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Ford's Mulally: In His Own Words

Alan Mulally talks with Ted Reed of TheStreet.com.
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DETROIT (TheStreet) -- Here are some excerpts from my interview with Ford (F) - Get Ford Motor Company Report CEO Alan Mulally for TheStreet.com.

TheStreet

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What happens when the music stops at Ford?

Mulally

: The music never stops. World-class companies profitably grow. They go through cycles, but they profitably grow for the long term. We have turned the corner. We have increased market share. We have a product line that we continued to invest in during the worst of times. And now we are going to serve all those customers around the world. We are going to globalize our products, increase the quality and the productivity every year, forever.

Is this the greatest job, fixing an American icon?

This is such an important industry for the U.S. and for the world. It is the soul of manufacturing, of technology, of innovation. It (provides) 4% or 5% of U.S. GDP. It's millions and millions of jobs. It fosters innovation for so many industries. It's part of the answer for energy independence, energy security, energy sustainability.

That's one of the big reasons we went back (in November 2008) and testified for our competitors. Who would have ever thought it, a Boy Scout and Girl Scout universe (where) you would support your competitors for the good of the industry so the United States doesn't go into a recession, or a depression?

At both Boeing (BAC) - Get Bank of America Corp Report and Ford, you have laid off tens of thousands of people.

I also hired a lot of people. These are cycles. The most important thing that you do is size your production to real demand and not overproduce. In the auto industry, they would keep the production up because they thought every cost was fixed. They would flood the market with vehicles, and then they'd discount them -- which actually would delay the whole cycle of recovery.

The way to survive is to reduce your production to the real demand (and) at the same time accelerate the investment in new products so that when you come out on the other side, you are there with the vehicles that people want. Then you start to grow the business again, profitably, and you start hiring people.

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Is Ford just like American (AMR) , a well-managed company that did not file for bankruptcy protection when its competitors did, and now is disadvantaged in terms of labor costs and debt?

We have the same labor costs as our competition in the U.S., both American and Japanese. We have not been disadvantaged (by United Auto Workers' rejection of contract changes), and we will continue to work with the UAW. We have a tremendous track record working with the UAW.

(As for debt), we are paying a bit more interest now because we have a little bit more debt. But you think of all the positive things because we didn't (file bankruptcy and accept buyouts.) People love us, we have a strong business, we have positive earnings and positive cash flow, and we'll accelerate the improvements of the balance sheet.

Has the auto industry lagged on seeking fuel efficiency?

Since the 1973 oil embargo, we have improved fuel efficiency on cars by 100% and on trucks by 70%. It really is too bad about the perception. We ended up being perceived for things we were against, when we really were trying to have a discussion about what was possible. We had a bad reputation, which I don't think was completely warranted.

According to Steven Rattner, Rick Wagoner said that Alan Mulally "called me with questions every day for two weeks after he got to Ford." Is this so?

He was just reflecting that I reached out to everybody in the industry (when I got here). With Rick we have so many things as an industry where we work on common requirements. I would talk to him regularly. I tapped in to everybody's knowledge.

I read that in 1969 you drove from Lawrence, Kansas, to Seattle in a VW in order to go to work at Boeing.

I was a poor college student.

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, that was all I knew about the Northwest. My thesis adviser used to be head of aerodynamics at Boeing, so I was his graduate student, doing slave labor. He had taken me to Seattle, introduced me to all of the smartest people in the world, at Boeing. I presented my research results to them. I saw the airplanes, saw the factory, saw the finest airplane company in the world, and I just knew that was where I wanted to be."

-- Written by Ted Reed in Charlotte, N.C.

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