No bailout and a record $20 billion in profits last year.
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How Outsider Alan Mulally Rescued Ford
Some people underestimate Alan Mulally when they first meet him. Ford
Motor Co.'s 66-year-old chief executive, who grew up in Kansas and once
aspired to be an astronaut, looks and sometimes acts like an overgrown
Boy Scout. He laces his speech with words such as "neat," "cool" and
"absolutely."
But the farm-boy exterior conceals one of business' toughest, most
ruthless managers. When a desperate Bill Ford recruited Mulally from
Boeing in 2006, Ford was heading for a $12.7-billion loss and on the
verge of losing its No. 2 sales spot in the U.S. to Toyota because of
poor management and an uninspiring vehicle lineup.
Four years later, Ford reported a $6.6-billion profit — the biggest
in the sector that year — and Toyota was comparing its cars with Fords,
not Hondas, in its ads.
In his new book "American Icon: Alan Mulally and the Fight to Save
Ford Motor Company," author Bryce G. Hoffman, a veteran reporter with
the Detroit News, details "one of the greatest turnarounds in business
history" and, to a lesser extent, the man behind it.
Published by Crown Business, the book makes for a fascinating read
for anyone who follows the car industry; others may find the story
engaging too, if hard work in places.
Ford was in deep trouble in 2006, with a poisonous culture in which
executives fought turf wars and sat through endless meetings but made
the real decisions elsewhere.
When Mulally arrived, many of its senior managers in Dearborn, Mich.,
did not deign to drive Fords or even cars made by its rivals,
preferring the Jaguars and Land Rovers made by its loss-making British
luxury brands. The new boss made them drive Volkswagens and Hondas.
Importing a practice from Boeing, he introduced weekly meetings that
were mandatory for all senior managers. Executives were barred from
using BlackBerrys or belittling one another; they were required to grade
their own progress on targets truthfully and to confront problems
head-on.
Initially, Mulally faced resistance in a company — indeed, an industry — that has always viewed outsiders with suspicion.
But he made a series of canny decisions and astute appointments that
protected Ford as the U.S. car industry headed into a crisis in 2008
that nearly sank the century-old company and its two Detroit
competitors, General Motors and Chrysler.
Mulally protected product spending even as Ford cut thousands of
staff and economized on everything else, down to paper clips and plant
watering.
He made tough decisions only a cold-eyed non-car enthusiast would,
such as selling Ford's European premium brands and its stake in Mazda so
it could focus on its core "blue oval" mass-market cars.
Some of the masterstrokes attributed to Mulally were already underway
when he joined. His predecessors had begun steps to borrow $23.6
billion in 2006, just before credit markets closed.
But Mulally sealed that deal — brilliant in hindsight because it
enabled Ford to refuse a federal bailout and a trip through bankruptcy
that would have seen its shareholding family's members diluted out of
their birthright.
Avoiding Chapter 11 bankruptcy also gave Ford's cars an edge over GM
and Chrysler with U.S. consumers, while better vehicles developed on
Mulally's watch began rolling into dealerships.
Some of the stories in the book have been told before, but the author
delivers much new, excellent reporting collected in interviews with all
the main people concerned.
Mulally is a constantly chipper, boosterish presence, whether bucking
up dispirited colleagues, preparing for a presentation in Congress or
hugging a dumbfounded customer at a dealership in Shanghai.
"Mulally ripped off the bandage, cauterized the wound and cured the
disease," the author concludes, with his typical gusto. "Only an
outsider could do that."
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Merry Christmas. 662 hp.
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