In 2006, with the Ford Motor Co. losing boatloads of money, little cash on hand and little of interest in its product pipeline, then-CEO Bill Ford, Jr. announced a major restructuring and brought in Boeing executive vice president Alan Mulally as its new president and CEO. One of Mulally's first moves was to mortgage virtually all of the company's assets, including its buildings and the logos on them, to raise $23.4 billion for much-need product development.
This was seen by nearly all observers as extremely risky, and many wondered whether the company would survive. But that move – borrowing billions when corporate credit was still available – would ultimately enable Ford, unlike its Detroit rivals, to avoid the embarrassment of bankruptcy and government loans when the economic tsunami struck two years later.
Since then, the PR benefit of avoiding bankruptcy and a string of appealing new products, Ford has recovered very well. And, despite still-substantial debt and higher UAW wage rates vs. post-bankruptcy General Motors and Chrysler, it's doing fine today.
No surprise, then, that Mulally has been named 2011 Automotive Executive of the Year by a group of auto industry media, analysts and supplier CEOs. Past recipients of the award, which is sponsored by DNV Business Assurance, Johnson Controls, DuPont and Visteon, have included Elon Musk, James O'Sullivan, Jim Press, Carroll Shelby, Bill Ford, Jr., Dieter Zetsche, Henry Ford II, Rick Wagoner, Bob Lutz, Carlos Ghosn, John DeLorean and Lee Iacocca.
"We are fighting for the soul of American manufacturing and competing with the best in the world," Mulally told the April 13 award luncheon at the Detroit Athletic Club. He said he feels good about having joined his fellow Detroit automaker CEOs in testifying to that (incredibly ignorant and arrogant) Congressional committee in 2008 and would do it again, because the future of the industry was at stake. "If GM and Chrysler had gone down, they would have taken the suppliers with them. We would have gone from recession to depression."
Then he opened the floor to questions. Among the first was his take on the industry's future. "Clearly, we're going to be paying more for gas," he responded, "so our focus on fuel efficiency is of utmost importance. Plus more alternate fuels: cellulosic ethanol, CNG, diesel, hydrogen and electrification with options – battery electrics, hybrids, plug-in hybrids – all built on the same assembly line to keep costs down." He added that battery size, weight and cost will have to come down from the current 700-800 pounds and $15,000.
Continue reading Detroit CEOs speak up on efficiency and electrification...
A few blocks away on the very next day, GM CEO Dan Akerson addressed the Society of Automotive Engineers (SAE) World Congress. "The heart of our company, this industry, is engineering," he said. "We produce some of the most technically complex machines for a mass market. How we market these machines is critical – but the business starts and ends with the work you [engineers] do. And we have our work cut out for us. Because this industry is on the verge of a huge transformation that will challenge our engineering capability."
But dramatic transformation does not advance evenly or smoothly, he continued, but happens in "bursts." As a former telecommunications exec, he is most familiar with how this process has played out in that field – from telegraph to telephone, copper wire to fiber-optics, wireless to satellite, analog to digital – and others, including photography and aviation.
"Today, we're at the start of this kind of revolution in the auto industry. It is centered on the push to develop cleaner, safer, more energy-efficient vehicles for a rapidly expanding global auto market. And it is driven by the fact that limited petroleum supplies... and soaring demand for energy... mean that we can no longer rely on oil to supply 96 percent of the world's automotive energy requirements.
"We're moving from an industry that, for 100 years, has been based on vehicles that are mechanically-driven and petroleum-fueled... to ones that will eventually be driven and fueled by electricity itself.... the change is coming. And faster than many might think."
He discussed how GM is working to anticipate these changes and incorporate them into its own transformation while bringing to market such new technologies as:
- improvements in conventional powertrains
- development of alternative fuels
- advances in aerodynamics and mass reduction
- electrification of the automobile
- a variety of hybrid systems
- extended-range electric vehicles
- battery electric vehicles
- fuel-cell electric vehicles.
He emphasized that GM intends to lead, not follow, in development of these technologies "That's why we've invested more than $700 million in recent years in Michigan facilities... to bring the Volt to market. That's why we announced in November that we'll hire 1,000 new engineers and researchers in Michigan over the next two years... to significantly expand our electric vehicle programs. That's why we're raising our R&D and product spending this year... and why we'll maintain it at higher levels going forward... in good times and bad.
"And that's why we created GM Ventures last June to identify and develop new automotive technologies. Somewhere, some kid is inventing the next Hewlett-Packard in his garage. We want to find him or her and help bring those exciting new ideas to market.
"Does it cost more to bring these things to market? Of course. It requires a lot of up-front investment. In the long run, investing in technology and R&D – and engineering – will strengthen our individual companies... improve the prospects for our industry... and help to grow our economy."
Strong words with noble intent for a CEO with no prior automotive experience who has been on the job just eight months since replacing government-appointed Ed Whitacre last Sept. We'll see how Akerson's GM technology transformation plays out in the next few years.
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Award-winning automotive writer Gary Witzenburg has been writing about automobiles, auto people and the auto industry for 21 years. A former auto engineer, race driver and advanced technology vehicle development manager, his work has appeared in a wide variety of national magazines including The Robb Report, Playboy, Popular Mechanics, Car and Driver, Road & Track, Motor Trend, Autoweek and Automobile Quarterly and has authored eight automotive books. He is currently contributing regularly to Kelley Blue Book (www.kbb.com), AutoMedia.com, Ward's Auto World and Motor Trend's Truck Trend and is a North American Car and Truck of the Year juror.