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CNBC EXCLUSIVE: CNBC TRANSCRIPT: FORD MOTOR COMPANY CEO ALAN MULALLY ON CNBC’S “SQUAWK BOX” TODAY

Alan Mulally
Stan Honda | AFP | Getty Images
Alan Mulally

WHEN: Friday, June 11th at 8am ET

WHERE: CNBC's "Squawk Box"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Alan Mulally, Ford Motor Company CEO, today on CNBC's "Squawk Box" at 8am ET.

All references must be sourced to CNBC.

JOE KERNEN: NOW TO THE MAN OF THE MORNING, ALAN MULALLY. I THINK I'VE ASKED YOU THIS BEFORE, ALAN. IT'S GREAT TO SEE YOU.

ALAN MULALLY: GOOD TO SEE YOU.

KERNEN: ALL RIGHT. SO FORD, LIKE GM, HAD THIS INSULAR CULTURE AND YOU CAME IN FROM BOEING AND AT THE TIME PEOPLE SAID, YOU KNOW, CARS DON'T FLY. AT LEAST NOT YET. YOU SAID, BUT IT IS AN ASSEMBLY LINE. THERE ARE SOME SIMILARITIES. MAYBE IT WAS GOOD TO SHAKE IT UP. YOU DID SOMETHING EARLY ON WITH THE BALANCE SHEET AND IT SAVED YOU AND SORT OF IS THE DEFINING MOMENT WHICH ALLOWED YOU NOT TO TAKE ANY GOVERNMENT MONEY. WHY DID YOU RAISE THAT -- USE THE BALANCE SHEET TO LEVERAGE YOURSELF AND GET THAT MONEY IN THE BANK? YOU DIDN'T KNOW THE FINANCIAL CRISIS WAS COMING. WHAT HAPPENED?

MULALLY: WELL, CLEARLY WE DIDN'T KNOW IT WAS GOING TO GET AS BAD AS IT DID, JOE. BUT IT REALLY GOES BACK TO THE PLAN THAT WE PUT IN PLACE AND CLEARLY WE PULLED TOGETHER AROUND OUR ONE FORD PLAN. DECIDED WE WERE GOING TO AGGRESSIVELY RESTRUCTURE THE COMPANY BACK TO PROFITABILITY. WE ACTUALLY ACCELERATED DEVELOPMENT IN ALL OUR NEW VEHICLES. WE KNEW THAT WE NEEDED TO HAVE THE FINANCING FOR BOTH THOSE ELEMENTS IN THE PLAN.

KERNEN: SO YOU ROLLED THE -- YOU SORT OF BORROWED BIG AND ROLLED THE DICE. WE ARE GOING TO DO IT ON FORD. WE HAVE A PLAN. AND I MEAN, IT'S UNBELIEVABLE. YOU'VE GOT TO ADMIT HOW SERENDIPITOUS -- NOT SERENDIPITOUS -- PHIL.

LEBEAU: FORTUITOUS

KERNEN: FORTUITOUS DOESN'T REALLY MEAN FORTUNATE, THAT JUST, IT JUST HAPPENED THAT WAY

LEBEAU: WELL YEAH BUT EVERYBODY LOOKS AT THIS AND THEY SAY YOU LEVERAGED EVERYTHING THERE. I THINK PEOPLE LOSE SIGHT OF THE FACT THAT YOU CONTINUED INVESTING IN PRODUCT. THAT'S REALLY -- THAT'S BEEN THE GENERATOR FOR THE MOMENTUM THAT YOU'VE SEEN WITHIN THE LAST TWO YEARS. IT'S NOT JUST THAT THEY BORROWED IN ORDER TO RESTRUCTURE THE COMPANY. THEY INVESTED AT THE SAME TIME WHEN A LOT OF OTHER COMPANIES BORROWED OR SIMPLY CUT BACK. THAT'S THE BIGGEST DIFFERENCE THAT WE SEE.

MULALLY: ABSOLUTELY. AND ONE OF THE THINGS THAT WE CAME TOGETHER ON VERY QUICKLY WAS A POINT OF VIEW ABOUT THE FUTURE ON WHAT PEOPLE REALLY WOULD WANT IN THEIR VEHICLES. THAT'S WHERE WE ENDED UP HAVING A COMPLETE FAMILY OF VEHICLES, SMALL, MEDIUM AND LARGE. CARS, UTILITIES AND TRUCKS. ALSO, JOE AND BECKY, WE DECIDED WE WERE GOING TO BE IN BEST IN CLASS IN QUALITY, FUEL EFFICIENCY, SAFETY, REALLY SMART DESIGN, LIKE MY FORD IN SYNC AND OF COURSE THE BEST VALUE AND SERVE THE CUSTOMERS WORLDWIDE. WITH THAT PLAN IN PLACE THAT'S THE PLAN WE TOOK TO THE BANKS TO BORROW THAT.

KERNEN: PHIL, THINK ABOUT HOW MANY TIMES SOMEONE AT GM OR CHRYSLER OVER THE LAST TEN YEARS TOLD YOU WE'RE GOING TO HAVE THE BEST IN CLASS, BEST QUALITY, I MEAN THEY SAY IT AGAIN AND AGAIN AND AGAIN.

LEBEAU: IT'S NOT JUST AMERICAN. IT'S EVERYBODY.

KERNEN: EVERYBODY SAYS IT BUT IT DOESN'T ALWAYS HAPPEN.

LEBEAU: THAT IS TRUE, WHICH IS PART OF THE REASON THAT FORD AND ALAN IS GETTING THE CREDIT THAT HE IS GETTING RIGHT NOW.

KERNEN: HOW DID IT HAPPEN?

MULALLY: CLEARLY --

KERNEN: GOT A WHIP OR SOMETHING?

MULALLY: THAT'S WHY I CAME TO FORD. I DEDICATED MY LIFE PERSONALLY TO SAFE AND EFFICIENT TRANSPORTATION. I GET A CHANCE TO SERVE ANOTHER AMERICAN GLOBAL ICON. IT'S ALL ABOUT THE PRODUCT. THAT'S WHY EVERYBODY IN FORD COMES TO WORK EVERY DAY, TO MAKE THE BEST CARS AND TRUCKS IN THE WORLD. TO BRING THAT FOCUS WAS ALMOST AN ENABLELER.

KERNEN: YOU ARE ALWAYS LIKE THIS. ISN'T HE? YOU'RE ALWAYS HAPPY, ALWAYS POSITIVE?

MULALLY: GET A CHANCE TO MAKE THE BEST CARS AND TRUCKS IN THE WORLD?

JAMES ROHR, Guest Host: REALLY IT WAS A DIFFERENT STRATEGY THOUGH. A NUMBER OF OTHER PEOPLE WERE CUTTING BACK AT THE SAME TIME YOU WERE INVESTING IN QUALITY AND NEW PRODUCTS. SO THEY TALK ABOUT MARKET SHARE GAINS, YOUR MARKET SHARE GAINS COME FROM NEW PRODUCTS. HAVEN'T THEY

MULALLY: WELL EXACTLY AND I THINK ANOTHER NEAT THING I REALLY APPRECIATE ABOUT THE FORD PLANT IS WE DECIDED TO LET THE NEW PRODUCTS DO THE SPEAK FOR US AND NOT TALK ABOUT THE FUTURE BEFORE WE HAD THE PROOF POINTS WITH THE CARS. I LOVE THAT HENRY FORD QUOTE, HE SAID, YOU CAN'T BUILD YOUR REPUTATION ON WHAT YOU'RE GOING TO DO. AND SO WE WAITED VERY PATIENTLY, WE MADE THE INVESTMENT IN THE PRODUCTS AND THEN WE LET THE PRODUCTS DO THE TALKING. THAT'S WHAT'S SO GRATIFYING TO SEE THE ACCEPTANCE.

KERNEN: I HAVE TO ADMIT THAT BILL FORD PUT HIS EGO IN THE BACKSEAT. A LOT OF TIMES YOUR NAME IS FORD, YOU'RE ONE OF THESE GUYS THAT TRY TO RUN A COMPANY, A FAMILY COMPANY, AND HE FINALLY SAID, I GOT TO GET SOMEONE LIKE YOU IN HERE TO DO IT. I MEAN, YOU MIGHT BE AS -- THAT DECISION MAY HAVE BEEN THE MOST IMPORTANT DECISION HE EVER MADE.

MULALLY: WELL, BILL FORD IS A TREMENDOUS LEADER. AND HE --

KERNEN: SOMETIMES IT'S GETTING SOMEONE ELSE TO DO --

MULALLY: HE BELIEVES SO MUCH IN FORD AND THE LEGACY AND THE RESPONSIBILITY AND THE ACCOUNTABILITY. AND I COULD NOT HAVE A BETTER PARTNER. AND I REALLY, JOE, I KNEW I WAS IN TROUBLE WHEN HE CALLED AND I DIDN'T SAY NO RIGHT AWAY.

LEBEAU: ALAN, YOU'RE NOT GOING ANYWHERE ANY TIME SOON. I KNOW YOU LOVE YOUR JOB AND YOU'RE NOT PLANNING ON LEAVING. BUT YOU ALSO ARE NOT A SPRING CHICKEN RELATIVE WILL OTHERS IN THE --

ROHR: OH! WAIT A MINUTE.

KERNEN: WAIT A MINUTE.

LEBEAU: THE MAN WOULD BE IN TENNIS. I'M NOT SITTING HERE TO SAY HE'S ON HIS DEATH BED.

KERNEN: THIS IS WHAT YOU GET IF YOU DEAL WITH LeBEAU. I WOULDN'T ASK YOU THAT.

LEBEAU: THE QUESTION HAS COME UP, AND IT IS A PERTINENT QUESTION WHICH IS, DO YOU HAVE A TIME LINE FOR HOW LONG BEFORE YOU SAY ANOTHER FIVE YEARS, ANOTHER SEVEN YEARS, AND THEN I THINK IT'S TIME FOR US TO TRANSITION INTO THE NEXT LEADER AT FORD? IS THERE A DEFINITIVE TIME LINE OUT THERE?

MULALLY: NOW WE'RE GETTING RIGHT DOWN TO IT NOW.

KERNEN: YEAH. WELL, YOU DON'T HAVE TO ANSWER ANYTHING YOU DON'T WANT TO.

MULALLY: WELL, CLEARLY --

ROHR: DO YOU HAVE A BIRTHDAY COMING UP?

KERNEN: I DON'T RECALL.

MULALLY: I'M SO PLEASED TO BE AT FORD. AND I HAVE NO PLANS ON LEAVING IN THE NEAR TERM AS LONG AS I CAN SERVE AND THE BOARD WANTS ME TO CONTINUE I'M PLEASED TO SERVE FORD NOW. HAVING SAID THAT, WE HAVE A TREMENDOUS SUCCESSION PLAN, LEADERSHIP DEVELOPMENT PROCESS AND WHEN YOU HAVE A COMPANY LIKE FORD THAT OPERATES GLOBALLY AROUND THE WORLD WE HAVE A WONDERFUL SET OF LEADERS THAT ARE GOING TO BE READY.

KERNEN: WHO'S THAT YOUNG GUY THAT LOOKS LIKE HE'S A SOAP OPERA? WHAT'S THAT GUY'S NAME? THE HANDSOME GUY.

LEBEAU: WHO? FIELDS

KERNEN: FIELDS, THAT'S HIM. HE LOOKS LIKE HE'S ON "DAYS OF OUR LIVES" OR SOMETHING. IS HE ACTUALLY GOOD TOO?

MULALLY: MARK IS A TERRIFIC LEADER.

KERNEN: REALLY? CAUSE THAT'S WHY YOU'RE HERE, FOR YOUR LOOKS.

MULALLY: YOU SEE FORD EVERYWHERE AROUND THE WORLD AND IF YOU GET A CHANCE, IF YOU WORK FOR FORD YOU GET A CHANCE TO OPERATE EVERYWHERE AROUND THE WORLD.

KERNEN: HOW IS 11 MILLION CARS THIS YEAR? HOW IS BUSINESS? IT'S STILL NOT GREAT.

MULALLY: WELL, I AM VERY ENCOURAGED BY THE CONSISTENCY OF THE GROWTH RIGHT NOW. EVEN THOUGH IT IS SLOWER THAN RECOVERY FROM PAST RECESSIONS WE'RE PRETTY MUCH ALIGNED WITH MOST ECONOMISTS, WE THINK ABOUT 3, 3 1/2% EXPANSION IN GDP THIS YEAR. OF COURSE, REMEMBER, WE'RE AT A LOW OF 10.6 MILLION VEHICLES LAST YEAR IN THE U.S. WE'RE THINKING AROUND 11 1/2 TO 12 1/2 MILLION, WHICH WOULD BE A TREMENDOUS, STEADY RECOVERY IN MARKET. AND THE NEAT THING IS WE'RE HERE WITH THE CARS THAT PEOPLE REALLY DO WANT.

LEBEAU: ARE YOU OF THE BELIEF, ALAN, WE HAVE KNOWN STORIES ABOUT THIS IN THE LAST COUPLE OF DAYS. USED CAR PRICES ARE AT AN ALL-TIME HIGH RIGHT NOW LARGELY BECAUSE AS THE AUTO INDUSTRY CUT BACK OVER PRODUCTION IN THE LAST THREE YEARS THERE'S SIMPLY NOT ENOUGH VOLUME OR CARS OUT THERE. IF THIS ECONOMY WERE TO GET A DECENT POINT, UNEXPECTED BUMP, DOES THAT MEAN THAT WE SEE A REAL SKYROCKET IN TERMS OF PRODUCTION IN DEMAND FOR NEW VEHICLES?

MULALLY: WELL, I THINK THAT -- GOING BACK TO THE FUNDAMENTALS OF YOUR QUESTION, I THINK WE AS AN INDUSTRY AND AGAIN I'M VERY PROUD ABOUT FORD THAT WE TOOK THE LEAD ON THAT TO MATCH OUR PRODUCTION TO THE LOW DEMAND, WHICH HELPS EVERYBODY KEEP THE VALUE OF THESE GREAT PRODUCTS. SO WE HAVE A GOOD MATCH BETWEEN DEMAND AND PRODUCTION RIGHT NOW. BUT ALSO WE HAVE MAINTAINED OUR ABILITY TO SURGE UPWARDS BECAUSE CLEARLY THERE'S A LOT OF PENT UP DEMAND. AS THIS STARTS TO COME BACK WE ANTICIPATE THAT THE RECOVERY CAN EVEN ACCELERATE.

QUICK: THAT MEANS THAT YOU WOULD BRING PEOPLE BACK ONLINE VERY QUICKLY? HIRE MORE WORKERS?

MULALLY: ABSOLUTELY. ONE OF THE NEAT THINGS ABOUT THE PLAN IS WE'RE CONVERTING TRUCK PLANTS TO CAR PLANTS BECAUSE WE HAVE THE BALANCED PORTFOLIO AND WE'RE MAKING CARS WITH OUR TRANSMISSION AGREEMENT WITH UAW AND OUR COST STRUCTURE, WE'RE MAKING CARS NOW IN THE UNITED STATES AND WE'RE DOING IT PROFITABLY. WE ABSOLUTELY HAVE THE CAPABILITY TO SUPPORT THE CUSTOMER.

QUICK: TRUCKS FOR SO LONG, THE AMERICANS JUST WANTED TRUCKS, THEY WANTED THE BIG SUVs. GAS PRICES JUMPED AND THAT KILLED DEMAND FOR IT. BUT WHETHER IS THE AMERICAN APPETITE RIGHT NOW? YOU MENTIONED CARS BACK SO STRONG. AS YOU SEE PRICES CLIMB AT THE PUMP, DOES THAT PUT PRESSURE ON?

MULALLY: IT'S VERY INTERESTING, BECKY. CLEARLY IN FORD'S CASE WE REALLY KNOW SUVs AND TRUCKS BECAUSE IN THE UNITED STATES COST STRUCTURE WE ENDED UP FOCUSING ON THEM BUT NOW WITH OUR COST STRUCTURE WE HAVE A COMPLETE FAMILY FOR EVERYBODY. BUT ON THE TRUCK SIDE, YOU KNOW JUST TAKE THE F-150, 34 YEARS THE NUMBER ONE VEHICLE IN THE UNITED STATES. YOU CAN LIVE IN AN F-150 AND PULL YOUR HOUSE BEHIND IT SIMULTANEOUSLY. THESE ARE FANTASTIC VEHICLES. AND EVEN AS THE FUEL PRICES ARE UP $3.50, $3.60, EVEN THOUGH THE MARKET CAME DOWN A LITTLE BIT, STILL A VERY SUBSTANTIAL MARKET FOR PICK-UPS BECAUSE WE USE THEM FOR BUSINESS, WITH CONSTRUCTION, FOR OUR LIFESTYLE, YOU KNOW, BOATING, HOUSING.

QUICK: MIKE JACKSON OF AUTO NATION TOLD US THAT LAST MONTH AUTO NATION SAW A 50% INCREASE IN TRUCK SALES. DOES THAT MATCHUP WITH WHAT YOU'VE SEEN AT FORD?

MULALLY: ABSOLUTELY, SAME THING.ESPECIALLY WE HAVE THE NEW SUPER DUTY, WHICH IS KIND OF ONE OF THE NEATEST OF THE F SERIES TRUCKS AVAILABLE. IT REALLY -- SALES ARE UP LIKE 60%, 70%.

ROHR: WONDERFUL.

QUICK: WHAT DOES THAT TELL YOU ABOUT THE HEALTH OF THE AMERICAN ECONOMY? HE SAYS THAT THESE ARE SMALL BUSINESS OWNERS BUYING THESE THINGS?

MULALLY: I THINK IT'S A REAL LEADING INDICATOR. PHIL AND I TALKED ABOUT THAT THE LAST FEW WEEKS IS THAT YOU CAN JUST WATCH THE ECONOMIC ACTIVITY WITH THE TRUCK SALES BECAUSE SO MANY OF THEM, PROBABLY 50%, ARE USED FOR SMALL, MEDIUM AND LARGE --

KERNEN: YOU GUYS JUST CALL EACH OTHER AND TALK ABOUT THINGS?

MULALLY: I CHECK IN ON CNBC FOR MY NEWS.

KERNEN: UNBELIEVABLE. THAT'S FINE. WHEN YOU TALK TO PEOPLE THAT BUY A FORD, DO YOU EVER HAVE LIKE A SURVEY AS TO WHY THEY DECIDED TO BUY FORD? WHAT I'M GETTING TO IS, DO YOU HAVE A PERCENTAGE OF PEOPLE THAT SAID, I DON'T WANT ANY GOVERNMENT INVOLVEMENT WITH THE MAKER OF MY CAR I JUST DON'T LIKE IT AND I'M BUYING A FORD FOR THAT REASON? DO YOU HAVE ANY KIND OF NUMBER ON THAT?

MULALLY: JOE, VERY INTERESTING QUESTION. I'LL NEVER -- I'LL NEVER FORGET MAKING THE DECISION TO GO TO WASHINGTON, D.C. AND TESTIFY ON BEHALF OF MY BANKRUPT COMPETITORS. WE DID THAT CLEARLY FOR THE GOOD OF THE INDUSTRY, BUT ALSO THE GOOD OF THE U.S. ECONOMY. BECAUSE IF THE SUPPLIERS WOULD HAVE ALL GONE INTO BANKRUPTCY, FREE-FALL, MOST ECONOMISTS WOULD HAVE TAKEN THE U.S. FROM A RECESSION TO A DEPRESSION. SO WITHIN TWO WEEKS AFTER THOSE HEARINGS, 100% OF THE PEOPLE KNEW THAT GM AND CHRYSLER WERE BANKRUPT AND FORD WAS NOT AND THAT FORD HAD A PLAN. AND WE COULD JUST WATCH THE ACTIVITY AS PEOPLE TUNED IN TO FORD TO FIND OUT MORE ABOUT FORD AND THE BUSINESS AND THE CARS. AND 74%, WITHIN A FEW WEEKS, 74% OF ALL THE PEOPLE IN THE UNITED STATES SAID THEY WERE CONSIDERING FORD. TWO REASONS.ONE, THE THE STRENGTH OF THE PRODUCT LINE. BUT ALSO, IT WAS SO IMPORTANT TO THEM THAT WE WERE CREATING A STRONG BUSINESS AND WE WERE NOT TAKING OUR PRECIOUS TAXPAYER MONEY.

LEBEAU: ALAN, CLEARLY YOU HAD THE LIFE RAFT OF HAVING THE MONEY YOU BORROWED. IT WAS DWINDLING LOWER AND LOWER. HOW CLOSE WERE YOU GUYS TO SAYING WE CAN ONLY GO ANOTHER COUPLE OF WEEKS, ANOTHER COUPLE OF MONTHS AND THEN THE LIFE RAFT IS NOT THERE AND AT SOME POINT WE WILL HAVE TO MAKE THAT DECISION OF BANKRUPTCY. IN OTHER WORDS, DID YOU HAVE ANOTHER MONTH, ANOTHER TWO MONTHS?

MULALLY: NO, WE WERE NEVER CLOSE LIKE THAT, PHIL, BECAUSE WHEN WE TOOK OUR BUSINESS PLAN TO THE BANKERS AND WE BORROWED THE MONEY WE ALSO WANTED TO CUSHION FOR A DECLINING ECONOMY. BUT ALSO WE WANTED TO KEEP ALL OF OUR PRODUCT DEVELOPMENT PLANS IN PLACE. EVEN DURING THE WORST OF TIMES WE ACCELERATED THE INVESTMENT IN NEW PRODUCTS. WE HAD A NUMBER OF THINGS WE COULD DO TO CONSERVE CASH IF WE NEEDED TO DO IT. THE NEAT THING WAS WE DID NOT SACRIFICE ONE CAR OR TRUCK IN OUR PRODUCT DEVELOPMENT PROGRAM DURING THE WORST OF TIMES WHICH IS WHY, I THINK, WE'RE IN THE POSITION THAT WE ARE.

ROHR: DID IT ALSO MATTER TO YOUR CUSTOMERS THAT THEY HAD CONFIDENCE IN YOUR ABILITY TO SERVE YOUR WARRANTY AND SERVICE THE PRODUCT OVER A LONG PERIOD OF TIME? I MEAN, WHEN YOU BUY A CAR IT'S AN INVESTMENT OVER A PERIOD OF TIME.

MULALLY: ABSOLUTELY. AND NEXT TO OUR HOME, THE CAR IS THE SECOND BIGGEST PURCHASE THAT WE MAKE. AND ALL THE DATA SAYS THAT PEOPLE WANT TO -- THEY WANT TO A GREAT VEHICLE, THEY ALSO WANT TO KNOW THAT THEY ARE GETTING IT FROM A STRONG BUSINESS THAT WILL BE THERE FOR THEM GOING FORWARD AND ALSO A THIRD ONE THAT'S COME INTO THE CORPORATE REPUTATION IN THE PURCHASE DECISION IS, DO YOU CARE, DO YOU CARE ABOUT CONTRIBUTING TO A BETTER WORLD, ARE YOU WORKING ON FUEL EFFICIENCY, ON QUALITY, DO YOU CARE ABOUT THEM AND DO YOU CARE ABOUT THE ISSUES THAT WE'RE ALL FACING TODAY ON ECONOMIC GROWTH, ENERGY INDEPENDENCE AND ALSO SUSTAINABILITY.

QUICK: SINCE WE HAVE BOTH OF YOU TWO ONSET. HOW ARE THE CREDIT AVAILABILITY FOR CUSTOMERS TODAY? THAT WAS A HUGE PROBLEM, I KNOW, FOR PEOPLE TRYING TO BUY CARS. JIM, OBVIOUSLY YOU SEE A GOOD DEAL OF THIS, TOO. CAN YOU GUYS KIND OF TELL US WHERE THOSE STAND RIGHT NOW?

ROHR: WELL, WE'RE TRYING TO AGGRESSIVELY PURSUE AS MUCH LENDING AS -- RESPONSIBLE LENDING AS WE POSSIBLY CAN. WE'RE JUST NOT SEEING THE LOAN DEMAND WE ORIGINATED, AS I MENTIONED EARLIER, $32 BILLION OF CREDIT IN THE FIRST QUARTER. A BILLION DOLLARS FOR SMALL BUSINESS. WE PUT A SECOND REVIEW PROCESS IN FOR SMALL BUSINESS LENDING IF YOU GET TURNED DOWN THE FIRST REVIEW WE HAVE A DIFFERENT GROUP OF PEOPLE, DIFFERENT SET OF EYES THAT, YOU KNOW, TAKES A LOOK AT IT. WE HAVE IMPROVED OUR APPROVAL RATE. SO YOU KNOW, IN OUR CASE, WE HAVE 86% LOAN TO DEPOSIT RATIO.WE HAVEN'T EVEN LET OUT OUR EXISTING DEPOSITS. SO WE CONTINUE TO GROW DEPOSITS. WE'VE ADDED 15 BILLION OF TRANSACTION ACCOUNTS IN THE LAST 15 MONTHS. AND YET LOANS -- OUR LOAN NUMBERS KEEP GOING DOWN BECAUSE OF THE LACK OF LOAN DEMAND.AND YOU MENTIONED EARLIER ABOUT HOW MUCH CASH IS ON THE SIDELINES.

QUICK: RIGHT.

ROHR: CORPORATIONS AND INDIVIDUALS HAVE A LOT OF CASH. SO WE WOULD LOVE TO SEE A TURN. BUT AS YOU KNOW, LOAN DEMAND TYPICALLY FOLLOWS THE RETURN OF THE ECONOMY BY ABOUT 12 MONTHS.

QUICK: RIGHT. ALAN, EARLIER WE HAD JIMMY DUNN ON AND HE TOLD US THAT THE SECURITIZATION MARKET HAS COMPLETELY DISAPPEARED. SO THAT SHADOW BANKING AREA THAT USED TO BE THERE IS GONE. HOW IS THAT AFFECTED AUTO SALES?

MULALLY: WE ARE SEEING AVAILABILITY IN CREDIT NOW AND IT'S GETTING BETTER. THE NEATEST THING ABOUT THE PROGRAMS PUT IN PLACE BY THE GOVERNMENT WAS THE FACT THAT WE COULD GETTING ACCESS TO CAPITAL EVEN DURING THE WORST OF TIMES. AND OF COURSE AS YOU KNOW, WE HAVE OUR CAPTIVE FINANCE COMPANY. SO WHEN YOU COME TO A FORD STORE YOU NOT ONLY CAN GET THE VEHICLE BUT YOU CAN GET THE FINANCING FOR IT, PLUS, WE FINANCE MOST OF THE SHOWROOMS FOR OUR FORD STORES. SO WE ARE SEEING THAT GRADUALLY IMPROVE. BUT IT REALLY GOES WITH THE RECOVERY IN THE ECONOMY.

KERNEN: EARLIER WHEN YOU SAID BANKRUPT COMPETITORS I WAS THINKING, TWO BEAUTIFUL WORDS FOR A CEO OF -- BUT THEN I THOUGHT ABOUT IT MORE AND IF THEY HADN'T BEEN BAILED OUT, WOULD WE HAVE LOST ALL THE SUPPLIERS? WHAT WOULD YOU HAVE -- YOU WOULDN'T HAVE HAD ANY SUPPLIERS FOR -- YOU NEEDED THOSE GUYS TO SURVIVE, DIDN'T YOU?

MULALLY: NONE OF US WILL EVER KNOW THAT TWO PRESIDENTS, TWO ADMINISTRATIONS, AND WITH A LOT OF GREAT ADVICE AND COUNSEL, DECIDED THAT WE NEEDED TO STEP IN. AND I AM SO PLEASED THAT WE STOOD TALL FOR OUR COMPETITORS AT THAT TIME BECAUSE CLEARLY THE DOWNSIDE WAS NOT SOMETHING --

KERNEN: WHO GETS IT NOW, DO YOU THINK? CHRYSLER HAD SOME GOOD NUMBERS. WHITACRE GETS A LOT OF PRESS, DOING A LOT OF STUFF. WHO ARE YOU AFRAID OF IN TERMS OF THE MODELS THEY'RE BRINGING OUT? OKAY. YOU'RE NOT AFRAID OF ANYONE. BUT WHO GETS IT? WHO IS MAKING SOME STUFF THAT MAKES YOU THINK, WOW, WE'VE GOT --

MULALLY: YOU KNOW, I WAS JUST THINKING, JOE, HOW MUCH I LOVE THE FORD PLAN.

KERNEN: WELCOME TO MY WORLD. IT'S LIKE RUNNING INTO A BUZZ SAW. YEAH, SO NOBODY -- YOU DON'T --

MULALLY: WE ARE COMPETING. THE NEATEST THING, JOE, WE ARE COMPETING WITH THE BEST COMPANIES IN THE WORLD RIGHT NOW.

KERNEN: THEY'RE NOT JUST U.S. COMPANIES.

MULALLY: ABSOLUTELY. THIS IS A GLOBAL BUSINESS, GLOBAL CUSTOMERS. THE NEAT THING ABOUT FORD IS THAT HENRY FORD ACTUALLY SET UP FORD TO OPERATE ALL AROUND THE WORLD, COUNTRIES AND MARKETS THAT WE SERVE.THE NEAT THING ABOUT FORD IS THAT WE ARE PULLING ALL THOSE FORD ASSET, ALL THE INTELLECTUAL CAPABILITY TOGETHER AROUND FORD TO SERVE THE CUSTOMERS AROUND THE WORLD. WE WELCOME TO COMPETITION AND THE CUSTOMER IS GOING TO GET A GREAT PRODUCTS.

LEBEAU: ALAN, LET ME ASK YOU ABOUT THE DECISION GETTING RID OF MERCURY AND BUILDING UP LINCOLN.

MULALLY: YES.

LEBEAU: YOU HAVE TOLD ME, YOU SAID IT LAST WEEK OR A WEEK AND A HALF AGO, LISTEN, I THINK THAT LINCOLN CAN BE EVERY BIT AS COMPETITIVE AS BMW, AS LEXUS AND WE CAN WIN IN THE LUXURY MARKET. BUT WHEN YOU LOOK AT THE LUXURY SALES YEAR TO DATE, LINCOLN IS NUMBER SEVEN. IT'S THE NUMBER SEVEN LUXURY BRAND. AND A LOT OF PEOPLE WHEN I BRING THIS UP TO THEM IN THE AUTO INDUSTRY OUTSIDE OF FORD THEY SCOFF AT THE IDEA THAT LINCOLN CAN BECOME EVERY BIT AS COMPETITIVE AS LEXUS AND BMW AND MERCEDES AND CADILLAC.

MULALLY: WELL, YOU KNOW, CLEARLY THAT'S THE PLAN. AND I THINK WE HAVE A TRACK RECORD THAT EVERYBODY REALIZES THAT WE CAN MAKE THE CARS AND TRUCKS THAT PEOPLE REALLY DO WANT AND ALSO THE FACT THAT REMEMBER, WHEN WE HAD ALL THOSE OTHER BRANDS LIKE ASTON MARTIN AND JAGUAR AND LAND ROVER, THAT'S WHEN WE WERE MAKING OUR INVESTMENT AND WE DIDN'T INVEST AS MUCH AS WE COULD IN LINCOLN. LINCOLN HAS A GREAT BRAND. IT'S NEVER BEEN DAMAGE TO THE PLACE WHERE I CAN'T COME BACK.SO AGAIN ONE MORE TIME WHEN YOU START SEEING THE NEW LINCOLNS COME OUT, ABSOLUTELY WE CAN MAKE A PREMIUM BRAND

LEBEAU: DO YOU NEED TO MAKE THE LINCOLN EXPERIENCE IN TERMS OF THE DEALERSHIPS, BECAUSE YOU KNOW, YOU OWNED A LEXUS BEFORE YOU THAT NEEDS TO CHANGE, CORRECT?

MULALLY: PHIL, I CAN REMEMBER THE FIRST TIME I MET PHIL --

LEBEAU: HE'S NOT GOING TO ANSWER.

MULALLY: NO IN THE NEWS CONFERENCE. I WALKED OUT WITH PHIL AND WE WENT THROUGH ALL OF THE STRATEGIC QUESTIONS FROM THE PRESS. ONE OF THE MEMBERS OF THE PRESS SAID, "SO, MR. MULALLY, WHAT KIND OF CAR ARE YOU DRIVING." I SAID, "I'M DRIVING A LEXUS." AND THEY SAID "WELL, WHY ARE YOU DRIVING A LEXUS." AND I SAID, "AT THE TIME IT'S THE FINEST CAR IN THE WORLD." AND THEY SAID, "WELL, WHY DID YOU COME TO FORD?" I SAID, "I CAME TO DESIGN, TO HELP DESIGN THE BEST CARS IN THE WORLD." WE ABSOLUTELY ARE GOING TO PROVIDE A TREMENDOUS PREMIUM EXPERIENCE.

QUICK: WHAT DO YOU DRIVE NOW?

MULALLY: I DRIVE A DIFFERENT CAR EVERY NIGHT. USUALLY A FORD. HALF THE TIME I DRIVE THE COMPETITORS, BECAUSE REMEMBER, THE OTHER PART OF THE PLAN IS BEST IN CLASS AND YOU ONLY KNOW IT WHEN YOU KNOW IT. NOW WE HAVE EVERYBODY AT FORD ABSOLUTELY KNOWS EVERYTHING ABOUT EVERY ONE OF OUR COMPETITORS.

LEBEAU: WITHOUT SAYING THE CAR, HOW OFTEN DO YOU GET INTO THE COMPETITOR'S CAR, AND MAYBE IT'S NOT A WHOLE CAR OR TRUCK BUT THERE'S A FEATURE AND YOU GO, WOW.

MULALLY: FREQUENTLY, WHICH IS PRETTY NEAT BECAUSE IF YOU'RE COMMITTED TO MAKE AN INVESTMENT IN THE WORLD AND YOU DON'T WANT ANY GOOD IDEA TO PASS YOU BY.

QUICK: WHAT'S A FEATURE YOU THOUGHT, WOW, I REALLY WANT THIS.

MULALLY: WELL, THE ONE THAT I AM -- I'M JUST SO PLEASED IS THE SYNC IN THE MY FORD. THE FACT THAT WE CAN NOW HANDS ON THE WHEEL, EYES ON THE ROAD, VOICE ACTIVATED, YOU BRING ALL YOUR SMART PHONE, ALL THE APPLICATIONS IN THE CAR, YOU'RE ALL SYNC'D UP AND YOU'RE ABSOLUTELY A BETTER DRIVER BECAUSE YOU MINIMIZE ALL OF THOSE DISTRACTIONS. IT'S GOING TO BE A FABULOUS DEVELOPMENT FOR ALL OF US.

KERNEN: AND YOU CAN GET A REFRIGERATOR, IN YOUR FLEX. YOU KNOW I'M A BIG GRAPE SODA GUY--

MULALLY: KIDS LIKE THAT.

KERNEN: THEY DO.

MULALLY: IT'S A FORD I THINK ISN'T IT JOE?

KERNEN: THERE'S NO BEER IN THERE PHIL, I'M SORRY. I KNOW WHAT YOU'RE THINKING. YOU'RE THE ONLY ONE THAT ASKS HIM THE QUESTIONS THAT MAYBE HE WON'T COME BACK BECAUSE OF.

QUICK: THAT'S WHY WE NEED HIM HERE.

KERNEN: I DON'T KNOW. NO, WE ALL TRY TO. ALAN --

MULALLY: PHIL DOES A GREAT JOB.

KERNEN: HE DOES. THANK YOU FOR COMING IN. PHIL FOR BRINGING ALAN.

LEBEAU: ALWAYS GOOD TO BE HERE.

KERNEN: GREAT TO BE ABLE TO TALK TO YOU FOR SO LONG ABOUT ALL OF THESE THINGS. AND GOOD LUCK. IT'S OKAY -- IS IT OKAY FOR ME TO SAY I LIKE IT WHEN AN AMERICAN INSTITUTION IS SURVIVES AND DOES WELL?

MULALLY: PLEASE SAY IT SLOWLY. REMEMBER, JOE, FORD, DRIVE ONE AND FEEL THE DIFFERENCE.

KERNEN: ALL RIGHT. NO LONGER FOUND ON THE ROAD DEAD IS WHAT YOUR SAYING. ALL RIGHT THAT WAS A FEW YEARS AGO.

QUICK: ALAN, THANK YOU.

LEBEAU: YOUR OFF ON A ROLL THIS MORNING BETWEEN PUTTING BEER IN THE LITTLE --

KERNEN: FOR YOU. FOR YOU.

LEBEAU: YEAH.

MULALLY: BECKY, JOE, ALSO, THANK YOU FOR COVERING THE TRANSFORMATION.

QUICK: THANK YOU FOR JOINING US. PHIL, WE'LL SEE YOU SOON. THANK YOU.

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