Name: How Ford avoided bankruptcy
Uploaded: 2014-04-09
Duration: 4 min 50 s
Description: Chairman Bill Ford says the carmaker kept up R&D spending when sales slowed.

[ MUSIC ] Two years ago Ford was seen as one of the riskiest bets in the auto industry, and now it's considered the best bet. So clearly you're doing something right. What do you think you're doing right? Well, it's a lot of things. I mean I, I think there's you know, in this business there's kind of no silver bullet. There are a number of things you gotta do well. I mean, our quality, has come up dramatically, and we're at the top now. We have the most five star safety ratings. We are going to be the fuel economy leader in every segment that we participate in. That's all important. But I think the really important stuff is that even during the dark days we kept our R & D spending on the new technology alive. So, today, we're launching hybrids, plug- ins. We've got an all electric vehicle coming this year. We have bio- fuel vehicles. We're still, spending money in, in development on fuel cells and hydrogen, into, both fuel cell hydrogen, but also internal combustion hydrogen. So, we kept all that alive during the difficult days, and now it's starting to hit the marketplace. And I think that's a real differentiater for us. Now, you mentioned the dark days. When did those really start? When did you start to know something was wrong? Well, you know, it's it's really, I mean, we've had [ LAUGH ], if you go back through our history we've had a lot of ups and downs. This has always been a really cyclical business. In fact in my working career I've been through two major recessions. Actually it's my third major recession. And I've been through some great times. But, really the decade of the 90's were really good to Ford, and really, to the, most of the industry. And then, at the turn of the century, it started to become more difficult. And, you know we actually made money through 2005, but it was clear at the end of 2005 and beginning 2006 that we needed to do some major, major restructuring. And so we did. We took a lot of costs out. It was very painful to do, but that was the period that we didn't slash and burn our R & D. In fact, we kept investing in all these new technologies figuring there would be a brighter day. And that brighter day would require us to be the leader in rolling these out. Mm- hm now other than, creating a smaller house, well, how many brands do you have now? Well we've, we, we still have Volvo, although we've openly declared we're trying to find a solution for that. We have a much smaller interest in Mazda. And so really, we're down to Ford, Lincoln, and Mercury. And Ford is a global brand. Right. Now, other than making your house of brands much smaller, what else are you doing to, make the company more efficient? Well one of the things we did, and Alan and I talked about this on the first day, is, for over 100 years, Ford has been on every continent. We had Ford of Europe, Ford South America, Ford Asia, Ford North America. And they really in many ways acted like separate companies. And one of the, one of the great things Alan has done in terms of bringing the focus to the Ford brand is to also integrate all those different regional companies into one global company. So, yeah. You get a lot more economy scale when you do that. You can spread your development costs out around the world. And, it's allowing us to be much more efficient. So an example is, in the past we would have done, you know, a tour- size vehicle. Or, I should say, a fusion- size vehicle, in the U. S ., done a completely different one in Europe, and perhaps even a third one in Asia. Today we're developing one of those vehicles for the globe. And that's a much more efficient way to operate. And we are doing the same things with our engines. Now, you've mentioned that you believe that you are gonna be profitable by 2011. Why are you so optimistic about that? Because we've really streamlined our operations. It's been pretty painful. I mean, it's, it's no fun to go through restructuring. But we've gotten ourselves into shape where we are much leaner. Our products are being exceptionally well- received. We're gaining market share all around the world. And we believe that unless there is an economic catastrophe, we're on track to do that. And do you have enough cash on hand to do all this? We do. Research and development? We do, we do. One of the things that obviously, we've spent a lot of time looking at, is our cash. You know, and we stress test it against every kind of economic condition. And, you know, for as far ahead as we can see, we think we're gonna be in pretty good shape. So as far ahead as you can see do you ever foresee asking the government for money, bankruptcy? No, no, absolutely not. I mean, not unless the world literally falls apart and we don't envision that. I mean, we're not a, in our scenario plan, we don't envision any great pickup in the overall environment for the foreseeable future. So, we think we're really, pretty conservative on our planning base. And we think with that planning base, we're gonna be just fine.

Chairman Bill Ford says the carmaker kept up R&D spending when sales slowed.