From Aircraft to Autos: Ford CEO Alan Mulally

Alan Mulally is Ford Motor Co.'s new CEO, and it's hoped he can help turn the ailing automaker around.

(

Jack Speer, NPR /

)

Ford Motor Co. is in the midst of a major restructuring, closing plants and laying off workers. At the helm of the company is new chief executive, Alan Mulally, a former airline industry executive.

With Mulally, Ford gets a CEO who played a key role in the turnaround at Boeing. He also has no real experience in the auto industry.

Mulally went to work at Boeing in 1969, and he stayed there for the next 37 years, eventually becoming the head of Boeing's commercial aircraft division.

From Aircraft to Autos

When then Ford CEO Bill Ford first called to offer him the top job at Ford, Mulally says he turned it down. But, he says, he kept thinking about it and ultimately changed his mind. He couldn't resist the challenge of trying to pull off another turnaround.

"Everybody said Boeing couldn't compete, and the United States couldn't compete, and we didn't have the work ethic, and we didn't have the commitment," Mulally recalls.

"Boeing is back as the No. 1 airplane company in the world, and there is no reason Ford and the United States can't compete, but we have to decide that's what we are going to do and we have to take action to make that happen."

Ford paid Mulally, who has been on the job since September 2006, $28 million in salary and bonus last year. What the company wants him to deliver is nothing less than a Boeing-style comeback.

Taking Aim at a Turnaround

On a recent afternoon at the automaker's test track in Dearborn, Mich., Mulally shows off one of Ford's newer models, the Fusion.

But while the Fusion and the Edge, Ford's new crossover vehicle, are selling reasonably well, other Ford models are sitting on dealer lots. Last month, Ford's U.S. sales slid by 13 percent, compared with a year ago.

So engineering a turnaround at Ford will be difficult. The company is still carrying out a painful restructuring that will eliminate 30,000 union jobs.

Mistake with Management Bonuses?

Amid the upheaval, Mulally decided to proceed with a plan to reward his top executives with bonuses. He said the bonuses were necessary to keep key managers from leaving.

But others, such as Gary Chaison, a labor professor at Clark University, think he made a big mistake by offering bonuses to management right now.

"One of the key elements in demanding concessions is what's called the quality of sacrifice. Everyone must sacrifice equally. And if workers see now that management is not sacrificing as much as they are, they're going to reject concessions," Chaison says.

And along with labor issues, there are questions about whether Mulally's experience at Boeing will be of much help at Ford, which faces nearly a dozen competitors, not just one.

CEO Optimistic Amid Challenge

As recently as 2000, Ford sold more than 4 million cars and trucks in the United States. Last year, that number fell to less than 3 million. The earliest Ford is expected to return to profitability is 2009.

Despite the dizzying array of challenges, Mulally doesn't seem overly concerned.

"I'm more convinced than when I accepted this job that we can create a viable Ford Motor Co. that makes cars and trucks that people really do prefer. And we can make them using minimum resources and minimum time and be competitive with our competition. We have the plans in place to do it and we are going to have a lot of fun doing it," Mulally says.

But fun is something that is in short supply at Ford right now: The company has mortgaged nearly all of its assets to come up with the money it needs to stay afloat.

Copyright 2022 NPR. To see more, visit https://www.npr.org.