DEARBORN, Mich. — A decision Ford Motor Co. chief executive Alan Mulally made during his first months on the job may turn out to be the automaker’s saving grace.
In 2006, the CEO fresh from Boeing Co. wanted to concentrate on making smaller, more fuel-efficient cars, matching production with consumer demand and focusing on the Ford, Lincoln and Mercury brands.
The company has announced the closure of 17 factories and eliminated 50,000 jobs since its latest restructuring started in 2005, many through buyout and early-retirement offers. Smaller cars produced by its European unit are coming to the U.S. starting in 2010.
But to fulfill that vision for the company, Mulally needed at least $17 billion. He took his plan to 40 banks at a time when credit flowed freely, and he ended up raising $23.5 billion. He bet all of Ford’s buildings, stock, intellectual property, stakes in foreign automakers and even its trademark blue logo as collateral.
“At the time, people were wondering if we were being too aggressive to leverage assets,” Mulally said in an interview with The Associated Press. “I erred on the side of being conservative on financing.”
The move to secure credit proved to be key to Ford’s assertion that it doesn’t need an emergency loan from Congress now, as General Motors Corp. and Chrysler LLC do.
Yet Ford could be standing on a melting iceberg. The company spent $7.7 billion more than it took in in the third quarter as U.S. auto sales fell.
