Ford heir steps down as CEO

Boeing exec to take over at automaker

Ford gives up CEO position

September 06, 2006|By New York Times News Service

DEARBORN, Mich. -- With the Ford Motor Co. struggling to end a financial crisis, William Clay Ford Jr. announced yesterday that he was giving up the chief executive's title after five years to Alan Mulally, a veteran executive at Boeing Co.

Mulally, 61, is the highest-ranking executive in many years to join a Detroit automobile company from outside the industry. The move immediately brought to mind International Business Machines Corp.'s decision in 1993 to hire Louis V. Gerstner, an executive with RJR Nabisco, as its chief executive.

Like IBM at the time, Ford is struggling to reverse its losses and regain market share in North America, where it has been pummeled by both its Detroit rivals and foreign auto companies. In July, Toyota passed Ford for the first time to rank as the nation's second-biggest auto company, behind GM, although Ford regained that position last month.

Later this month, Ford is expected to announce more job cuts, plant closings and other steps under a restructuring plan it calls the Way Forward. The plan, unveiled in January, initially called for Ford to eliminate 30,000 jobs and close 14 factories through 2012.

Since then, Ford has lost nearly $1.5 billion. Last month, it said it would cut its production in the last three months of the year by 21 percent, the largest cut it had taken since the early 1980s. Ford also has halved its dividend and Ford has warned employees that the company expects to take significant steps in an effort to restructure.

Mulally spent 37 years at Boeing, where he most recently served as chief executive of Boeing Commercial Airplanes. He had been passed over twice during the past few years for the position of chief executive at Boeing.

Bill Ford, in a memo to employees, said yesterday that the company needed a restructuring expert "who has led a major manufacturing enterprise through such challenges before."

He will remain as Ford's chairman, a position he has had since 1998.

Although Mulally does not have any automotive experience, he used manufacturing techniques borrowed from the industry to streamline Boeing's assembly operations and its aircraft development.

In particular, Mulally studied the development of the Ford Taurus, a family car designed in the mid-1980s to compete with sedans offered by Toyota and Honda.

Ford put together a group of designers, engineers, manufacturing experts and others to develop the Taurus, known for its then-radical aerodynamic appearance.

In addition, Mulally is a student of the Toyota Production System, which the Japanese automaker uses in its operations around the world. The Toyota system, known as TPS, emphasizes the elimination of waste, continuous improvement and involving workers in fixing problems on the assembly line. Mulally applied those lessons to the development of the Boeing 777 aircraft, a long-range plane that joined its fleet several years ago.

More recently, Boeing has begun taking orders for a new midrange plane, the 787, which is meant to take the place of the Boeing 757 and 767 in its lineup.

The successful start of marketing for the 787 has helped Boeing beat back a strong challenge from the European aircraft maker, Airbus, which has run into a series of delays with its new long-range aircraft, the Airbus A380.

Bill Ford said he believed Mulally's experience dealing with labor unions, fuel prices and the economic turmoil caused by the attacks of Sept. 11, 2001, would serve him well at Ford. "Certainly, the challenges Boeing faced in recent years has many parallels to our own," Ford said in a statement.

Ford, great-grandson of the company's founder Henry Ford, said he will stay actively involved in the company, where he has served as the de facto chief operating officer since July.

The appointment of Mulally, who will join the Ford board, came as a complete surprise in Detroit. Over the past several years, Ford had approached Carlos Ghosn, chief executive at both Renault and Nissan, about joining his company. Ghosn is now leading his company in negotiations on a three-way alliance with General Motors, a deal that was suggested by GM's biggest shareholder, Kirk Kerkorian.

Ford began speaking to Mulally about joining the company several months ago, people with direct knowledge of conversations said yesterday. The discussions were assisted by Richard A. Gephardt, the former House minority leader, who knows both executives.

In the memo to Ford employees, Bill Ford emphasized that he did not plan to let up on his efforts to fix the auto company.

"I'll be here every day, and I will not rest until a prosperous future for this company is secured," Ford said. "As I have said many times, I have been part of this company since I was born and I will be a part of it for the rest of my life."

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