Can Ford’s new CEO turn the car(maker) around?

Bob Moon Sep 6, 2006


SCOTT JAGOW: If you’re the CEO of Ford, and your name is Ford, I imagine it’s pretty hard to see your company struggling so much under your watch. Bill Ford’s been at the helm for five years. He’s the great-grandson of Henry Ford. But yesterday, Bill Ford said he’s stepping down to let someone else run his company. That someone else is a top Boeing executive, who helped turn his company around. Marketplace’s Bob Moon has more.

BOB MOON: They had to ask and appearing before reporters, the newly-chosen CEO of Ford had to own up to it. Alan Mulally sounded a bit chagrined.

ALAN MULALLY:“OK, I . . . I drive a, uh, Lexus today and I can’t wait to own a Ford car.”

Uncomfortable laughter from Bill Ford, who will remain the struggling carmaker’s chairman, but Mulally has a serious challenge: moving the carmaker toward more Japanese-like designs.

MULALLY:“We’ll continally work the fuel-efficiency and the product line, especially the automobile side, to complement the great position that Ford is in the trucks and the SUVs.”

But what really needs to be “Job One” at Ford, as University of Maryland business professor Peter Morici sees it, is curbing “out of control” labor costs that he blames on the United Auto Workers union.

PETER MORICI: “The new CEO has enormous challenges in front of him. No one has successfully renegotiated a UAW contract to the degree and scope that is necessary. I believe that they need to cut their labor costs in half.”

Morici says the new CEO has no choice if he wants to ensure the carmaker’s very survival.

Alan Mulally is largely credited with correcting Boeing’s troubled course in recent years, and Bill Ford says that’s exactly the kind of CEO he’s been looking for to breathe new life into his namesake company.

BILL FORD:“I thought we could absolutely benefit from the leadership of somebody who had been through those tough times and had led a team through them successfully.”

After 37 years at Boeing, Mulally resisted at first, but has become convinced he could, indeed, bring some better ideas to Ford:

MULALLY: “The symbolism and the parallelism between Boeing and Ford just stood out.”

Both companies have faced intense foreign competition. And the head of the Center for Automotive Research, David Cole, says there’s other good experience that Mulally can bring over from the aerospace industry:

DAVID COLE: “There are many similarities to the auto industry: Very complex manufacturing, very complex labor relations issues, and what Boeing has gone through in the last few years is a very significant restructuring. They were in trouble a few years ago, and Alan was very much a part of that restructuring to turn the company around.”

Mulally himself cites one other key qualification, saying he cares deeply about having a viable business.

In Los Angeles, I’m Bob Moon for Marketplace.

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