Content area
Full text
New Ford Motor Co. CEO Alan Mulally is shrinking the money-losing automaker to restore profits. Can he ever recapture its lost status as a global leader in the car business?
FORD MOTOR CO.'S WOES ARE THE SAME ones plaguing other Detroit automakers -- exorbitant labor costs and plummeting vehicle demand fueling big losses -- but there's one big difference: the Ford family's status in the annals of American business.
In September company chairman William Clay Ford Jr., the great-grandson of pioneering founder Henry Ford and guardian of his family's still-significant stake in the company, recruited longtime Boeing Co. executive Alan Mulally to see Ford through a massive restructuring. So far, Mulally, who headed Boeing's commercial aircraft unit, has focused on getting Ford leaner. He sold its Aston Martin division and announced a series of plant closures and layoffs that he says will return the company, which lost a staggering $12.7 billion in 2006, to profitability by 2009. In the meantime, Ford is tapping the proceeds of nearly $24 billion in debt offerings, in which it pledged nearly all its assets as collateral against default, to sop up the flow of red ink.
In a recent conversation with Institutional Investor Assistant Managing Editor Justin Schack, Mulally, a 61-year-old Kansas native and an engineer by training, said that the high-stakes restructuring plan is on track. The bigger question, though, is whether over the long term he will be able to convince the car-buying public to embrace Ford's vehicles over those of its foreign rivals and restore the company to its place atop the pantheon of global business powers. Following are excerpts from the interview.
Institutional Investor: You turned this job down the first time Bill Ford asked you to take it. Why, and what changed your mind?
Mulally: It seemed initially that it would be a lot of fun to finish my career at Boeing -- you know, finish another one or two airplanes. The more I thought about it, I was very much attracted to Bill's vision of a viable, long-term, vibrant Ford Motor Co. I was once in a similar situation at Boeing that Ford is in, where we had a few big challenges over the years. It really started to excite me, the...