Tuesday, September 05, 2006
Ford names Alan Mulally CEO
By Jui Chakravorty and Kevin Krolicki Tue Sep 5, 7:26 PM ET
DETROIT (Reuters) - Ford Motor Co. named former Boeing executive Alan Mulally as chief executive on Tuesday, ending the troubled five-year stint of Bill Ford Jr. as the operational head of the automaker founded by his great-grandfather.
Mulally, who spearheaded the resurgence in Boeing Co.'s commercial plane division after the sharp decline that followed the attacks of September 11, 2001, becomes one of the first chief executives of a major automaker from outside the industry.
The radical choice is the latest indication of the pressure on Ford to step up its cost-cutting, shake up its product development plans and revamp its entire way of doing business.
Bill Ford Jr., whose family retains a controlling ownership stake in the No. 2 U.S. automaker through a separate class of shares, will stay on as executive chairman and said he would remain active in the company's management.
Ford posted a $1.44 billion loss in the first half of the year, and its U.S. sales this year have declined by nearly 10 percent through August.
Last week, Bill Ford had said the automaker needed a new business model and had to attract outside executives who would find sources of growth beyond the company's once-profitable reliance on sales of trucks and SUVs.
"Our turnaround effort required the additional skills of an executive who has led a major manufacturing enterprise through such challenges before," Bill Ford wrote in an e-mail to Ford employees announcing Mulally's appointment on Tuesday.
"Clearly, the challenges Boeing faced in recent years have many parallels to our own," Ford said.
Ford's stock and bonds rose in reaction to Mulally's appointment, which analysts said signaled Bill Ford's commitment to a more sweeping shake-up of the 103-year-old company.
"It sends a message of high urgency to the organization, to all stakeholders," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. "It means that this is a really important time to hustle."
TROUBLED TENURE
Under Bill Ford Jr., who took over as chief executive in October 2001, the company's U.S. market share dropped from near 23 percent to about 17 percent. Its share price fell by almost 70 percent over the same period.
Ford, 49, who has acknowledged previously approaching other high-profile executives, including Renault-Nissan Chairman Carlos Ghosn, said he told the Ford board he was ready to step down in July, about the time it became clear that the automaker's current restructuring plan was being undercut by the collapse in the market for trucks and SUVs.
"I went to the board this summer and said I've got too much to do, I'm wearing too many hats," Ford told reporters. "And we have a relatively young management facing tough times. So I thought we can benefit from the leadership of someone who has been through the tough times and led a team to success."
Mulally was credited for setting in motion a number of changes at Boeing that put the aerospace company on track to overtake its arch-rival Airbus after a five-year comeback.
Mulally, 61, slashed Boeing's supplier base in half, took a tough line with the company's industrial unions and changed its assembly process so that it became more like an auto factory, with planes moving along a production line.
"He took lessons from the auto industry and applied them to Boeing. Now he's going to be bringing that back," said AMR Research analyst Kevin Reale. "This is what Ford desperately needs."
ANALYSTS CAUTIOUSLY POSITIVE
Other investors and analysts also praised the appointment, given the pressure on Ford, but said the company's unsolved problem remains its reliance on an aging and uninspired line-up of pickup trucks and SUVs -- an area where an experienced auto industry executive might have helped faster.
"I think Bill Ford was under some pressure to bring in additional leadership," said Tim Ghriskey, chief investment officer of Solaris Asset Management. "I think this step to bring in new management from outside the company is a smart, mature action by him."
Said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management: "My concern is not about (Mulally's) ability to cut costs but his ability to stop Ford's slide in market share. What is he going to do to stop that slide?"
The timing of the appointment surprised some industry watchers since Ford is on the brink of announcing its third restructuring in five years.
The company said in January that it would cut 30,000 jobs and close 14 plants in North America by 2012.
In July, citing an unexpectedly steep decline for its market-leading trucks, Ford said it would accelerate and deepen that turnaround plan, dubbed the "Way Forward." This month it said it was looking to sell its Aston Martin luxury unit.
Analysts said they expected Mulally's arrival would mean that Ford would reexamine all its assets, including the struggling Lincoln division and other nameplates such as Land Rover and Jaguar.
Mulally, who told reporters he drives a Lexus from Toyota Motor Corp., said everything was on the table for review.
"Ford has a great set of brands and as we go forward, we'll be making decisions about that family. (At Boeing), we treasured fuel efficiency, reliability and safety. The fundamentals are exactly the same," he said.
(Additional reporting by David Bailey, Jonathan Stempel, Karen Brettell, Michael Flaherty, Dane Hamilton and Caroline Valetkevitch) ¶ 10:40 PM
DETROIT (Reuters) - Ford Motor Co. named former Boeing executive Alan Mulally as chief executive on Tuesday, ending the troubled five-year stint of Bill Ford Jr. as the operational head of the automaker founded by his great-grandfather.
Mulally, who spearheaded the resurgence in Boeing Co.'s commercial plane division after the sharp decline that followed the attacks of September 11, 2001, becomes one of the first chief executives of a major automaker from outside the industry.
The radical choice is the latest indication of the pressure on Ford to step up its cost-cutting, shake up its product development plans and revamp its entire way of doing business.
Bill Ford Jr., whose family retains a controlling ownership stake in the No. 2 U.S. automaker through a separate class of shares, will stay on as executive chairman and said he would remain active in the company's management.
Ford posted a $1.44 billion loss in the first half of the year, and its U.S. sales this year have declined by nearly 10 percent through August.
Last week, Bill Ford had said the automaker needed a new business model and had to attract outside executives who would find sources of growth beyond the company's once-profitable reliance on sales of trucks and SUVs.
"Our turnaround effort required the additional skills of an executive who has led a major manufacturing enterprise through such challenges before," Bill Ford wrote in an e-mail to Ford employees announcing Mulally's appointment on Tuesday.
"Clearly, the challenges Boeing faced in recent years have many parallels to our own," Ford said.
Ford's stock and bonds rose in reaction to Mulally's appointment, which analysts said signaled Bill Ford's commitment to a more sweeping shake-up of the 103-year-old company.
"It sends a message of high urgency to the organization, to all stakeholders," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. "It means that this is a really important time to hustle."
TROUBLED TENURE
Under Bill Ford Jr., who took over as chief executive in October 2001, the company's U.S. market share dropped from near 23 percent to about 17 percent. Its share price fell by almost 70 percent over the same period.
Ford, 49, who has acknowledged previously approaching other high-profile executives, including Renault-Nissan Chairman Carlos Ghosn, said he told the Ford board he was ready to step down in July, about the time it became clear that the automaker's current restructuring plan was being undercut by the collapse in the market for trucks and SUVs.
"I went to the board this summer and said I've got too much to do, I'm wearing too many hats," Ford told reporters. "And we have a relatively young management facing tough times. So I thought we can benefit from the leadership of someone who has been through the tough times and led a team to success."
Mulally was credited for setting in motion a number of changes at Boeing that put the aerospace company on track to overtake its arch-rival Airbus after a five-year comeback.
Mulally, 61, slashed Boeing's supplier base in half, took a tough line with the company's industrial unions and changed its assembly process so that it became more like an auto factory, with planes moving along a production line.
"He took lessons from the auto industry and applied them to Boeing. Now he's going to be bringing that back," said AMR Research analyst Kevin Reale. "This is what Ford desperately needs."
ANALYSTS CAUTIOUSLY POSITIVE
Other investors and analysts also praised the appointment, given the pressure on Ford, but said the company's unsolved problem remains its reliance on an aging and uninspired line-up of pickup trucks and SUVs -- an area where an experienced auto industry executive might have helped faster.
"I think Bill Ford was under some pressure to bring in additional leadership," said Tim Ghriskey, chief investment officer of Solaris Asset Management. "I think this step to bring in new management from outside the company is a smart, mature action by him."
Said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management: "My concern is not about (Mulally's) ability to cut costs but his ability to stop Ford's slide in market share. What is he going to do to stop that slide?"
The timing of the appointment surprised some industry watchers since Ford is on the brink of announcing its third restructuring in five years.
The company said in January that it would cut 30,000 jobs and close 14 plants in North America by 2012.
In July, citing an unexpectedly steep decline for its market-leading trucks, Ford said it would accelerate and deepen that turnaround plan, dubbed the "Way Forward." This month it said it was looking to sell its Aston Martin luxury unit.
Analysts said they expected Mulally's arrival would mean that Ford would reexamine all its assets, including the struggling Lincoln division and other nameplates such as Land Rover and Jaguar.
Mulally, who told reporters he drives a Lexus from Toyota Motor Corp., said everything was on the table for review.
"Ford has a great set of brands and as we go forward, we'll be making decisions about that family. (At Boeing), we treasured fuel efficiency, reliability and safety. The fundamentals are exactly the same," he said.
(Additional reporting by David Bailey, Jonathan Stempel, Karen Brettell, Michael Flaherty, Dane Hamilton and Caroline Valetkevitch) ¶ 10:40 PM
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