Lessons from Private Industry
Earlier this month I had the opportunity to join a few of my fellow Chamber Board Members and attend the Ohio Chambers Annual Meeting in Columbus, Ohio. This meeting brought together members of the Ohio General Assembly and many of Ohio’s most active business leaders. One of the highlights was the keynote speaker, the President and CEO of Ford Motor Company, Alan Mulally.
Mr. Mulally, and Ford Motor Company, have a very compelling story to tell of late. Mulally detailed a phone call he received from Bill Ford, Jr, the great grandson of Henry Ford while he was working as the CEO of Boeing. Bill Ford said, “We’re in really tough shape and we need your help. Would you consider coming to Ford?” When Mulally accepted the job, Ford was projected to lose $17B in 2006.
The financial position of Ford back in 2006 is not too much different than the fiscal positions of our state ($8.5B deficit) and the federal government today. Both have chalked up huge deficits that are not sustainable. Like our government, Ford was living beyond their means. The good news is that there are important lessons to be gained from private industry and companies like the Ford.
If Mr. Mulally can take an old school industrial company like Ford and turn it into a model of how a modern company should be run – there is no reason our elected officials can’t turn around an old school government. So how did he do it?
1. By understanding that you can’t spend more than you take in. Deficit spending is not sustainable. Ford had to size itself to the demand. It was a tough action that was necessary to set the stage for their financial turnaround. Both our state and federal governments are running record deficits.
2. By understanding that you have to be competitive. Mulally understood that he had to address internal structural problems so that Ford could be competitive (profitable) on a global basis. The state of Ohio must do the same if we’re going to win the competition for jobs against other states. How many jobs have we lost to Texas, Indiana, and the Carolina’s where the cost of doing business is lower?
3. By recognizing that the success of economic development is directly related to the strength of the public/private partnership. Economic development is not a zero sum game where there is a winner and a loser. Economic development will prosper in those areas where both the public and private sectors realize that they are on the same team. Ford can build a plant (jobs) anywhere in the USA. A strong public/private partnership ranks high on their evaluation criteria. We need these type of jobs in Ohio.
During the last 5 years of Mulally’s leadership, we know that Ford is one of the Cinderella stories of the automotive industry. Not only did they reverse their $17B deficit, but they were the only US automotive company that did not require a government bailout.
As a small business owner, it’s refreshing to see that the basic concepts we run our business on also work for industry giants like Ford. As a fellow Chamber Member, I encourage you to support our elected officials who share these beliefs and are willing to make the tough decisions like Mulally has done. Like Ford back in 2006, Ohio needs a financial turnaround today.