Tags: ford | mulally | gm | chrysler

Ford CEO: GM, Chrysler Bailouts Were 'Right Thing' to Do

By    |   Tuesday, 26 June 2012 03:06 PM

Although Ford did not receive government assistance during the auto bailouts of 2008 and 2009, the bailouts were "the right thing for the industry," Alan Mulally, Ford's chief executive officer, told Yahoo.

"If GM and Chrysler would've gone into free-fall, they could've taken the entire supply base into free-fall also, and taken the U.S. from a recession into a depression," Mulally said. "That's why we testified on behalf of our competitors even though we clearly did not need precious taxpayer money."

Mulally noted that it was a big decision to testify, but that the U.S. was in a very serious economic situation at the time.

The reason he said he testified was because the auto industry is such an integral part of the U.S. economy—making up 10 to 12 percent of the GDP—and for every U.S. auto job there are another nine to 10 jobs.

"Today looking back I think we would absolutely make the same decision," Mulally said.

A few years ahead the bailouts, Ford had borrowed $23.5 billion to restructure the business to get back to profitability and accelerate the investment in new vehicles.

"We have now repaid all of that debt," he told Yahoo.

Mulally noted that Ford was "disadvantaged" because it had to pay back its debts, but there were advantages.

Within eight days of the hearings, 98 percent of Americans knew that GM and Chrysler were bankrupt and Ford was not, and two weeks after the hearings, 74 percent of Americans reported they would consider Ford for their next auto purchase.

"Who would've thought that would've turned out to be such a positive thing for Ford?" he asked.

"The most important thing when you run a business is to do the right thing. If you do the right thing for the customers and all the stakeholders, then people are going to recognize that and appreciate it," Mulally stated.

"What's going to be good for the U.S. is this continuing focus on economic development and U.S. competitiveness," he said. "That's the most important thing for the leadership of the country to focus on, clearly."

However, a new report by by AlixPartners LLP warns that U.S. auto-sales growth may slow through at least 2016 as high unemployment lingers and young people drive less.

Car sales may rise 12 percent to 14.3 million this year and 3.5 percent to 14.8 million in 2013, Southfield, Michigan-based AlixPartners said. In the three years through 2016, sales may rise 7.4 percent to 15.9 million, the company said. That trails the market’s pre-recession high of 17.4 million in 2000, Bloomberg reporting, citing the data from AlixPartners.

There are 5 million fewer potential auto buyers in the U.S. compared with 2007, as employment recovers at a slower rate than after other recessions since World War II, the report said.

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Tuesday, 26 June 2012 03:06 PM
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