Mulally New Ford CEO
Tuesday, September 5th, 2006
Bill Ford lost his job as chief executive of his family’s car company on Tuesday. And he seemed downright giddy about it all. He joked that the Lexus 430 driven by his replacement, former Boeing executive Alan Mulally, would be keyed. He joked that Mulally’s youthful looks would be quickly degraded by the stress of the problems at Ford Motor.
Bill Ford was yucking it up because he is relieved. He was clearly overworked and overwhelmed, and he finally got some help. Bill Ford never warmed up to the task of chief executive in the five years he served. And because of years of management turmoil, Ford was left with a young and thin management team. The man who didn’t even want to be chief executive also was standing in as chief operating officer because that post was vacant.
Meanwhile, the family’s company, under his watch, has slid into one of the most difficult periods of its 100-year life. Its North American auto operations lost $2.5 billion in 2005 and $1.3 billion through the first half of this year. And Ford’s (nyse: F - news - people ) market share has been eroding steadily for years. So far this year, Ford has lost another point of market share, to about 18%. A decade ago, Ford had 25% of the auto market.
In July, Bill Ford, who will remain chairman of the board, told the rest of the board he wanted to look for help. He came up with Mulally, 61, who ran Boeing’s (nyse: BA - news - people ) commercial airplane division. Mulally is credited with helping turn Boeing around, in part by developing the 787 Dreamliner, a light, fuel-efficient mid-size jet that can cover long distances nonstop.
Bill Ford said Mulally will provide a “steady hand” to Ford’s young executives, someone who has “been through the wars, who has the battle scars and emerged victorious.” Mulally described himself as “nervous, but not afraid.”
If Mulally can provide that, it is just what Ford needs. While speaking in general terms about his own tenure, Bill Ford said that not everyone was cut out for certain situations. In stepping down, he indicated–rightly, it seems–that Bill Ford was not the one to lift his company out of its current mess.
It is indeed a difficult mess. Unlike past Ford downturns, this time the economy and industry vehicle sales have been robust. But customer tastes, constantly improving competition from abroad, and staggering labor and health care costs have left Ford at sea.
Bill Ford became chairman of Ford’s board of directors in 1999, the first Ford family member to head the company since Henry Ford II stepped down in 1979. He added the chief executive title in 2001 after pushing out Jacques A. Nasser. Mulally must be mindful of the fact that Nasser was only the latest in a serious of well-known executives who were nudged out by the Ford family, though he said he had not talked to Nasser before accepting the job.
But Mulally said Bill Ford’s continued involvement in the company–and the long-term perspective that comes with a family-controlled enterprise–was critical in his decision to leave Boeing after 37 years. “I would never have considered it if I couldn’t have worked with Bill. It was absolutely a condition to take the job,” Mulally said.
No doubt another contributing factor in Mulally’s decision was the fact that he had been passed over as CEO of the aircraft maker.
When Bill Ford took over as chief executive, he was seen by many, both inside the company and out, as a savior. Indeed, he moved quickly to restore profits by selling noncore businesses and cutting 35,000 jobs worldwide.
But at times he has seemed overwhelmed by the enormity of the task. His management team has been a revolving door, leading to hiccups in product development that caused Ford to lose precious time bringing new vehicles to showrooms.
Though he was one of the first to warn that higher gas prices would slow sales of big sport utilities, he was blindsided by how quickly Ford’s market share collapsed as a result. In September, North American boss Mark Fields is expected to announce details of a new strategy to cut costs, speed up product development and restore profits. Mulally said that from what he’s seen of the new plan, Ford is making the right moves.
While Mulally and Fields work to save the company, Bill Ford will retreat to the chairman role he has had since 1999, where he has always seemed more comfortable. So there will still be a Ford at the top.
Tags: ford, ceo, ford ceo, bill ford, bill ford jr, Alan Mulally, Mulally, FoMoCo, Ford Motor Company
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