers during the recession and resulting bailout of the auto industry.

"We had a very comprehensive plan before the economic slowdown and fuel prices were moving up," Mulally said on "CBS This Morning." "So we were well on our way to create an exciting Ford. We made a decision to even testify on behalf of our bankrupt competitors at the time because we felt that it was such a critical time for the industry and the United States economy that, if we wouldn't have helped out temporarily, that we could have had the United States slip from a recession into a depression. So looking back, we thought about it a lot. Would we do the same thing again and testify on behalf of our competitors? I think it was critical to our country at the time."

Ford borrowed $23.5 billion from banks in 2006, and based on the strength of their products, Mulally said, they have completely paid off that debt.

A major part of that transition to profitability is making fuel-efficient vehicles. Mulally said, "Most people agree that they'll pay more for fuel going forward, so fuel efficiency is the number one reason to buy."

For more with Mulally on the United States and manufacturing, as well as the decision to increase the use of aluminum in Ford vehicles, watch the video in the player above.