Alan Mulally, CEO of Ford Motor Co., right, discusses the future of his company with Stuart Bell, Kansas University’s dean of engineering, Wednesday in Bell’s office. Mulally visited his alma mater and met with KU students at Eaton Hall.

Alan Mulally grew up in Lawrence, graduated from Lawrence High School and earned aeronautical and astronautical engineering degrees at Kansas University.

Now, having already ascended professionally into service as CEO of Boeing Commercial Airplanes, Mulally finds himself behind the wheel as the top executive at Ford Motor Co.

During a visit to Lawrence last week — to meet with engineering students, mingle with school administrators and squeeze in a visit with his mother, Lauraine — the Ford CEO made some time to answer questions about his efforts at Ford, his economic expectations for the future and even whether he’d entertain being considered a candidate to be KU’s next chancellor.

Excerpts:

Q. How’s it going at Ford these days?

A. Ford is doing great. And what I mean by that is that we have a complete product line, that are best in class — our new vehicles, on quality and fuel efficiency and safety — and the response that we’re getting from consumers is very gratifying, that we’re on the right track.

And clearly we’re in a different place than some of our competitors, because we have sufficient liquidity to continue to finance our plan and make the vehicles that people really do want.

It’s a tough environment. The economy is tough — sales for the industry are down over 50 percent — so I think the things that people are doing, especially the government, to get this economy going again are going to bode well for all of us.

Q. GM and Chrysler are moving into reorganization or bankruptcy. Why is it that Ford has been able to keep from doing all the things that they’re being forced into doing?

A. Clearly, Ford developed a strategy about two and a half years ago, when we were really going to transform the business of the automobile industry and of Ford, and so we took some pretty dramatic actions and implemented a new strategy, a new business plan for Ford.

We decided to focus on the blue oval, so we divested all the noncore brands. We divested Aston Martin, Jaguar, Land Rover. We bought down our equity position in Mazda, and we also separated out Volvo for sale. And so that brand clarity and focusing on Ford was one of those pieces.

Another piece was to commit to the very best vehicles — whether they’re small, medium or large; cars, utilities or trucks, to be not just competitive but best in class, on quality, and fuel efficiency and safety. So that was another big strategic decision.

And then, of course, we also went to the markets, when the credit was available, and we raised sufficient liquidity so that we could finance this plan and have a cushion for a further degradation in the economy.

So clearly, you can see now, that what the U.S. government is doing with Chrysler (and) GM is trying to help them temporarily do those same kind of actions to make them viable businesses, because the automobile industry is really important for the United States, and their commitment is that they want to help with this transition to have them have viable businesses also.

Q. How confident are you that Ford won’t ever have to take any federal bailout money?

A. We’re very confident. Because that was the plan, to raise sufficient capital, which we did, when we could. And we feel very comfortable with our liquidity today. We ended the quarter with over $21 billion dollars in cash. And we reduced our cash burn rate, for the quarter, to $3.7 billion. And we also gave guidance that we were going to improve that cash burn and reduce that every quarter through the rest of the year, because we’d already cut our production to meet the real demand.

So now we are actually going to start to increase production, because people really love the new product lines, and we’re actually increasing market share.

Q. So you’re actually increasing production at a time when others are closing plants. You’re actually going to make more cars?

A. Absolutely, … 10,000 (more) vehicles in the second quarter.

Q. Somebody’s going to see that as crazy.

A. Well, we’re absolutely matching our production to the real demand. And the reason we’re doing it is that customers want more of the Ford products.

Q. Recently you had to report a net loss of $1.4 billion for the first quarter.

A. Yes.

Q. And that’s good news?

A. That is tremendous news, because the most important thing is our plan to get back to profitability, and we reaffirmed our guidance that we’re going to be profitable in 2011.

And the glide slope that we’re on now — from the losses in the past and what we’ve done on our quality and productivity and our restructuring — that was a signal to everybody that we have less loss, and we’re moving toward profitability in 2011. So that was very important news for everybody.

Q. Have we hit the bottom?

A. In the economy?

Q. For Ford, and the economy?

A. I’m cautiously optimistic that we are kind of bouncing along the bottom right now. But I’m also very confident that the fiscal and monetary policy that the U.S. government is implementing is working on the right thing, and that is our economy.

I think the combination of stabilizing banks, freeing up credit, the most important thing we can do is get the customers’ confidence back, and get our great economy going again. And that’s the No. 1 priority of the U.S. government, which is terrific. …

I think the fact that the economy is stabilizing and the automobile sales are stabilizing, and Ford is actually increasing their production are very positive signs right now.

Q. How important is fuel economy going to be in relation to auto sales and auto production in the coming years, now that gasoline prices are down from the $4 a gallon?

A. I think fuel economy, fuel efficiency, is going to take ever more importance in our purchasing decisions, no matter what size vehicle you have — small, medium or large, or whether it’s a car or utility or truck. What the consumers want is world-class quality, world-class fuel efficiency and world-class safety. And the best value. Those are the most important purchasing considerations.

In Ford’s case we have taken a long-term perspective that the demand for fuel and energy is going to be more than the production capability for all energy, because of the worldwide economic development. So, over time, we believe we will pay more for energy. And then that fuel-efficiency piece will be even more important, as far as a consideration.

Another thing I really like about where we’re going is that I think we’re going to see more discussion and more debate around the world — led by the United States — on energy independence, energy security, and sustainability. Because I think all of us are starting to appreciate, more and more, the value of economic development, but we want to do it in the most sustainable way we possibly can.

So I think that fuel efficiency is going to be ever more important, no matter what the current fuel prices are, because, over time, they’re going to drift up.

Q. Couldn’t fuel taxes increase demand for fuel-efficient cars, by pushing up prices?

A. Fuel taxes are — a tax on fuel is one clear way to get consumers involved. Our position has been that whatever we do as far as getting an integrated energy policy in the United States, … you need to include the consumer … and then we’ll make a corresponding economic decision.

And, for us, some people will value the larger vehicles, and then many people are going to value smaller, even neater vehicles — like that Ford Fiesta, and that Ford Focus, and that Ford Fusion — along with the wonderful Mustang, the Escape, the Edge, the Flex, the Explorer, the Expedition, the F-series (trucks) and the new Transit Connect. All from your Ford dealer.

Q. Shouldn’t you be working in a showroom?

A. (Laughs) We have an exciting story to tell. And to be associated with Ford, and to be making products that people want, and they value, it’s really exciting. …

Whatever you sell has to deliver on the brand promise, because you can’t fool anybody today. Information is ubiquitous. The consumer has all the information — they can learn about quality, fuel efficiency, safety. So the most important thing we decided at Ford was that we were going to be best in class in the things that people really care about, and what they consider when they buy a new vehicle.

And so once we decided that, and now every car that’s coming out is world-class, then it’s the time now to help everybody understand that they’ve got great, great choices at Ford. So it’s an exciting time to be a spokesperson for Ford.

(Pause)

F-O-R-D. Drive one. Feel the Difference.

Q. So what’s a Ford car going to look like in five years? All hybrids? All-electric? What’s the future?

A. We get a glimpse of that when we look at the technology road map — the enabling technology that we can bring to bear to improve quality, fuel efficiency and safety. And there’s still a lot of improvement we’re going to make on the internal combustion engine.

And in Ford’s case, we are really moving aggressively with turbocharging and direct fuel injection, which allows us to improve the fuel economy by 20 percent and reduce the CO2 by 15 percent.

And we also can put these engines in all our vehicles, no matter whether it’s a Fiesta or an F-150, so it’s affordable. You can get volume, and you can make a huge difference to sustainability with the product line.

Then you’ll move to alternate fuels — like ethanol, and like cellulosic — where you’re using the internal combustion engine but you’re using alternate fuels.

Then, I think, the next element of the technology road map will be moving to hybrids. That’ll be every combination of the internal combustion engine with electricity.

And then, the real window to the world on enabling technology, will be the electrification of the vehicles, where you get to electric vehicles. But to do that, we need to do what we’re doing, and that is to enhance the electrical grid, generate the electricity clean, and then we’ll be able to use electricity clean.

And the enabling technology for that is going to be the batteries, the most important innovation that is required for us to create this very compelling future.

Q. When you left Boeing to come to Ford, you knew there would be some challenges. But with everything that is going on, how are you handling it?

A. I find it so interesting that everybody who knows me, or knows of me, they’ll come up and they’ll say — just like today — “How’s it going?” “Are you OK?” and “What’s kind of the rest of the story behind the headlines?” And it’s just so fun to share with them: In business, it always starts with a point of view about the future. It always starts with having a plan. It always starts with everybody being included and respected and everybody contributing.

And to be asked to serve at Ford — (including Boeing) two global and American icons — and I’ve been there, I’ve been through the geopolitical and economic cycles around the world. I have the confidence of having been through it, and not only having come out the other side but creating exciting businesses going forward. And to get a chance to do that at Ford, with the fabulous Ford team, is inspiring.

I’ve never felt better about a company — where it is, where it’s going. I’ve just never had more fun — never have had more fun — and never felt more appreciated and, boy, this is important stuff. This is compelling. This is about the United States. This is about the world. This is about the industrial base, being part of the recovery, and we’re not the problem, we’re part of the answer.

And then to see the look on people’s faces when they see these fabulous vehicles that are a part of each of our lives, knowing they’re getting the best quality, the best fuel efficiency, and the safest vehicles. And getting the best value. I mean, this is America’s car company, and we’ve been innovating since Henry Ford started this. And to get a chance to stand on the shoulders of these leaders and, you know, contribute and help take Ford flying is pretty special.

Q. How is it being back at KU?

A. It is fabulous to be back at KU. I had a chance to meet with the students in a number of settings and I just find it not only inspirational but just so valuable, to understand what they’re thinking about, what they care about. This is like a leading-edge indicator of where the world’s going. …

I think that we need their expertise and their leadership more than ever.

Q. What qualities should KU be looking for in its next chancellor?

A. KU’s next chancellor — what an opportunity.

This is a fabulous, a fabulous institution. And I’m sure that the combination of being so committed to education as an enabler, and the diversity to continue to be a window to the world — KU’s just phenomenal — plus the business acumen, and bringing all of the stakeholders together around this important institution. What an exciting opportunity for the next chancellor. …

I’m sure they’re going to have a great list of people to consider, because talk about an opportunity to lead such a fabulous institution.

Q. So, add your name to the list?

A. I have a full-time job at the Ford Motor Company, but I will always be here for the University of Kansas.