CNBC TRANSCRIPT: CNBC'S PHIL LEBEAU INTERVIEWS FORD MOTOR CO CEO ALAN MULALLY, ON CNBC'S "POWER LUNCH" TODAY

CNBC TRANSCRIPT: CNBC'S PHIL LEBEAU INTERVIEWS FORD MOTOR CO CEO ALAN MULALLY, ON CNBC'S "POWER LUNCH" TODAY

WHEN: Today, Friday, November 7th at 12:12 pm ET

WHERE: CNBC's "Power Lunch"

Following is the unofficial transcript of a CNBC interview with Ford Motor Co. CEO Alan Mulally, on CNBC, airing on "Power Lunch"

All references must be sourced to CNBC.

------------------------------------------------------------------

PHIL LEBEAU: WE'LL GET RIGHT TO IT WITH ALAN MULALLY WHO JOINS ME FROM FORD HEADQUARTERS OVER IN DEARBORN. THANKS FOR JOINING US HERE ON "POWER LUNCH."

ALAN MULALLY: YOU'RE WELCOME.

LEBEAU: LET'S GET STRAIGHT TO IT. YOU LOSE $3 BILLION IN THE THIRD QUARTER. YOU BURN THROUGH 7.7 BILLION, AND YET WHEN YOU AND I TALKED THIS MORNING YOU INDICATED YOU DON'T WANT TO LOSE MONEY, YOU DON'T LOSE CASH, BUT YOU STILL BELIEVE THAT YOU'RE POSITIONED, IF YOU CAN WEATHER THE STORM, YOU'RE POSITIONED TO COME THROUGH THIS. HOW DO YOU JUSTIFY THAT TO THE INVESTORS OUT THERE?

MULALLY: WELL, CLEARLY IT GOES BACK TO OUR FUNDAMENTAL PLAN, PHIL, AND WE WENT TO THE MARKETS OVER A YEAR AND A HALF AGO TO RAISE WHAT WE THOUGHT WAS THE CAPITAL WE NEEDED, NOT ONLY TO FUND THE TRANSFORMATION OF OUR PRODUCT LINE IN OUR PRODUCTION FACILITIES, BUT ALSO TO HAVE A CUSHION IN CASE THE GLOBAL ECONOMY SLOWED, AND CLEARLY THAT IS HAPPENING, AND WE'RE MANAGING THAT CASH VERY CAREFULLY. WE REPORTED THAT HAD WE ENDED THE QUARTER WE ARE $19 BILLION IN CASH PLUS OUR CREDIT LINE WHICH TAKES US UP TO ABOUT $30 BILLION, AND ALSO WE POINTED OUT THAT WE BELIEVE THE MOST IMPORTANT THING WE DO IS TO SIZE OUR PRODUCTION FOR CURRENT DEMAND WHICH WE CONTINUE TO DO AND KEEP INVESTING IN OUR NEW PRODUCT LINE, A FUEL EFFICIENT, SMALL, MEDIUM AND LARGE VEHICLE, SO WE'RE GOING TO STAY ON THAT PLAN. SO I THINK THIS HAS BEEN OUR PLAN ALL THE WAY ALONG, AND I THINK TODAY WE SHOWED THAT WE'RE IMPLEMENTING THAT PLAN.

LEBEAU: ALAN, AT RATE WHICH YOU'RE BURNING THROUGH CASH, 2.5 BILLION A MONTH IN THE THIRD QUARTER, HOW MUCH LONGER CAN FORD CONTINUE TO SUSTAIN THAT CASH BURN RATE BEFORE YOU HAVE TO SAY, LISTEN, WE'RE GETTING CLOSE TO THE POINT WHERE WE NEED TO CONSIDER BANKRUPTCY OR SOME OTHER OPTION, PRESSING THE GOVERNMENT FOR MONEY?

MULALLY: I UNDERSTAND, PHIL, AND WITH RESPECT TO THE THIRD QUARTER, I MIGHT JUST POINT OUT THAT IT WAS A LITTLE BIT OF AN UNUSUAL QUARTER BECAUSE WE CONSCIOUSLY DECREASED THE PRODUCTION OF OUR 2008 F-150, OUR TRUCK -- OUR INDUSTRY LEADING TRUCK IN THE UNITED STATES.

LEBEAU: RIGHT.

MULALLY: AND WE DID THAT BECAUSE THE DEALER STOCKS HAD GOTTEN HIGH. WE WANTED TO BRING DOWN THAT EXCESS INVENTORY SO WE HAVE WOULD A TERRIFIC LAUNCH FOR OUR NEW F-150. WE DID THAT. THE PRODUCTION IN THE THIRD QUARTER WAS DOWN TREMENDOUSLY SO THAT AFFECTED PROFITS AS WELL AS PAYABLES SO THAT CASH BURN WAS QUITE A BIT HIGHER THAN WHAT WOULD BE A NORMAL CASH BURN. NOW HAVING SAID THAT, YOUR QUESTION GOING FORWARD IS THAT WITH THE SLOWING ECONOMY, WE ALSO ANNOUNCED TODAY THAT WE'RE GOING TO TAKE VERY DECISIVE ACTION TO RAISE BETWEEN 14 BILLION AND 17 BILLION OF CASH IMPROVEMENT SO THAT WE CAN OFFSET THIS DECLINE ENVIRONMENT AND CONTINUE TO INVEST IN OUR PRODUCTS IN THE FUTURE, AND WE LAID OUT THOSE ACTIONS TODAY ALSO.

LEBEAU: ALAN, YOU WERE IN WASHINGTON YESTERDAY WITH THE HEADS OF GENERAL MOTORS AND CHRYSLER AS WELL AS UAW. HOW QUICKLY DO YOU NEED THE GOVERNMENT TO GIVE YOU AT LEAST THE 25 BILLION TO ASSIST IN THE VIVA FUND FOR THE UAW RETIREMENT HEALTH CARE PLAN AS WELL AS WHAT KIND OF DIRECT INFUSION DO YOU WANT FROM THE FEDERAL GOVERNMENT?

MULALLY: WELL, THAT'S ABSOLUTELY CORRECT, PHIL, BECAUSE WE WENT TOGETHER TO EXPLAIN THE SITUATION OF THE AUTOMOTIVE INDUSTRY IN THE UNITED STATES, AGAIN, AGAINST THE BACKDROP OF THE ECONOMIC SITUATION IN THE UNITED STATES WHICH IS CLEARLY MOVING FURTHER INTO A RECESSION. SO THE DISCUSSION THAT WE HAD REALLY EVOLVED AROUND THREE MAIN POINTS. THE FIRST ONE THAT YOU MENTIONED IS, IS THE MONEY THAT WAS ALLOCATED DURING THE 2007 ENERGY INDEPENDENCE AND SECURITY ACT LAST YEAR BY CONGRESS. AND THEY SET ASIDE $25 BILLION THAT WOULD BE USED TO CONVERT INEFFICIENT PLANS TO FUEL EFFICIENT PLAINS AND THE ENABLING TECHNOLOGY TO BRING ON FUEL EFFICIENT VEHICLES. WE WERE PART THAT. WE AGREE WITH IT AND THEY JUST PUT OUT THE GUIDELINES FROM THE DEPARTMENT OF ENERGY YESTERDAY AND NOW WE WILL APPLY FOR THOSE LOANS TO ACCELERATE THE FUEL-EFFICIENT VEHICLES. THE SECOND PART OF WHAT HAVE WE TALKED TO THE GOVERNMENT ABOUT WAS ASSOCIATED WITH FREEING UP THE CREDIT AVAILABILITY, AND, OF COURSE, WE HAVE FORD MOTOR CREDIT WHICH IS A TREMENDOUS ASSET FOR US, SO WE HAVE ACCESSED NOW $4 BILLION OUT OF THAT PAPER-BACKED ASSET FACILITY TO HELP US FINANCE THE VEHICLES WITH OUR CUSTOMERS. THE THIRD PART THAT YOU MENTIONED, WE ALSO TALKED ABOUT, YOU KNOW, IF THE ECONOMY CONTINUES TO DETERIORATE AND OVERWHELMS US ALL, YOU KNOW, THE AUTOMOBILE INDUSTRY IS A CRITICAL PART OF THE UNITED STATES ECONOMY, NEARLY 3.5 MILLION JOBS ARE ASSOCIATED WITH IT, HIGH TECHNOLOGY, THE INDUSTRIAL BASE, THAT IF THAT HAPPENED, SHOULDN'T WE HAVE A PLAN FOR A BRIDGE LOAN THAT IF IT DID HAPPEN IT WOULD BE ABLE TO GET US THROUGH THIS. WE'LL PAY IT BACK, GET US THROUGH THIS SO THAT WE ARE PART OF THE ANSWER ON THE RECOVERY OF THE ECONOMY. SO THOSE ARE THE THREE THINGS WE TALKED ABOUT.

LEBEAU: ALAN, GENERAL MOTORS JUST SAID IN ITS RELEASE THAT THEY ARE AT THE POINT NOW WHERE LIQUIDITY IS IN QUESTION FOR THE EARLY PART OF 2009. WE'RE NOW TALKING ABOUT THE POTENTIAL BANKRUPTCY OF GENERAL MOTORS. IF GENERAL MOTORS WERE TO GO INTO BANKRUPTCY, WOULD IT BRING FORD INTO BANKRUPTCY?

MULALLY: WELL, THAT'S A SPECULATION THAT, YOU KNOW, I REALLY CAN'T GET INTO TODAY, PHIL, BUT CLEARLY WE ARE, YOU KNOW, WATCHING THESE DEVELOPMENTS THAT I HAVEN'T SEEN THE INFORMATION THAT YOU'RE TALKING ABOUT, BUT CLEARLY WE'RE VERY, VERY INTERDEPENDENT. WE HAVE THE SAME SUPPLY BASE THROUGHOUT THE UNITED STATES, AND SO WE'RE VERY INTERDEPENDENT SO WE'LL MONITOR IT CAREFULLY AND I'LL FIND OUT MORE ABOUT IT RIGHT AWAY AND THEN WE'LL TAKE ACTION.

LEBEAU: AND LAST QUESTION, ALAN, HOW QUICKLY DO YOU NEED THAT MONEY FROM THE FEDERAL GOVERNMENT? DO YOU NEED IT BEFORE THE END OF THE YEAR?

MULALLY: NO. THE REAL THING IS, THAT WE WANT TO ACCESS IT AS SOON AS WE CAN. AND ON THE DEPARTMENT OF ENERGY PART FOR THE FUEL-EFFICIENT VEHICLES WE HAVE AGREED THAT WE THINK WE MIGHT BE ABLE TO GET OUR APPLICATIONS IN FOR THAT DURING THE FOURTH QUARTER AND MAYBE EVEN START THAT INVESTMENT FOR THE FUTURE FLOWING THEN. ON THE BRIDGE LOAN, WITH THE ECONOMY, THAT REALLY DEPENDS ON WHERE THE ECONOMY IS. WHERE IT IS GOING FORWARD BECAUSE CLEARLY THE OCTOBER THAT WE HAD WITH THE SALES RATE OF 10.8 MILLION IS THE LOWEST THAT ANY OF US HAVE SEEN IN THE UNITED STATES FOR 35 YEARS, SO I THINK IT'S REALLY DEPENDENT ON WHAT HAPPENS WITH THE ECONOMY AND WHAT HAPPENS TO THE CONSUMER SPENDING.

LEBEAU: ALAN MULALLY, THE CHIEF EXECUTIVE OFFICER AT THE FORD MOTOR COMPANY, THANK YOU FOR JOINING US FIRST ON CNBC HERE ON "POWER LUNCH."




About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.