FORD CEO ALAN MULALLY TESTIFIES ON CAPITOL HILL

[VaporDude]

Originally Posted by Alloy Dave

+1 Especially on the part about Congress not having any business sense.

When was the last time congress had any sense? They know how to criticize everyone else and blame others real fast except for themselves. Lets see how congress disects this letter and what they don't understand.

[Johnny Dangerously]

Heard this on Hannity this afternoon:
The government is not without blame. You've got the politicians that are in the pockets of the environmental whack jobs, the unions, insurance companies, & anybody else with a special interest & money. Thanks to their regulations (influenced by these groups) that they imposed on the automakers, they are forced to develop technology in order to meet the mandates. They get beat up for improving gas mileage, because the government won't allow new exploration, new drilling or new refineries.

I'm all for the improvements made in cars & trucks recently, but I believe that we would have gotten them even without government mandates & the cost impact to them would not have been as great as it is when they get stuffed forced on them.


`

[VaporDude]

Originally Posted by Johnny Dangerously

Heard this on Hannity this afternoon:
The government is not without blame. You've got the politicians that are in the pockets of the environmental whack jobs, the unions, insurance companies, & anybody else with a special interest & money. Thanks to their regulations (influenced by these groups) that they imposed on the automakers, they are forced to develop technology in order to meet the mandates. They get beat up for improving gas mileage, because the government won't allow new exploration, new drilling or new refineries.

I'm all for the improvements made in cars & trucks recently, but I believe that we would have gotten them even without government mandates & the cost impact to them would not have been as great as it is when they get stuffed forced on them.


`

I couldn't agree more.......

[HSURB]

Originally Posted by Johnny Dangerously

Heard this on Hannity this afternoon:
The government is not without blame. You've got the politicians that are in the pockets of the environmental whack jobs, the unions, insurance companies, & anybody else with a special interest & money. Thanks to their regulations (influenced by these groups) that they imposed on the automakers, they are forced to develop technology in order to meet the mandates. They get beat up for improving gas mileage, because the government won't allow new exploration, new drilling or new refineries.

I'm all for the improvements made in cars & trucks recently, but I believe that we would have gotten them even without government mandates & the cost impact to them would not have been as great as it is when they get stuffed forced on them.


`

That's hard to argue with. Have to agree.

HSURB®

[68fastback]

Mullaly's comments today to Congress... (total text below)

FORD CEO ALAN MULALLY TESTIFIES ON CAPITOL HILL

NOTE TO EDITOR: Today, Ford President and CEO Alan Mulally testified before the Senate Committee on Banking, Housing and Urban Affairs. Mr. Mulally's complete written testimony is available at: http://media.ford.com. The following statement was prepared for delivery:

WASHINGTON, D.C., Dec. 4 – "Mr. Chairman, Senator Shelby, and members of the Committee. Since the last hearing, I have thought a great deal about the concerns you expressed. I want you to know I heard your message loud and clear.
On Tuesday, you received Ford's detailed and comprehensive business plan, and I appreciate the opportunity to return here today to share Ford’s vision and progress in becoming a profitable, growing company.
You were clear that our business model needs to change. I agree. And that's exactly why I came to Ford two years ago to join Bill Ford in implementing his vision to transform our company and build a greener future using advanced technology. Let me share with you what we have done to change from how we used to do business to how we do business now.
It used to be that we had too many brands. Now we have a laser focus on our most important brand: the Ford blue oval. In the last two years, we sold Aston Martin, Jaguar and Land Rover – and reduced our investment in Mazda. And this week, we announced we are considering a sale of Volvo.
It used to be that our approach to our customers was: If you build it, they will come. We produced more vehicles than our customers wanted and then slashed prices, hurting the residual values of those vehicles and hurting our customers. Now we are aggressively matching production to meet the true customer demand.
It used to be that we focused heavily on trucks and SUVs. Now we are shifting to a balanced product portfolio, with even more focus on small cars and the advanced technologies that will drive higher fuel economy in all of our vehicles.
It used to be that our labor costs made us uncompetitive. Now we have a ground-breaking agreement with the UAW to reduce labor costs, and we appreciate the UAW's continued willingness to help close the competitive gap.
It used to be that we had too many suppliers and dealers. Now we're putting in place the right structure to maximize the efficiency and the profitability for all of our partners.
It used to be that we operated regionally – European cars for Europe. Asian cars for Asia. American cars for the U.S. market. Now we are leveraging our global assets, innovation, technology, and scale to deliver world class products for every market.
It used to be that our goal was simply to compete. Now we are absolutely committed to exceeding our customers' expectations for quality, fuel-efficiency, safety and affordability.
This is the Ford story. We are more balanced. We are more efficient. We are more global. And we are focused. In short, we are on the right path to becoming a profitable, growing company.
We have moved our business model in a completely new direction, in line with the most successful companies – and competitors - around the world. And as a result of our progress, we made a profit in the first quarter of this year. Unfortunately, we all are facing a severe economic downturn that has slowed our momentum.
Despite this downturn, Ford does not anticipate a near-term liquidity crisis. In fact, we expect our automobile business to be profitable in 2011. But we do support a government bridge loan because it is critically important to the U.S. auto industry.
Specifically, Ford requests access to $9 billion in bridge financing – something we hope we will not need to use. Instead, as we continue to drive change in our company, this line of credit will serve as a critical safeguard, if events require it. And if we did need to access this loan, we would use the money to continue our aggressive transformation and restructuring.
Ford is an American company and an American icon. We are woven into the fabric of every community that relies on our cars and trucks and the jobs our company supports. The entire Ford team – from employees to shareholders, suppliers to dealers – is absolutely committed to implementing our new business model and becoming a lean, profitable company that builds the best cars and trucks on the road for our customers. There is a lot more work to do, but we are passionate about the future of Ford.
In fact, we invite you to visit us in Dearborn to kick the tires, look under the hood and talk to our employees. We hope you will join us and see for yourself the progress we are making to develop the vehicles of the future."

[VaporDude]

Ford has done alot in the past several years to try and turn a profit without hurting the company. I don't think GM or Chrysler can say the same. At least Ford isn't asking for a loan, just a line of credit in the event something bad happens down the road that can not be prevented on their own. I like the direction that Ford is going and I hope they continue that same path in years to come. I just hope congress wakes up see what Ford is doing and only hope that GM and Chrysler can follow their lead.

[KR]

bailouts NEED TO STOP...................It will teach the whole country a lesson!

[black vert ss]

I say let the oil companies bail out the automakers. With the record profits they have recorded this past year they could more than afford to lend the car makers the money. After all it is the cars that use thier oil products.

[rpretzel]

Originally Posted by black vert ss

I say let the oil companies bail out the automakers. With the record profits they have recorded this past year they could more than afford to lend the car makers the money. After all it is the cars that use their oil products.

[68fastback]

Full text of written testimony Mullaly gave Congress today:

Written Testimony of Alan R. Mulally, President and Chief Executive Officer, Ford Motor Company

Testimony of Alan R. Mulally
President and Chief Executive Officer, Ford Motor Company
Senate Committee on Banking, Housing, and Urban Affairs

December 4, 2008

Mr. Chairman, Senator Shelby and members of the Committee. Thank you for the opportunity to share Ford’s plan. We appreciate the valid concerns raised by Congress about the future viability of the industry. We hope that our submission and today’s testimony will help instill confidence in Ford’s commitment to change, including our accountability and shared sacrifice during this difficult economic period.
On Tuesday, Ford Motor Company submitted to your Committee our comprehensive business plan, which details the company’s path to profitability through an acceleration of our aggressive restructuring actions and the introduction of more high-quality, safe and fuel-efficient vehicles – including a broader range of hybrid-electric vehicles and the introduction of advanced plug-in hybrids and full electric vehicles.
In addition to our plan, we are also here today to request support for the industry. In the near-term, Ford does not require access to a government bridge loan. However, we request a credit line of $9 billion as a critical backstop or safeguard against worsening conditions as we drive transformational change in our company.
One Plan: Beginning earlier this decade, we recognized the challenges the domestic auto industry faced and began implementing a disciplined global business plan to completely transform Ford, to improve our efficiency, cut costs and champion innovation. Our plan builds on the success we have seen in the past two years by accelerating the development of our new products that customers want and value. Our plan is anchored by four key priorities:

• Aggressively restructure to operate profitably at the current demand and changing model mix;
• Accelerate development of new products our customers want and value;
• Finance our plan and improve our balance sheet; and
• Work together effectively as one team, leveraging our global assets.

One Goal: Our team and plan is dedicated and focused on delivering profitable growth for all. While market, economic and business conditions recently have deteriorated worldwide at a rate never before seen, we have made substantial progress since we launched our plan in late 2006:

• We obtained financing by going to the markets in December 2006 to raise $23.5 billion in liquidity, consisting of $18.5 billion of senior secured debt and credit facilities, substantially secured by all of our domestic assets, and $5 billion of unsecured convertible debt.

• We have implemented our strategy to simplify our brand structure. As a result, we sold Aston Martin, Jaguar, Land Rover and the majority of our ownership of Mazda, and we’re considering our options for Volvo. We have divested other non-core assets. These sales have also helped our overall liquidity and generated $3.7 billion in additional capital to re-invest in the business.

• To achieve maximum efficiency, we will have reduced our North American operating costs by more than $5 billion between year end 2005 and 2008.

• We have taken painful downsizing actions to match capacity and market share in North America, including closing 17 plants and downsizing by 12,000 salaried employees and 44,000 hourly employees.

Ford is committed to building a sustainable future for the benefit of all Americans, and we believe Ford is on the right path to achieve this vision. I know the Members of the Committee have had an opportunity to review our plans over the last two days, so I will highlight new details about Ford’s future plans and forecasts:

• Ford’s plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years.

• Based on current business planning assumptions – including U.S. industry sales for 2009, 2010 and 2011 of 12.5 million units, 14.5 million units and 15.5 million units, respectively – Ford expects both our overall and our North American automotive business pre-tax results to be breakeven or profitable in 2011.

• As part of a continuing focus on building the Ford brand, we are exploring strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker. The strategic review is in line with a broad range of actions we are taking to focus on the Ford brand and ensure we have the resources to fund our plan. Since 2007, Ford has sold Aston Martin, Jaguar, Land Rover and the majority of its stake in Mazda.

• Half of the Ford, Lincoln and Mercury light-duty nameplates by 2010 will qualify as “Advanced Technology Vehicles” under the U.S. Energy Independence and Security Act – increasing to 75 percent in 2011 and more than 90 percent in 2014. We have included these projects in our application to the Department of Energy for loans under that Act and we hope to receive $5 billion in direct loans by 2011 to support Ford’s investment in advanced technologies and products.

• From our largest light duty trucks to our smallest cars, Ford will improve the fuel economy of our fleet an average of 14 percent for 2009 models, 26 percent for 2012 models and 36 percent for 2015 models – compared with the fuel economy of its 2005 fleet. Overall, we expect to achieve cumulative gasoline fuel savings from advanced technology vehicles of 16 billion gallons from 2005 to 2015.

• Next month at the North American International Auto Show in Detroit, we will discuss in detail Ford’s accelerated vehicle electrification plan, which includes bringing a family of hybrids, plug-in hybrids and battery electric vehicles to market by 2012. The work will include partnering with battery and powertrain systems suppliers to deliver a full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011. We will develop these vehicles in a manner that enables it to reduce costs and ultimately make BEVs more affordable for consumers.

• The 2007 UAW-Ford labor agreement resulted in significant progress being made in reducing the company’s total labor cost. Given the present economic crisis and its impact upon the automotive industry, however, we are presently engaged in discussions with the UAW with the objective to further reduce our cost structure and eliminate the remaining labor cost gap that exists between Ford and the transplants.

• As previously announced, Ford plans two additional plant closures this quarter and four additional plant closures between 2009 and 2011. We have announced our intent to close or sell what will be four remaining ACH plants. And we will continue to aggressively match manufacturing capacity to real demand.

• Ford will continue to work to reduce its dealer and supplier base to increase efficiency and promote mutual profitability. By year end, we estimate we will have 3,790 U.S. dealers, a reduction of 606 dealers overall – or 14 percent from year-end 2005 – including a reduction of 16 percent in large markets. In addition, Ford has been able to reduce the number of production suppliers eligible for major sourcing from 3,400 in 2004 to approximately 1,600 today, a reduction of 53 percent. We eventually plan to further reduce the number of suppliers eligible for major sourcing to 750.

• After reducing our workforce by 50 percent in just three years, we are also canceling all bonuses and merit increases for North America salaried employees – including top management – in 2009. And should Ford need to access funds from a potential government bridge loan, I will work for a salary of $1 a year – as a sign of my confidence in the company’s transformation plan and future.

• We are moving ahead with plans we announced this summer to leverage the company’s global product strengths and bring more small, fuel-efficient vehicles to the U.S. The plan includes delivering best-in-class or among the best fuel economy with every new vehicle introduced. We are also introducing industry-leading, fuel-saving EcoBoost engines and doubling the number and volume of hybrid vehicles.

• This product acceleration will result in a balanced product portfolio with a complete family of small, medium and large cars, utilities and trucks. And we are increasing our investment in cars and crossovers from approximately 60 percent in 2007 to 80 percent of our total product investment in 2010.

Our plan is working, but there is clearly more to do – something that is increasingly difficult in this tough economic climate. That is why we are seeking access to a $9 billion bridge loan, even though we hope to complete our transformation without accessing any of these funds.
Despite the serious global economic downturn, Ford does not anticipate a liquidity crisis in 2009 – barring a bankruptcy by one of our domestic competitors or a more severe economic downturn that would further cripple automotive sales and create additional cash challenges.
In particular, the collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford's top dealers also own GM and Chrysler franchises.
The impact of a bankruptcy also reaches beyond Ford and the U.S. auto industry. It would cause further stress to our domestic banking industry and private retirement systems. Goldman Sachs estimates the impact at up to $1 trillion.
We also believe effective restructuring involves a broader dialogue with all our stakeholders. President-elect Obama has indicated an interest in such a discussion. There are a number of complicated questions that will need to be considered, for example:

• How do we create a dealer body that meets market demand and is profitable for all?
• How do we develop a healthy and viable supplier base?
• How do we work with the UAW to ensure that our cost structure is competitive with the foreign transplants?
• How do we address the significant debt obligation of the domestic industry?

We are prepared to work together with this Committee and all of the parties to address these critical issues as part of our plan.
Ford has a comprehensive transformation plan that will ensure our future viability – as evidenced by our profitability in the first quarter of 2008. While we clearly still have much more to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth.
Thank you.

Mullaly was very clear today:

-we have adequate liquidity ifor 2009 but would like access to $9B line-of-credit in the absence of available traditional channels
-it would hurt us irrepairably if either GM or Chrysler went under because it would sink supplier-base which is 80% in-common.
-we've made great strides and are already on the right plan -- we just need to execute.

Ford also announced a corporate czar of global peformance products today ...good to see that.

[Alloy Dave]

Originally Posted by 68fastback

we have adequate liquidity ifor 2009 but would like access to $9B line-of-credit in the absence of available traditional channels[/color]

If that's the case, let them come back and ask when they need it.

[KR]

"adequate liquidity" But we'd rather keep that for ourselves and spend tax payers money.
Is more like it!

[68fastback]

Wow, tough audience here

I think they just need to know what business assumptions they can plan on -- i.e. yes/no/how-much -- you just can't run a business without knowing that and Ford would be a fool to not participate given how interlocked the supplier base is. Ford is only asking for what they would have obtained from the banking industry if it wasn't broken right now. Also, if GM/Chrys get direct assistance it would put Ford at a disadvantage: it's all-three or nothing, imo. The three also agreed that, to the extent they accept gov-loan money, they'd agree to grant a Congressional oversight committee (as I predicted Congress would realize they need) the same powers of a bankruptsy court to reorganize their businesses if they fail to perform -- all three agreed to that.

How would this be any different than bailing out a bank with the agreement that money would get allocated to traditional asset-collateralized loans to the big three. As I see it the only diference is that the bank would get a markup on the money -- a gift they are not worthy of, imo. So why not have the government just bypass the banks and provide the assistance directly but under the same terms/penalties as in a functioning banking system.

I also liked the pressure that is being put on the UAW leadership ...they have some $2B in their coffers over $1B of which is specifically for the next strike! Congress asked their chief a$$hole if he's be willing to kick that money (just the $1B part) to reduce labor costs ...dodging and weaving BS words and he would not be pinned down (it's the memebers' money -- fair enough) but it seemed clear that being able to cripple their members employers is more important than their members having employers.

I tell ya, I really do respect the notion that, as a general rule, taxpayer money should never be used for this, but this isn't the airlines where the product is consumed in a hours ...these are durable goods with warranties (without which few will buy) and I don't see, on balance, there is any sensible choice except to help. Clearly just one opinion but I don't see that the breakage and it's ripple-thru can be justified on principle alone in this specific case. The automakers drive 4% of the US GDP which is 4x the cost of worst-case cost (more than the $34B) assistance and assuming the money isn't paid back (which I predict will *not* occur for Ford). I see it more as a direct injection of liquidity availability without traditional banking overhead.

I wish there was a realistic way to pick and choose who survives on this one. Chrysler is seemingly toast anyway. GM is the problem, imo. They're almost as bad off as Chrysler but are the 800lb gorilla. Without their spending, Ford's supply chain is toast.

I think the oversight committee with bankruptsy-court powers is key. Because I think it will be GM that dips into the well first and, if they don't hit their targets, will be getting paired-down, voluntarily or not. They need to sell Saturn (whcih has become a joke), and prolly dump Pontiac at a minimum too. If they don't they'll liely default and the court or Congressional committee will do it for them ...and probably with a far duller knife.

It's a tough call either way ...will be interesting to see how the incompetant political whores Congress vote.

[Alloy Dave]

Originally Posted by 68fastback

Ford is only asking for what they would have obtained from the banking industry if it wasn't broken right now. Also, if GM/Chrys get direct assistance it would put Ford at a disadvantage: it's all-three or nothing, imo.

Good point Dan. Why can't they go to the same banks that are loaning Honda and Toyota money? I'm ignorant on this....are they Japanese just not in need of loans, or are they using Japanese banks?

Originally Posted by 68fastback

The three also agreed that, to the extent they accept gov-loan money, they'd agree to grant a Congressional oversight committee (as I predicted Congress would realize they need) the same powers of a bankruptsy court to reorganize their businesses if they fail to perform -- all three agreed to that.

This doesn't give me any tummy comfort, as our Congress has oversight of many things that have turned into a mess...so I don't trust them to do the right thing either.

Originally Posted by 68fastback

How would this be any different than bailing out a bank with the agreement that money would get allocated to traditional asset-collateralized loans to the big three. As I see it the only diference is that the bank would get a markup on the money -- a gift they are not worthy of, imo.

First of all, let's assume it's NOT any different. I still don't want it...I didn't want it for the banks either and I'm irate that they did it anyway. Secondly, I think they are a bit different because the banks affect ALL parts of the economy, not just one. If you do this for the Big 3, why not the boat business? What about RVs? What about mattress makers? How about Eli Lilly? Microsoft? Where does it end?

Originally Posted by 68fastback

So why not have the government just bypass the banks and provide the assistance directly but under the same terms/penalties as in a functioning banking system.

Why not bypass the Big3 and just give all Americans the money to spend at any business they want...which would address my issue above about picking a particular industry? I know the answer...because some people would save the money instead of spending it on cars.

Originally Posted by 68fastback

I also liked the pressure that is being put on the UAW leadership ...they have some $2B in their coffers over $1B of which is specifically for the next strike! Congress asked their chief a$$hole if he's be willing to kick that money (just the $1B part) to reduce labor costs ...dodging and weaving BS words and he would not be pinned down (it's the memebers' money -- fair enough) but it seemed clear that being able to cripple their members employers is more important than their members having employers.

I agree on this point....I think the union is going to have to make the lion's share of the sacrifices. Until they get to the point where their wages/benefits/productivity are essentially the same as the Japanese, the Big3 will be in trouble. What's amazing is that the wages are not THAT different...Honda is paying a fairly good wage...but they are not unionized, so the labor flexibility is much greater, which increases productivity and drives down costs.

Originally Posted by 68fastback

I don't see, on balance, there is any sensible choice except to help.

I say let them fail. The consequences would be dire. Lots of unemployment, lots of downside in the market..IN THE SHORT TERM. But over time, someone will start a new car company and compete....perhaps more than one. I think there is room for at least 2.

We've lost whole industries on other items. It's not good, but it happens. Electronics. Shoes.

I am terrified of the consequences of failure in the short term, but I still think leaving them to the free market is the best long-term approach. The union guy has been saying "this is not a bailout, it's a LOAN". Well guess what....a loan IS a bailout when no one except the government will give it to you.

[Johnny Dangerously]

Video of Bail Out Explained - Photobucket - Video and Image Hosting

[KR]

Originally Posted by Johnny Dangerously

OMG I remember watching that on an old B&W tv

[Johnny Dangerously]

Originally Posted by GT500KR

OMG I remember watching that on an old B&W tv

What's a black & white TV?







`

[VaporDude]

I think it's a black enclosure with a white around the screen. They used to have some funky Panasonic ones along time ago when thier slogan was "Just slightly ahead of our time".

[Johnny Dangerously]

Originally Posted by VaporDude

I think it's a black enclosure with a white around the screen. They used to have some funky Panasonic ones along time ago when thier slogan was "Just slightly ahead of our time".

Not ringing any bells here.


`

[KR]

you guys remind me of a Too Young joke

Too Young
A guy's walking down the street and sees Dirty Johny smoking a cigarette. He says, "Kid, you're too young to smoke." Johny looks up and doesn't say anything. The guy says, "How old are you?"
Johny says, "Six."
The guy says, "Six? When did you start smoking?"
Johny says, "Right after the first time I got laid."
The guy says, "Right after the first time you got laid? When was that?"
Johny says, "I don't remember. I was drunk."