“It’s going to be hard for the next couple of years ä” said Ford’s then-new CEO, Alan Mulally, in his first keynote speech at the 2007 rendition of New York’s International Auto Show. Every chief executive loves to feel vindicated by the future bearing out his previous prognostications, but not even the most prescient could have predicted how hard those following three years would have been. Mulally may have indeed predicted hard times ahead, but not even he would have dared foretell a world economy with no bottom, the bankruptcy of both of Ford’s domestic rivals and, most precipitously for Mulally, an eventual resurgence in Ford’s fortunes so robust that the Blue Oval may now be one of the three most respected automakers on the planet (the others being Hyundai and an also-resurgent Volkswagen).

Despite his foresight (which, of course, would not come to light for some time), Mulally did not have an easy transition into the automotive world.

With virtually no automotive industry background, many questioned his ability to lead a troubled company in a business where product knowledge is revered. Indeed, those fears were not assuaged when, in his first Detroit auto show appearance, he announced the Ford Five Hundred — rebadged as a Taurus — as “the future of Ford” to a skeptical press throng.

Adding to the motoring press’s skepticism was the report by CNN, just days after that aforementioned New York debut, that Mulally had received a whopping US$28-million in compensation in his first four months on the job just months after Ford had posted a US$12.7-billion net loss in 2006. That his base pay was a mere fraction of that number and that the rest was either deferred or compensation for stock grants that he forfeited when he left Boeing mattered not; it was hardly an auspicious beginning, not helped by Ford’s massive layoffs at the time.

Fast forward three years and Mulally can afford to be ebullient as he presents the keynote speech at this year’s New York Auto Show. Ford has announced a pre-tax operating profit of US$454-million, a pittance for a company with gross revenues of US$118.3-billion, but a massive US$7.3-billion turnaround from just the year before. When questioned in 2007 regarding the prospects of luxury segment hybrids, Mulally declined to comment on future product. But this year brings the introduction of the Lincoln MKZ Hybrid and announcements of an electrified Transit Connect transport van as well as a similarly powered Focus in 2011 and a new plug-in hybrid for 2012. Ford’s market share is also up 1.1% to 15.3% of all U.S. sales — the first such increase since 1995.

One of the tricks, says Mulally, was to learn to work with the lower expectations of sales, which Ford now sees as 11.5 to 12.5 million units per year in the United States and — in the midst of predicting this downturn — to actually accelerate new product development, including changing the company’s focus from a dependence on trucks and SUVs to more fuel-efficient sedans and crossovers. The other change Mulally credits with saving Ford is the new-found concentration on its core brands. By divesting itself of its once-vaunted premium brands — Aston Martin, Jaguar, Land Rover and, most recently, Volvo — Mulally sees this new concentration on Ford’s products as directly responsible for the superior performance of its new models in the marketplace.

“It’s pretty cool to be Ford,” Mulally told the motoring press attending his second New York Auto Show keynote speech, noting that “we made it through the worst recession since the Great Depression and we did it the old-fashioned way, we earned it.”

Though most news reports have focused on Ford’s increased sales and market share gains, Mulally is most proud that Ford’s “transaction prices are up since customers desire our cars.” He also said that Ford’s credit ratings were up “because there is confidence in our brand.”

But Mulally’s most emphatic comment of his 2010 keynote speech was that Ford was “fighting for the soul of manufacturing in America.” Echoing a sentiment first voiced by Bill Ford that one of the biggest obstacles facing the automaker is the depths of disrepute the entire domestic automotive manufacturing segment has fallen, Mulally is convinced Ford has turned a corner in rewarding consumers’ faith in its abilities.

Of course, it could be argued that Ford’s successful negotiation of the auto industry bailout without declaring bankruptcy was pure, dumb luck. Dearborn got in severe financial trouble before either Chrysler or General Motors, forcing it to mortgage all its assets to borrow US$23.6-billion (or, as Mulally notes in hindsight, “borrow all you can”) in 2006, monies that, had Ford’s financial crisis occurred just 18 months later, would not have been available on the open market. Even Mulally isn’t that prescient.

dbooth@nationalpost.com