Alan Mulally, Ford’s turnaround guy won’t speculate about his own fate. The stock market will. This time, it is his China Strategy that has made them Unhappy. Has Mulally lost his Midas touch?
On a cold February morning of 2007, Mulally’s Falcon jet landed on the airstrip of a 330 acre auto-testing facility in East Haddam (Conn.), 720 miles due East of his office in Dearborn (MI). He was accompanied by two of Ford’s senior engineers. For Mulally, this was his first field trip to conduct a detailed trial of every Ford model on the market shelf. For 4 hours, he patiently listened to all the complaints made by third-party experts about his company’s vehicles. That the new Ford Edge SUV had no electronic opener and no handle on the rear making it impossible for five-footers to close the hatch was one. When questioned, his engineers exuded lumps of defensive excuses. First, their new boss gave them a piece of his mind. Then, he took out two pens and notepads from his satchel and followed it up with a command: “You know what? Just listen and take notes.” Mulally was prepared. He did not care about the humiliation his engineers suffered while standing amidst a gang of auto reviewers. He was least bothered about them being uncomfortable. What Ford needed then was correction of many mistakes, not cloaks that concealed the rust.
Every top executive in the automobile industry today, carries around with him a heavy backpack of tales. For Alan Mulally, much of what it holds is about resentment and confrontation. Be it insiders or outsiders, engineers or investors, he has waded through miles of objections and excuses to make Ford a profitable machine again.
What is widely known outside the walls of Ford’s offices is about Mulally being a Mr. Dear CEO. He never was. At 7 am every Thursday, Mulally meets 15 of his top executives in a windowless conference room, a floor below his 12th floor office in the company’s headquarters in Dearborn. It is called the Thunderbird Room. In these meetings, every reporting officer gets to know that Mulally has held his feet to the fire. He cares little about the displeasures earned in the path to progress. When in early 2009, Mulally decided to even consider postponing his plans to launch the new F-Series (because he wanted to clear out Ford’s inventory), he made many senior officials unhappy, including his global marketing chief James Farley.
He has also angered the markets in the past. It happened on November 29, 2006, when he pledged all of the company’s assets for $23.6 billion to US bankers in a packed hotel ballroom in New York. Ten trading sessions later, the stock was down 15.79% to $6.88 per share. During Q1, 2008, Mulally decided to show no loyalty to brands like Volvo, Jaguar, Land Rover & Aston Martin. He sold them off. The silence in the ever-giggling investor category became more pronounced. One trading session after the JLR deal was announced on March 27, 2008, Ford’s stock fell 6.83% to $5.59. During the eight months that followed, Ford’s stock plummeted to a historical low of $1.26 (Nov 19, 2008). The company lost a further $14.8 billion in FY2008 (the highest in its 105 year history) and burned 61% of its cash reserves ($21.2 billion) that year alone. Mulally’s promises of a turnaround tale had started looking like scrap metal. But the unexpected happened and Ford was back on its feet as the #2 car seller in the large US and EU markets during 2009 and 2010 (a situation last seen in FY2000). Credit goes to Ford’s lower-priced, smaller vehicles (which makes up 48% of Ford’s global sales today). The company made $9.28 billion in net profits.
On a cold February morning of 2007, Mulally’s Falcon jet landed on the airstrip of a 330 acre auto-testing facility in East Haddam (Conn.), 720 miles due East of his office in Dearborn (MI). He was accompanied by two of Ford’s senior engineers. For Mulally, this was his first field trip to conduct a detailed trial of every Ford model on the market shelf. For 4 hours, he patiently listened to all the complaints made by third-party experts about his company’s vehicles. That the new Ford Edge SUV had no electronic opener and no handle on the rear making it impossible for five-footers to close the hatch was one. When questioned, his engineers exuded lumps of defensive excuses. First, their new boss gave them a piece of his mind. Then, he took out two pens and notepads from his satchel and followed it up with a command: “You know what? Just listen and take notes.” Mulally was prepared. He did not care about the humiliation his engineers suffered while standing amidst a gang of auto reviewers. He was least bothered about them being uncomfortable. What Ford needed then was correction of many mistakes, not cloaks that concealed the rust.
Every top executive in the automobile industry today, carries around with him a heavy backpack of tales. For Alan Mulally, much of what it holds is about resentment and confrontation. Be it insiders or outsiders, engineers or investors, he has waded through miles of objections and excuses to make Ford a profitable machine again.
What is widely known outside the walls of Ford’s offices is about Mulally being a Mr. Dear CEO. He never was. At 7 am every Thursday, Mulally meets 15 of his top executives in a windowless conference room, a floor below his 12th floor office in the company’s headquarters in Dearborn. It is called the Thunderbird Room. In these meetings, every reporting officer gets to know that Mulally has held his feet to the fire. He cares little about the displeasures earned in the path to progress. When in early 2009, Mulally decided to even consider postponing his plans to launch the new F-Series (because he wanted to clear out Ford’s inventory), he made many senior officials unhappy, including his global marketing chief James Farley.
He has also angered the markets in the past. It happened on November 29, 2006, when he pledged all of the company’s assets for $23.6 billion to US bankers in a packed hotel ballroom in New York. Ten trading sessions later, the stock was down 15.79% to $6.88 per share. During Q1, 2008, Mulally decided to show no loyalty to brands like Volvo, Jaguar, Land Rover & Aston Martin. He sold them off. The silence in the ever-giggling investor category became more pronounced. One trading session after the JLR deal was announced on March 27, 2008, Ford’s stock fell 6.83% to $5.59. During the eight months that followed, Ford’s stock plummeted to a historical low of $1.26 (Nov 19, 2008). The company lost a further $14.8 billion in FY2008 (the highest in its 105 year history) and burned 61% of its cash reserves ($21.2 billion) that year alone. Mulally’s promises of a turnaround tale had started looking like scrap metal. But the unexpected happened and Ford was back on its feet as the #2 car seller in the large US and EU markets during 2009 and 2010 (a situation last seen in FY2000). Credit goes to Ford’s lower-priced, smaller vehicles (which makes up 48% of Ford’s global sales today). The company made $9.28 billion in net profits.
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