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Ford CEO: Middle Class ‘Getting Squeezed’, Should Concern All Americans

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CEO Alan Mulally has high hopes for Ford Motor Company (F). The company's seven U.S. assembly plants continue to churn out gleaming new cars and trucks and the No. 2 automaker in the U.S. plans to hire an additional 12,000 U.S. workers to build its cars over the next few years.

Mulally won't let his sanguine view on the company's future be tempered by prolonged economic weakness in the U.S. and abroad, two factors that threaten to disrupt Ford's storied turnaround. The automaker reclaimed its iconic blue logo last month, a significant achievement for a company that gave up its 109-year-old logo six years ago as collateral for nearly $24 billion in loans. Ford's life-saving decision in 2006 was risky — the company put up other prized assets to secure the much-needed funds — but it provided Ford with enough capital to dodge a government bailout, which its American auto rivals General Motors (GM) and Chrysler were forced to accept.

Ford's comeback has resulted in a leaner, more agile company and a more profitable one too. But a recession in Europe and an uneven economic recovery in the U.S. could cause Ford sales to grow at a tepid rate, threatening the progress Ford has made up to now. Mulally sat down for an interview with The Daily Ticker at Ford headquarters in Dearborn, MI to discuss his ongoing vision for Ford and how the company has adapted to the current economic challenges.

Ford posted strong North American sales in May, moving 216,267 vehicles versus 192,102 in May of 2011, and the company plans to build 690,000 vehicles in North America next quarter, a 5 percent jump from the same period last year. The increase in sales can be attributed to several factors: Ford's new lineup of fuel efficient vehicles; a positive image with consumers after thousands of Toyota (TM) recalls and GM/Chrysler bailouts; and industry-wide demand for new cars.

But Ford's sales in 19 Western European countries faltered last month, declining 0.2 percent to 8.1 percent year-over-year on total sales of 102,100 vehicles. Year-to-date, Ford's market share is down 0.1 percent compared with the first five months of 2011 and the company reported a $149 million pre-tax operating loss for its European business in the first quarter of 2012. The European debt crisis has shrunk Europe's overall car market from 18 million cars sold in 2007 to 15.3 million cars purchased in 2011. Ford remains the No. 2 best-selling European auto brand both in May and year-to-date while its competitors have experienced deeper losses and shrinking market share.

Mulally says Ford assembly plants have ramped up production to meet consumer demand, and some of its plants — such as the Flat Rock Mustang plant in Michigan — have workers on the assembly line six days a week to keep up with orders. Ford's strategy to increase sales from 5.3 million vehicles to 8 million vehicles a year by 2015 could be hampered by a slowdown in global growth — an outcome Ford has prepared for by sizing and adjusting the scale of its manufacturing output.

Mulally concedes that consumers in the U.S. and Europe are both "being squeezed" and the decline of the middle class at home is "something all of us in the U.S. should be concerned about."

Henry Ford, the revolutionary industrialist who forever changed the auto industry and the lives of millions of working-class Americans, bucked industry trends when he started producing his Model-T car in 1909. The Model-T was built for Americans of all socioeconomic classes, which was possible because Ford believed in fair, living wages that gave Americans the means to buy a car — a luxury only the wealthy could afford at the time.

To Mulally, the only way the nation can address the shrinking of the middle class today is "to get the economic engine growing again."

SEE ALSO: Bailouts of GM, Chrysler Were Good for Ford Too: Alan Mulally

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