Ford’s CEO cancels his order for a Lexus

updated 3:19 p.m. ET Jan. 4, 2007

DEARBORN, Mich. - Ford CEO Alan Mulally said he respects Toyota and its luxury brand, but that he canceled his order for a Lexus after taking the top job at the U.S. automaker. He said he traveled to Japan last month to meet with Toyota executives just to show his appreciation, and not in an effort to bring the companies any closer.

Mulally, who took over at the nation’s No. 2 automaker last year, said Wednesday he deeply admires the Japanese automaker for its manufacturing processes and product development strategy.

Mulally called Toyota “the finest machine in the world, the finest production system in the world. So we went to study with the master. I really wanted to connect with each of the manufacturers in the industry and to do it quickly,” said Mulally, who was hired away from aircraft maker Boeing Co. by Ford Motor Co.

Reports that Toyota Motor Corp. Chairman Fujio Cho met in Tokyo with Mulally at the latter’s request had sparked investor hopes about a potential alliance.

Mulally squelched that speculation again Wednesday, saying manufacturing methods — along with safety engineering, fuel economy and environmental issues — are topics that all automakers discuss with each other.

“We have so many things in common as an industry that we can work on together,” he said.

Ford on Wednesday reported an 8 percent drop in U.S. sales last year compared with 2005. But it was able to hold off Toyota after Toyota’s sales surpassed Ford’s for the first time in July and again in November.

Ford lost $7 billion during the first three quarters of 2006 and is in the midst of a major restructuring plan to shrink its factory capacity to match lower consumer demand. Mulally said the automaker still expects to return to profitability by 2009, aided not only by shedding jobs and closing factories but also by bringing new products to showrooms more quickly.

Dearborn-based Ford is on track to meet its goal of having 100 percent of its Ford, Lincoln and Mercury lineup represented by all-new or substantially reworked vehicles by 2010, Mulally said.

“Our recovery here in North America is going to be product-led,” he said.

Another goal for 2010 or shortly afterward is for Ford to match the efficiency levels of Mazda Motor Corp., said Derrick Kuzak, named last month as head of global product development. Ford owns one-third of Mazda.

Mulally, Kuzak and Mark Fields, Ford’s president of the Americas, said Ford’s painful recovery will be driven by new products brought to market more quickly. They spoke to reporters at a private dinner that featured a briefing and question-and-answer period.

“Despite the numbers, it [2006] was a year of incremental progress for us,” Fields said. “It’s like building a house. We built the foundation last year. But you don’t see the house. You see a hole.”

Ford’s top management also is making slow progress toward changing attitudes, the executives said.

“The culture at Ford Motor Company is, ‘God forbid you ask for help — it means you’re weak,’” Fields said.

Mulally, a Kansas native who spent 37 years at Boeing, said the Detroit automakers’ signature event — this month’s North American International Auto Show at Cobo Hall downtown — will be the first one he has ever attended.

“I’m really looking forward to it,” he said. “I don’t know whether I’m showy enough for the show, but I’m going to try to do my best to represent Ford.”

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