Wednesday, December 17, 2014

Ford Motor Co. is bouncing back

Alan Mulally, president and CEO of Ford Motor CO., spoke at a private meeting of regional Ford dealers last week at the Phila. Auto Show. (MICHAEL S. WIRTZ / Staff Photographer)
Alan Mulally, president and CEO of Ford Motor CO., spoke at a private meeting of regional Ford dealers last week at the Phila. Auto Show. (MICHAEL S. WIRTZ / Staff Photographer)
Alan Mulally, president and CEO of Ford Motor CO., spoke at a private meeting of regional Ford dealers last week at the Phila. Auto Show. (MICHAEL S. WIRTZ / Staff Photographer) Gallery: 2010 Philadelphia Auto Show

"Think about it," Alan Mulally implored: Just 14 months ago, the top executive at Ford Motor Co. was seated alongside his compadres at soon-to-be-bankrupt General Motors and Chrysler, at a congressional panel considering pleas for emergency taxpayer loans.

"Isn't that incredible?" Mulally said, wide-eyed and proud as he wound back the clock Friday morning during an unusual stop in Philadelphia.

With global rival Toyota hobbled by a recall crisis and Ford hot off its first reported full-year profit since 2005, the lone U.S. automaker that avoided bankruptcy and bailout aid is on a recession roll that would have seemed unimaginable a year ago.

And Mulally, an aeronautical engineer and longtime Boeing Co. executive who took over at Ford less than four years ago with a plan to make the beleaguered automaker more like Toyota, is starting to look like the smartest guy in Motor City.

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  • Ford took no bailout aid. Ford did not declare bankruptcy. And now, Ford is posting profits and unveiling a host of new models on which Mulally has staked the century-old automaker's future.

    "I think Ford," Mulally said Friday, "has moved to another place in the consumer's eyes."

    In the eyes of consumers and industry experts, who watched with horror as the U.S. automotive industrial complex nearly caved in on itself a year ago as unemployment roared, Mulally's success is nothing short of remarkable.

    Even naysayers who greeted his arrival with doubt now credit his decisiveness and his ebullient personality with transforming the global automaker's formerly calcified business structure - and all during a recession of gargantuan proportions.

    "They're like the Little Engine That Could," said industry analyst John Wolkonowicz at IHS Global Insight Inc.

    "A Vince Lombardi of the auto industry," said David Cole, chairman of the Center for Automotive Research in Michigan, in comparing Mulally to the legendary NFL coach.

    "Can you imagine? Toyota was the utmost of quality, and look what is happening today," said emeritus management professor Arnoldo Hax, who taught Mulally in the 1980s at Massachusetts Institute of Technology. "Ford is bringing a sense of confidence under his direction that no other major car manufacturer has."

    Said Philadelphia-area Ford dealer Michael Kennedy, who feared losing everything a year ago: "He's the best thing to happen to Ford Motor Co. in 50 years. He really is."

    Mulally's interview with The Inquirer at the Convention Center came before his appearance at a closed-door "sales rally" with regional Ford dealers from as far away as Scranton.

    The event, put together a few weeks ago to coincide with the final days of the Philadelphia International Auto Show, piggybacked on Mulally's planned appearance as keynote speaker at a fund-raiser later Friday in Hershey for The Second Mile, a nonprofit group.

    A sales rally could not come at a better time for Ford, given the intensifying crisis. Ford brands are right behind top-ranked Toyota in U.S. sales; dealers have been eager to show onetime Toyota loyalists how the Ford Fusion has garnered high consumer-quality ratings.

    "Look at this!" Mulally said, spreading his arms wide as he stood amid Ford's vast auto-show display. "This is the newest showroom of any automobile company. It has the most complete product line, it has the best quality, best fuel-efficiency - and this is coming out of a recession.

    "Because," he said, "there was a plan."

    If anything is to be credited with Ford's resurgence it is Mulally's insistence on getting the company behind a turnaround plan and putting the pedal to the metal.

    When Mulally - a Kansas native with dual engineering degrees and the spirit of an astronaut (an ambition derailed by color blindness) - arrived at Ford after heading Boeing's commercial-aviation division, the company seemed in worse shape than even GM.

    "He walked into a $12 billion loss in 2006," said Michael A. Cusumano, an author and professor at the MIT Sloan School of Management.

    Under prior management, Ford had gone on a costly acquisitions binge, scooping up such luxury brands as Jaguar and Volvo at the expense, critics now say, of staying focused on its core Ford nameplates.

    The company had also become too dependent on large profits from gas-guzzling SUVs and trucks, leaving it somewhat ill-prepared for a sharp rise in gasoline prices.

    When Mulally joined, it was on course to suffer years of staggering unprofitability: Between 2001 and 2008, Ford lost $31 billion and GM lost about $73 billion, Cusumano said, in numbers compiled for a forthcoming book. Toyota, meanwhile, earned $115 billion in net profit.

    Mulally's predecessors sensed the danger ahead. The economy was slowing, and Ford would need money to turn itself around. So Mulally pushed hard for a plan to mortgage the company's assets in return for a $23 billion credit line.

    If he had not moved as quickly as he did, the global financial crisis would have snapped shut the lending markets and Ford may very well have ended up a bailout beneficiary as well.

    "We needed to take action," Mulally said, and that meant being decisive - a quality that is said to be one of his greatest executive skills.

    That money would allow the company to implement the rest of its plan, which also included quicker production of fuel-efficient vehicles that were "best in class," he said.

    Mulally also managed something his predecessors had not: He eliminated the practice of designing and manufacturing vehicles differently for every market in the world.

    Wolkonowicz said Ford had failed to do this "because the Americans and Europeans couldn't agree on anything." Regional executives were at odds with each other.

    The vision, now called "One Ford," is important because it allows smaller vehicles popular in, say, Europe, to be made with the same robotics and parts as those in U.S. factories - an established model at Toyota for its cost-effectiveness.

    The new Ford Fiesta, which hits showrooms this summer, is an example of such a car, whose genesis was in the European market.

    Mulally also began to sell off the non-Ford brands.

    Given Mulally's background in aviation rather than autos, he had his critics at the start. But he was confident from his 38 years at Boeing, where he had dealt with terrorism on aviation and the Asian markets crash years before.

    "It's not something for me to worry about, what other people think," he said Friday. "We went to work right away to develop the new strategy for Ford. And what we're seeing today, and all the success Ford is having, is a result of all those decisions we made three years ago."

    It is too soon to declare victory for Ford. It carries $40 billion of debt on its books and, as observers note, anything can happen in this business - just look at Toyota.

    Mulally evaded a question about whether Toyota's current woes presented opportunities for Ford.

    "We are very gratified that over the last 15 months we've actually increased market share, meaning the customers absolutely prefer and value the Ford product line," he said. "Our absolute focus is on making the best cars and trucks in the world for our customers."

    A week ago, Ford reported $2.7 billion in profit in 2009 - its first full-year profit since 2005.

    Dealers' biggest fear now has little to do with last year's near-calamitous events.

    "We're worried about this guy leaving," Kennedy said of Mulally. "We don't want this guy to leave - that's how good he is."

     


    Contact staff writer Maria Panaritis at 215-854-2431 or mpanaritis@phillynews.com.

     

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