Ford names Boeing executive to replace Bill Ford as CEO of automaker
Wednesday, September 6th 2006, 12:14 pm
By: News On 6
DEARBORN, Mich. (AP) _ When Bill Ford decided that his family's company needed more leadership than he could offer, he started looking for someone who had successfully fixed a large but troubled manufacturing company.
He wasn't sure there was such a person, but as he asked around in and out of the auto industry, one name kept popping up: Alan Mulally, executive vice president of the aerospace company Boeing.
But Mulally, 61, who is credited with straightening Boeing Co.'s flight path in the dark days after the Sept. 11, 2001, terrorist attacks, was unwilling to leave a company he had served for 37 years.
``I resisted,'' Mulally said at a Tuesday news conference at Ford Motor Co.'s world headquarters in Dearborn.
Eventually, though, the 49-year-old Bill Ford prevailed, convinced that Mulally had the right experience to lead Ford's young management team through the troubled and uncertain times that lie ahead.
On Tuesday, Bill Ford introduced Mulally as the new president and chief executive officer of the nation's No. 2 automaker. Mulally will work in transition between the two companies through September and hopes to be fully on the job in Dearborn by the beginning of October.
Ford shares rose 15 cents, or 1.8 percent, to $8.54 in midday trading Wednesday on the New York Stock Exchange. Its shares have traded in a 52-week range of $6.06 to $10.20.
Mulally was widely praised for being a key architect of the resurgence of Boeing's commercial airplanes unit over the past couple of years. He was a top candidate for the Boeing CEO job last year, but the company went outside to select aerospace veteran Jim McNerney, then the 3M Co. chief executive.
Boeing on Tuesday named Scott Carson to replace Mulally as president of the commercial airplanes unit. Carson, 60, had been vice president of sales for the Seattle-based division and is a 34-year Boeing veteran.
While acknowledging he is not an auto authority, Mulally said: ``I'm certainly a product designer and I care deeply about having a viable business.''
He said Ford and Boeing have much in common, producing products that need long lead times for development. Both industries, he said, are heavily affected by fuel prices and foreign competition.
But he said during the past 15 years at Boeing, the company was able to trim its product line from 14 airplanes to only four, and those four do the same job more efficiently than the 15 did.
Mulally, who drives a Lexus, said he took the job partly because there are people who believe the U.S. can't compete with the rest of the world in manufacturing.
``I personally think we absolutely can if we pull together,'' Mulally said.
Bill Ford, the great-grandson of company founder Henry Ford, struggled for five years to steer the company toward financial stability.
He candidly admitted that he couldn't handle all the challenges that now face his 103-year-old company. He told his board in the spring that ``I'm wearing too many hats.''
He began courting Mulally in July, eventually winning him over.
``In this environment, it was clear to me I needed somebody with a skill set who can take us further,'' he said. ``I think everybody's skill set doesn't fit every era and every time. When I looked at what we need now, it was very apparent to me that I wanted somebody, if that person existed, who had major turnaround experience in an industrial company.''
Bill Ford, who took control of the company in 2001, decided to remain on as executive chairman to continue helping with strategy.
He said the company's planned announcement of moves that accelerate its ``Way Forward'' restructuring plan would take place as scheduled sometime after a Sept. 14 board meeting.
Mulally will have autonomy as CEO, and as he learns more about the restructuring, he will decide what areas to emphasize, Bill Ford said. He said he expected Mulally to work with Mark Fields, Ford's president of the Americas, on the turnaround, which Fields has been heading.
The change comes as Ford has struggled to remain profitable under Bill Ford's leadership.
It also comes more than seven months after Ford announced ``Way Forward,'' the second restructuring on Bill Ford's watch that so far has failed to revive the company. Under the first plan, Ford closed five plants and cut 35,000 jobs, but its North American operations failed to turn around. The latest plan, announced in January, would cut up to 30,000 jobs and close 14 facilities by 2012.
Since Bill Ford became CEO, the automaker's stock price has fallen nearly 40 percent and its share of the U.S. and global car market continues to drop. The company lost $1.4 billion in the first half of this year.
Ford has been CEO since October 2001 and chairman since 1999. He owns more than 10 million shares that have a market value of more than $70 million. The Princeton-educated vegetarian and environmentalist took control of the company when it was mired in losses and plagued by eroding sales, questions about vehicle quality and the Firestone tire crisis.
Ford's family still owns a 40 percent voting stake in the company.
Bruce Clark, lead auto analyst at Moody's Investors Service, said Mulally faces a ``daunting task in attempting to reshape Ford's operating model'' as demand shifts rapidly away from trucks.
``However, he comes to the company with a strong background in engineering, manufacturing and product development,'' Clark said in a statement. ``We think that this will be a valuable skill set as he fills the CEO position at Ford.''
Mulally was popular within Boeing and the aerospace industry for a personable, gregarious style and a thorough knowledge of the business. Even Boeing's unions, despite frequent criticism of management, praised him.
Peter Jacobs, a Seattle-based analyst for Ragen MacKenzie who covers both Ford and Boeing, said Mulally was a good choice to make the industry leap because he has dealt smoothly with complex manufacturing processes, labor relations and an international supply base.
``Other than the fact Alan's going to be focusing on automobile manufacturing as opposed to airplane manufacturing, pretty much all the things that he has done to make Boeing's commercial airplane business a success he can apply to the challenges and issues that Ford is facing right now,'' he said.