New Ford boss seeks encore

Outsider Alan Mulally is brought in to engineer a turnaround as he did with Boeing

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September 07, 2006|By Bloomberg News

DEARBORN, Mich. -- A day before the official announcement that he would become Ford Motor Co.'s chief executive officer, Alan R. Mulally let at least one person in on the secret: the head of Boeing Co.'s engineering union.

"The way he treated unions gave credence to his assertion that he respected all employees," says union chief Charles Bofferding, recounting Monday's call. "Alan's credibility gives him the moral authority to lead."

It's a sign that Mulally, who led a turnaround at Boeing's commercial airplane division, puts union relations high on his list of management priorities.

Getting more productivity from the work force is just one of a raft of challenges Mulally, 61, inherits at Ford, like Boeing an iconic American manufacturer struggling with falling market share. The first outsider to run Ford since 1946, Mulally needs to restore a Ford product line too dependent on big trucks and to close some of its major factories. Some of his peers give him a shot at pulling off another turnaround.

"This is a guy long on product strategy and long on bringing people together," said Dave Calhoun, 49, a former General Electric Co. vice chairman who oversaw aircraft engines and took over as CEO of Dutch publisher VNU Group BV last month. "In light of the difficult situation they face, those are essential elements. I don't think there's another business leader with more of those things."

Among Mulally's first tasks: Replacing the Lexus 430 he drives with a car made by his new employer. "I can't wait to drive a Ford car," Mulally said at a news conference Tuesday.

At Boeing, Mulally slashed employment in the commercial airplane division to about 50,000 last year from about 108,000 at the end of 1997, according to the company's Web site. He sped production by introducing moving assembly lines that keep planes inching forward in factories, a tactic he said was modeled in part on the car industry. And he backed development of a more fuel-efficient jetliner, the 787, that has helped Boeing regain market share from European rival Airbus SAS.

Since 1997, Boeing has trimmed the average time to build each 737 in half, to 11 days from 22. With the 787, it aims to assemble each in three days. Profit margins in the unit climbed to 10 percent in the first quarter from 8.2 percent a year earlier. Company forecasts show that Boeing may regain the lead in jetliner deliveries from Airbus later this decade.

At a process-oriented manufacturer populated by engineers and ex-military types, Mulally stood out. Rosy-cheeked and sandy-haired, he peppers briefings with phrases like "cool" and "neat." A compulsive doodler, he sometimes draws a cartoon image of a smiling jumbo jet next to his signature.

The upbeat style masks a determined, ambitious executive, according to Herb Kelleher, chairman of Southwest Airlines Co., who first met Mulally in the 1980s when the young Boeing executive did an internship at the Dallas-based airline as part of a business school program.

"He's a very canny, very capable individual," Kelleher said. "He really has done wonders at the Boeing Company, in terms of making the 737 line much more productive and efficient on an ongoing basis."

He'll need all his skills at Ford, in the midst of one of its worst crises. Internal forecasts say Ford's worldwide automotive losses may double to more than $8 billion this year, according to four people familiar with the estimates of the world's third-largest automaker.

That includes expenses the company considers one-time costs. Those include buyout and early retirement offers that Ford plans to make this month to all U.S. factory workers, said the people, who asked not to be identified because the company isn't making the projections public. Ford spokesman Oscar Suris declined to comment.

Ford reported a $3.49 billion profit for 2004, then net income slid to $2 billion last year. Ford said in January that it would cut 30,000 jobs and close 14 plants in North America by 2012.

A native of Lawrence, Kan., Mulally got bachelor's and master's degrees in engineering from the University of Kansas and joined Boeing as an engineer in 1969. He has been a licensed pilot since his teens. He and his wife, Nicki, have five children, the youngest of whom enters college this fall.

There is a tough, numbers-driven side to Mulally's personality. "The data will set you free" is one of his oft-repeated mantras. He hasn't shied from replacing managers. Toby Bright, who was hired at Boeing by Mulally 29 years ago, said he learned a lot from his former mentor - even though he had to resign as head of jetliner sales in 2004 when sales sagged.

"There is no doubt that Ford will face the rigors of Alan's all-day, once-a-week `Business Plan Review,'" says Bright, now chief of marketing at San Diego-based aircraft lessor Pegasus Aviation Inc. "That's the way Alan runs business. There are no surprises, and managing secrets will not be tolerated."

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