SUSIE GHARIB: Ford's earnings accelerated 22 percent in the first three months of this year, the auto maker's best quarter in 13 years. It earned $0.62 a share, much higher than the $0.50 analysts were expecting. Revenues surged 16 percent to $33 billion. That was $3 billion more than estimates. Earlier today, I talked with Ford's CEO Alan Mulally and asked him whether the company can stay in the fast lane for the rest of the year.
ALAN MULALLY, CEO, FORD MOTOR CO.: Well, one of the things that we shared today on the earnings policy is that we're increasing production in the second quarter of this year based on the strength of our products and consumer demand. We also reiterated our guidance that for the full year 2011, that we will achieve our guidance of improving our profitability and our cash flow over 2010. So that serves us very well for delivering profitable growth going forward.
GHARIB: Mr. Mulally, give us an update about the situation in Japan and getting parts and supplies from that country and what impact that will have on your earnings going forward.
MULALLY: Clearly our sympathies go out to everybody associated with this horrible disaster. In Ford's case, we do not have any direct Ford operations in Japan. But clearly many of our suppliers, down through tier two and tier three, get components from Japan. So we've been managing it every day. We've been finding alternative sources. We've been using our production facilities and moving down times around to make sure we didn't run out of parts. And so far, so good. We were able to meet our production commitments in the first quarter and we're also increasing production in the second quarter.
GHARIB: A lot of people are already talking about $5 a gallon gasoline. What impact will that have on your sales?
MULALLY: I think the impact will really be in the balance of the portfolio. We'll end up selling more small and medium-sized vehicles to complement our leadership in the larger vehicles. Susie, as we've talked in the past, we took this point of view nearly five years ago, that we all were going to pay more for energy going forward because of the demand being let out of the Asian Pacific economic growth. So that's why we committed to a full family of vehicles, small, medium and large, cars utilities and trucks and our commitment that every Ford vehicle would be best in class in quality, fuel efficiency, safety and really smart design.
GHARIB: And when are we going to see Ford's electric car, the Focus in showrooms and how much is that going to contribute to Ford sales ultimately?
MULALLY: You're going to start to see the electric vehicles from Ford this year, starting with the transit connect commercial van. And we have now committed into production, a hybrid version of the Focus size (ph), a plug-in hybrid and also an all-electric vehicle depending on how much the consumer wants to move to all-electric operation.
GHARIB: Looking at U.S. market share, Ford is now number two to GM. I know you're really focusing on getting your numbers up. General Motors (NYSE: GM) is offering incentives. Do you see that as an option so that you can boost your numbers?
MULALLY: We clearly are not participating, because there is nothing that destroys the industry and the value for our consumers in products by discounting vehicles, ruining the residual values. So that's why you see the residual values on all of Ford's vehicles continue to increase based on the strength and the quality of the vehicle.
GHARIB: Before you go, I want to ask you one question about your stock. Ford up today, but it is off for the year. If Ford is doing so well, what needs to be done to get investors to buy into the growth story?
MULALLY: An important thing that we communicated today was that we believe that our performance for 2011 will be even much improved over 2010. And that's what everybody is focused on because when you start doing that in a regular way, you are now creating an exciting profitably growing business in addition to reducing our debt and getting back to investment grade.
GHARIB: All right. Thank you so much for coming and telling us all about Ford. We really appreciate your time.
MULALLY: Thank you, Susie.
http://www.pbs.org/nbr/site/onair/transcripts/nbr_transcripts_110426/
ALAN MULALLY, CEO, FORD MOTOR CO.: Well, one of the things that we shared today on the earnings policy is that we're increasing production in the second quarter of this year based on the strength of our products and consumer demand. We also reiterated our guidance that for the full year 2011, that we will achieve our guidance of improving our profitability and our cash flow over 2010. So that serves us very well for delivering profitable growth going forward.
GHARIB: Mr. Mulally, give us an update about the situation in Japan and getting parts and supplies from that country and what impact that will have on your earnings going forward.
MULALLY: Clearly our sympathies go out to everybody associated with this horrible disaster. In Ford's case, we do not have any direct Ford operations in Japan. But clearly many of our suppliers, down through tier two and tier three, get components from Japan. So we've been managing it every day. We've been finding alternative sources. We've been using our production facilities and moving down times around to make sure we didn't run out of parts. And so far, so good. We were able to meet our production commitments in the first quarter and we're also increasing production in the second quarter.
GHARIB: A lot of people are already talking about $5 a gallon gasoline. What impact will that have on your sales?
MULALLY: I think the impact will really be in the balance of the portfolio. We'll end up selling more small and medium-sized vehicles to complement our leadership in the larger vehicles. Susie, as we've talked in the past, we took this point of view nearly five years ago, that we all were going to pay more for energy going forward because of the demand being let out of the Asian Pacific economic growth. So that's why we committed to a full family of vehicles, small, medium and large, cars utilities and trucks and our commitment that every Ford vehicle would be best in class in quality, fuel efficiency, safety and really smart design.
GHARIB: And when are we going to see Ford's electric car, the Focus in showrooms and how much is that going to contribute to Ford sales ultimately?
MULALLY: You're going to start to see the electric vehicles from Ford this year, starting with the transit connect commercial van. And we have now committed into production, a hybrid version of the Focus size (ph), a plug-in hybrid and also an all-electric vehicle depending on how much the consumer wants to move to all-electric operation.
GHARIB: Looking at U.S. market share, Ford is now number two to GM. I know you're really focusing on getting your numbers up. General Motors (NYSE: GM) is offering incentives. Do you see that as an option so that you can boost your numbers?
MULALLY: We clearly are not participating, because there is nothing that destroys the industry and the value for our consumers in products by discounting vehicles, ruining the residual values. So that's why you see the residual values on all of Ford's vehicles continue to increase based on the strength and the quality of the vehicle.
GHARIB: Before you go, I want to ask you one question about your stock. Ford up today, but it is off for the year. If Ford is doing so well, what needs to be done to get investors to buy into the growth story?
MULALLY: An important thing that we communicated today was that we believe that our performance for 2011 will be even much improved over 2010. And that's what everybody is focused on because when you start doing that in a regular way, you are now creating an exciting profitably growing business in addition to reducing our debt and getting back to investment grade.
GHARIB: All right. Thank you so much for coming and telling us all about Ford. We really appreciate your time.
MULALLY: Thank you, Susie.
http://www.pbs.org/nbr/site/onair/transcripts/nbr_transcripts_110426/
