William Clay Ford, Jr., the company’s CEO since 2001, went outside the industry and he and Ford’s board brought in Boeing executive Alan Mulally to replace him in September 2006.
Mulally, in turn, bet the company in order to take advantage of the opportunity to fill its treasury later in 2006 just before the auto market was swamped by one of the largest downturns in history. Ford got $23 billion in convertible notes and a revolving credit line for pledging an extraordinary amount of the firm’s assets.
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The decision by Mulally about the funding may not have taken Ford out of the woods, but they certainly kept the company from floundering to the point where it had to turn to the government for aid as GM and Chrysler did. Ford used the restructuring of the industry earlier this year, which had been given federal government blessing, to improve its own positions with the UAW and creditors. Ford substantially improved its place at the domestic car company table without becoming a ward of the state.
Ford gives part of the credit for the improvement to the “cash for clunkers” program that brought large numbers of buyers into US dealerships. The federal program was so popular that the $1 billion fund was exhausted in a matter of days. The House has passed a bill to replenish the pool with an additional $2 billion, but if it is not signed into law, the August results for the domestic car market may flag a bit.
Ford’s July sales were up 2% to to over 165,000 vehicles.
Executive Producer: Philip MacDonald.
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