Alan Mulally credited with turnaround at Ford

By A. James Memmott

May 3, 2008 at 12:40pm

Thanks to an airline executive turned car company CEO, Ford Motor Company has actually been making good news of late.

On Thursday, the company reported a first-quarter profit of $100 million, not huge, but encouraging, given the billions of dollars Ford had lost in the previous two years.

While its overall sales are down, Ford, with its popular Focus model, also seems better positioned than some other car makers to meet consumer demand for more fuel-efficient vehicles.

And the company just received what The Wall Street Journal called a “vote of confidence” from Kirk Kerkorian, the wealthy investor and corporate raider.

Though his holding company, the Tracinda Corp., Kerkorian is buying about 5 percent of Ford stock.

“This is first time that Mr. Kerkorian has made a major automotive investment because he actually believes in the company’s management and direction,” wrote Paul Ingrassia in the Journal Thursday.

Not everyone at the Journal agrees with this interpretation. Heidi N. Moore blogged earlier that it would be uncharacteristic for Kerkorian to sit on the sidelines and let management do its thing.

Regardless, Ford’s stock, which was at $4.95 a share in mid-March, has made significant gains, moving to above $8 a share.

Credit for Ford’s improved fortunes is going to Alan R. Mulally, who became president and CEO of the automaker in September 2006.

An engineer, Mulally had spent 35 years at Boeing, where his last position was president and chief executive officer of Boeing Commercial Airlines.

He brought no automotive experience to Ford, and his car of choice before he arrived was a Lexus, Toyota’s luxury model. But Mulally, 62, is said to be a quick study and a strong leader.

After arriving at Ford, he continued massive restructuring that has led to the elimination of tens of thousands of jobs. He put through the sale of Jaguar and Land Rover, two prestige divisions that were losing money. And he backed the emphasis on producing smaller cars, both for the U.S. and the international market.

Mulally also wooed marketing whiz James D. Farley away from Toyota last year to become Ford’s chief marketing officer.

The cousin of Chris Farley, the deceased comedian, Farley was leading Toyota’s Lexus division at the time of his switch to Ford. Earlier, he had been in charge of the Scion, Toyota’s youth-oriented brand.

Farley, 45, was quick to embrace the Ford culture. “I believe, in many ways, the future of Ford is the future of our country,” he told a group of Ford dealers, according to The New York Times. “The work here is simply more important than the work I was doing at Toyota.”

Whether or not it’s more important, it is harder, the Times suggested.

The company can no longer depend on huge profits from its larger vehicles; it still may have too many workers and too many plants in North America. Finally, it has to convince buyers to think again about a Ford in their future.

“Ford must convince a generation of Americans to take another look at the car brand that was probably parked in their parents’ driveways,” wrote Barrie McKenna for Toronto’s Globe and Mail, summing up the challenge that faces Mulally and his team.

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  • #1.   Victor Van Walleghem 05.04.2008

    I had become attracted to Ford when making a cursory examination of it’s cash flow and became convinced that the media was making a far worse case of Ford’s financial condition than was actually the case. Having become curious I began carefully noting the traffic as I moved about every day and it was obvious that Ford has a very big franchise, being very well represented. I see the data showing Ford losing market share but there are a number of very profitable companies with a smaller share so it’s clearly not so much about volume as it is about making a profit on the cars that you do sell. Mullaly has taken the bit in his mouth to bring about the real changes at Ford to produce results. I’m convinced that he would shut down the entire U.S. operations if that’s what it would take and I think the UAW has figured out that he is the pack leader. I would note further that I think Ford is introducing some cars into the market that are going to be winners and I believe that there are many people who will prefer to buy a Ford if they continue to follow with attractive market oriented introductions. Vic.

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