When he was hired away from Boeing in 2006, Mulally says he asked Bill Ford what had gone wrong at the Big Three. The U.S. companies were decreasing market share and becoming less relevant, he said he was told. The concentration on SUVs and trucks had created an opening for smaller, more affordable and fuel-efficient vehicles, and the Japanese and Koreans had rushed in to fill it. Add that to a fundamental drop in demand, and you had a recipe for a mammoth train wreck.
Mulally was talking to James Suroweicki of The New Yorker, which turns its attention to the automobile industry only infrequently. Here's the full 18-minute video: Mulally said the company's new strategy is to rebuild and focus on Ford itself for "absolute brand clarity--a laser focus on Ford." With Jaguar, Land Rover and (soon) Volvo out of the picture, Mulally will try to make segment-leading Blue Oval cars again, which is one reason the new Taurus ("We made seven million Tauri; we were number one for eight years!") is so important. Ford, which sells 60 percent of its vehicles outside the U.S., is also capitalizing on its global reach, and choosing to import more cars designed in Europe. "We need to capitalize on our global diversity," Mulally said.
By 2011, Mulally said, Ford will not only be profitable, but it will be making "best-in-class products in every segment," and all of them will be profitable, too. Asked about past failures such as the allegedly exploding Pinto, Mulally said, "We didn't have a competitive cost structure, so we didn't have a consistency of purpose in cars."
Moving forward, Mulally sees higher energy prices, a major push forward with hybrids and a move eventually to battery electric cars. "The key enabler is the batteries," he said, pointing out that the packs necessary to move EVs 30 to 40 miles weigh 600 to 700 pounds. The way forward, he said, is with new packs that can work with fewer cells and less weight.
Finally, he said, "A gas tax could be one important element of an integrated energy policy." That may sound radical, but I've heard Bill Ford say the same thing.