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Remarks as prepared for delivery by Alan Mulally, president and CEO, Ford Motor Company, at the 2008 annual meeting of shareholders held at the Hotel du Pont in Wilmington, Delaware, on Thursday, May 8, 2008.
Thank you, Bill. Good morning, ladies and gentlemen.
It is great to have this opportunity to talk to the shareholders of Ford Motor Company. As Bill indicated, your support is critical to the success of our transformation efforts, and we truly appreciate it.
Last year at this meeting, we outlined the principles and priorities Ford began operating under when I came on board. I also said the results of our efforts would be more readily apparent in time, and that we would continue to share those results.
Today we have a full year behind us, and a lot of good news to share. I would like to briefly review our results for 2007, and then update you on our progress and our plans.
In 2007 we had an overall net loss of $2.7 billion. That represented an improvement of nearly $10 billion over 2006. Excluding special items, we achieved a pre-tax profit from continuing operations of $126 million. A $10 billion improvement with an operating profit in the first year of our plan is a very good start.
Our worldwide automotive revenue was $155.8 billion in 2007, compared with $143.3 billion in 2006. Revenue growth is another good indicator of progress. Automotive gross cash at year end was $34.6 billion, an increase of $700 million. We definitely have enough money to execute our plans going forward. And our Financial Services continued as a strong contributor in 2007, earning a pre-tax profit of $1.2 billion.
As pleased we are by these results, we are even more excited about the progress we are making in our efforts to fully leverage the tremendous worldwide resources of Ford – what we call “One Ford. I’d like to share a little bit more about that.”
We operate in a fiercely competitive global industry. To achieve profitable growth we have to make the best use of our human resources, and take advantage of every potential economy of scale and best practice we can find. That means operating as one team around the world, with one plan and one goal – and that is exactly what we are doing.
One team, one plan, one goal – one Ford – profitable growth for all.
It starts with the team. We have worked hard to unleash the full potential of our people by building a single, unified global team. We began with our senior leadership, streamlining positions and moving several experienced and respected leaders up to head consolidated global organizations that make better use of our worldwide assets.
We focused our worldwide team on four key priorities: aggressively restructuring to operate profitably at the current real demand and changing model mix, accelerating the development of new products that our customers really want and value, funding our plan and improving our balance sheet, and taking working together with all of our partners, our dealers and suppliers to a new level of performance.
Our plan is working and we are sticking to it. These are the same priorities I outlined at this meeting last year, and they will remain our priorities for the foreseeable future. In addition to the bottom line results I described a moment ago, there are a number of other signs that our efforts are gaining traction:
- Our quality improvements have put us on par with the best in the business. In the first quarter of this year, the quality of Ford, Lincoln, and Mercury brand vehicles equaled that of Toyota and Honda. We are extremely proud of that accomplishment.
- We are safety leaders, with more five-star crash test ratings than any other brand or company in U.S. history. In addition, Ford Europe had the highest number of vehicles in the top 10 for adult occupant protection in the European New Car Assessment Program.
- Ford SYNC is the hottest new technology in the auto industry, on track to reach one million sales in early 2009. By the end of this year we will be moving to the next generation of SYNC, with even more features and more capability.
- Bill mentioned EcoBoost, our turbocharged direct-injection system. We think it will be the next “gotta have” technology. It delivers up to 20 percent better fuel economy and a 15 percent reduction in CO2, as well as superior driving performance with a higher torque at lower RPM, and will be available in half a million Ford, Lincoln and Mercury vehicles annually in North America during the next five years.
- The landmark agreement we signed with the United Auto Workers will enable us to invest in the new products that are a key element of our global plan going forward.
- We are going to have six major new product launches in North America in 2008. By the end of year, more than 70 percent of our entire lineup will be new or significantly upgraded. And by 2010 100 percent will be refreshed or new. This wave of new products includes the Ford Flex crossover; Lincoln MKS, the hybrid options for the Ford Fusion and Mercury Milan that Bill talked about, and an all-new version of the Ford F-150.
- Worldwide, our other new product launches in this year include the Ford Focus, the Fiesta and Kuga crossover in Europe, Ford Mondeo in Asia, and the Ford Falcon in Australia.
- Outside of North America, our automotive operations are growing and profitable. Because of high fuel prices around the world, that success is based primarily on fuel-efficient cars. So we have some tremendous expertise that we can leverage here in the U.S.
- We also have entered into an agreement to sell our Jaguar Land Rover operations, so we can concentrate on our core Ford brand.
All of these accomplishments validate our plan. They also encourage us to continue working toward our goal, which remains unchanged – we want to build products that are more desirable so that we can grow profitably.
Looking forward, there is no doubt that the slowing economy here in the U.S. presents a challenge for us. To help us deliver on our commitments in this difficult environment, we are taking further cost reduction actions in North America. In addition, we will continue to accelerate the flow of new products, and adjust our production to the changing business environment.
In spite of the headwinds we face, we are more excited than ever about the incredible “new” Ford we are creating. I am especially pleased that we are sharing the news about our accomplishments with the world in our new “Drive One” marketing campaign. Drive One, which started last month, tells the story of our leadership in quality, the environment, safety and technology in a credible and convincing way, backed up by our world-class products.
It is time the world learned about the phenomenal transformation that this great American icon is undergoing. When they do, I think they will share in the excitement the Ford team feels every day, as we work together to create a dynamic global enterprise growing profitably around the world. We hope you will share in the excitement, also.
We appreciate your attention this morning, and your continued support.
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