Ford's Mulally tells Seattle crowd automakers need aid

Home for the holiday, Ford Motor Chief Executive Alan Mulally told an audience of Seattle businesspeople Wednesday that the government must save the Detroit auto industry or risk a deep recession.

"We're fighting for the soul of the U.S. economy," said Mulally. "I've never seen such a critical time for the United States and the world."

Speaking at the Rotary Club in downtown Seattle, the former CEO of Boeing Commercial Airplanes delivered a relaxed speech to a friendly audience.

It was a far cry from Mulally's recent grilling before congressional committees in the other Washington that made him and his fellow Detroit executives the butt of "Saturday Night Live" jokes.

Comedians lampooned Mulally, along with the top guys at General Motors and Chrysler, for flying to the hearings in separate private jets to plead for $25 billion in cash.

"Next time, I'll walk," joked Mulally to the hometown crowd. "Or drive."

(Ford supplies Mulally with a private jet for all business and personal travel. His wife and children may also use the jet for personal travel. That perk cost Ford $752,203 last year, according to company filings.)

Mulally's serious message to the Rotarians was that the government cannot allow the auto industry to collapse. He insisted the industry is asking for "a bridge loan, not a bailout."

Auto sales have plummeted during the current credit crunch to create a "perfect storm," he said.

"When you have your (sales) volume and revenue come down so much, you can't cut costs fast enough to survive," Mulally said.

Even now, Ford doesn't need a loan immediately. In late 2006, soon after he left Boeing to join Ford, Mulally pledged nearly all the automaker's assets as collateral to borrow $23 billion, which he jokingly referred to as a "small home-improvement loan."

That infusion leaves Ford better positioned than either GM or Chrysler.

But Mulally said he went to the congressional hearings to support the industry because the collapse of one auto company could drag down the others.

Bankruptcy is not a viable option for any of them because sales would drop too fast to make a recovery impossible, Mulally said.

"If our industry goes down, we've a tremendous problem for the United States," he said. "We'll be part of a deeper recession."

Mulally expressed confidence Ford can become an "exciting, dynamite, profitable growing business."

He outlined his strategic plan, which he dubbed "revolutionary" for abandoning the auto industry's dysfunctional past. Mulally said he's moving Ford out of SUVs and into smaller cars, and has renegotiated labor deals with the United Auto Workers union.

He played down the sales hype around GM's electric/gas hybrid Chevy Volt, due out in late 2010, describing it as a "technology demonstrator" that will sell in low volumes. "We all have versions of the Volt," Mulally said.

Instead, he said, the near-term focus at Ford is on improving the internal-combustion engine to gain a 20 percent jump in fuel efficiency.

Mulally, who still has a house on Mercer Island, said in an interview after his speech that he's happy to have had the chance to lead at "two American and global icons" — Ford and Boeing.

He said he has spoken with President-elect Obama about the auto industry and the economy, and he expressed confidence Obama will bring "really thoughtful plans" to the country's economic crisis.

"We're clearly in a recession now and we've got to turn it around," said Mulally.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com