Ford's new CEO whacks costs, creates product

Buzz on Mulally: Disarming, decisive

Ford's new CEO whacks costs, creates product

Bill Ford, right, introduced new CEO Alan Mulally to Ford employees.
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Alan Mulally makes tough choices with the cold precision of an engineer and the tact of a skilled diplomat.

The new president and CEO of Ford Motor Co. has made lots of tough choices in the past few years. As CEO of Boeing Commercial Airplanes, he slashed thousands of jobs in the wake of the 9/11 terror attacks, outsourced manufacturing work to other countries and canceled entire airplane projects to help turn the company around.

Yet his adversaries are few.

The 61-year-old, Kansas-born executive, who holds two engineering degrees as well as a master's in management, is known for his ability to disarm others. "He's never, ever combative," said Seattle aviation consultant Ned Laird. "That goes a long way when you have a difficult industrial situation like they have at Boeing or Ford."

Laird said Mulally effected change at Boeing by gathering his facts and presenting them to everyone in a friendly, collaborative way.

"Then he asks them to make a contribution to how the situation can be changed," Laird said. "And if they don't, then he tells them what it's going to be -- in a very friendly and straightforward fashion. He believes in process, but he also believes you have to make decisions. And you have to stick to them and implement them."

Alan Mulally
New job: President and CEO, Ford Motor Co.
Old job: President and CEO, Boeing Commercial Airplanes
Notable achievements: General manager, Boeing 777 aircraft program; contributor to 727, 737, 747, 757 and 767 programs
Education: Bachelor's and master's degrees in aeronautical and astronautical engineering, University of Kansas; master's in management, Massachusetts Institute of Technology
Born: Aug. 4, 1945
Personal: Wife, Nicki; 5 children; resides in Seattle area
Hobbies: Private pilot, enjoys tennis, golf and reading
Source: Boeing Co., Ford Motor Co.

Charismatic figure

Last year, Mulally was a front-runner for the top job at Boeing Co., but he lost to former General Electric executive W. James McNerney. Some said Mulally was too close to Boeing's mandatory retirement age of 65. Others said Boeing preferred an outsider after two previous CEOs became embroiled in scandals.

Mulally is a charismatic figure who many describe as enthusiastic, positive, even effervescent. He seems to enjoy himself even in the midst of pressure. "Fun" is one of his favorite words; and whenever he signed his name at Boeing, he doodled a little airplane to go with it.

Aerospace consultant Richard Aboulafia of the Teal Group Corp. in Fairfax, Va., describes Mulally as "an exceedingly energetic person -- very, very outgoing and engaging."

"He's the opposite of a stuffed shirt," Aboulafia said. "Some people prefer a more corporate style; but, on the other hand, he really gets the job done."

Sandy Munro is another fan. "This guy knows business cold," said Munro, CEO of Munro & Associates, a consulting firm in Troy, Mich. "He understands engineering. He's a hands-on guy."

Good instincts

Mulally has good instincts as well, Munro said. After the 9/11 attacks brought aviation to a halt, Mulally responded quickly, announcing plans to lay off as many as 30,000 commercial airplane workers.

Even before 9/11, Boeing had been losing ground to rival Airbus. Boeing has made a turnaround since then, and Aboulafia said Boeing's recovery can be attributed directly to Mulally. Others were involved, Aboulafia said, but "in terms of setting the tone for a company reinvention, he led the way. I think history is going to be very good to him."

Mulally persuaded Boeing's board of directors to develop the 787 Dreamliner aircraft in the midst of a downturn, Aboulafia said. Mulally also made cutbacks against the wishes of labor unions, Aboulafia said. Boeing ended production of the 717 and 757 airplanes. Boeing outsourced major chunks of the 787 project to companies in Italy, Japan and South Carolina and kept a lid on health care and pensions.

"With a lesser man, all of these things would inspire the union strike from hell," Aboulafia said.

Of course, all that was before the UAW. Mulally will need his nice-guy reputation and diplomatic skills when Ford enters negotiations with the union next year. Last week, UAW President Ron Gettelfinger praised Mulally and said he had negotiated with the former Boeing executive when he, Gettelfinger, ran the UAW's aerospace department.

But Boeing's union leaders are divided in their opinions of Mulally. Charles Bofferding, executive director of the Society of Professional Engineering Employees in Aerospace, says his union has a good relationship with Mulally, who is a former member.

"Alan can be an enlightened leader, particular with regard to interactions with unions," Bofferding said. "Our negotiation was based on criteria that we all agreed to and understood, rather than who could force the other to do something they don't want to do. We're engineers and technical employees. We like things based on facts and data."

Labor tension

But another union leader says Mulally leaves negotiations to his subordinates, sometimes allowing labor relations to deteriorate. "I would say that he wasn't very hands-on," said Mark Blondin, president of the International Association of Machinists and Aerospace Workers, District 751. "The labor people he had in place have not been effective in dealing with us."

Last year, Blondin's members staged a month-long strike against Boeing. It ended only after Mulally personally came to the table.

The union had come close to a strike three years before that, but failed to get the 66 percent vote it needed. "Part of that was threats by Mulally that if there was a strike, when they came back, Boeing would outsource a lot of those jobs," Blondin said.

Blondin also said the union recently tried to meet with Mulally and other Boeing executives to hammer out some issues before the next round of negotiations. The Boeing executives refused to meet.

Blondin called the outsourcing of jobs on the 787 -- especially fuselage work being done in South Carolina -- "pure union avoidance."

Tom Buffenbarger, international president of the machinists union, said he'd give Mulally "decent points" for his relationships with organized labor. But Buffenbarger agreed that Mulally tends to participate in labor negotiations only at the last minute. "Otherwise, he preferred to delegate," Buffenbarger said.

But when Mulally does show up, Buffenbarger said, he understands the issues and reaches a deal quickly. "I give him high marks for being open-minded and having the can-do spirit," Buffenbarger said. He said Ford's new CEO is "an engineer who knows how to fix what doesn't work, as opposed to a bean-counter or a marketer."

Student of Taurus

Mulally has demonstrated an ability to think out of the box.

When he undertook production of the Boeing 777, Mulally studied Ford's development of the Taurus. In the mid-1990s, Mulally and former Boeing Co. CEO Phil Condit went to Dearborn to meet Lew Veraldi, the famed Ford engineer who developed the Taurus.

During the Taurus project, Veraldi broke down the bottlenecks in Ford's vehicle-development hierarchy.

Previously, Ford engineers would spend considerable time to create a component, only to be told by finance it would be too costly. Or manufacturing executives might veto a design as impossible to build, junking months of work.

James P. Lewis chronicles Mulally's pilgrimage to Dearborn in his book about the 777's development, Working Together: 12 Principles for Achieving Excellence in Managing Projects, Teams and Organizations.

Mulally got a variety of stakeholders involved, from the shop floor on up, in the development process. "These principles have come full circle," Lewis told Automotive News. "The concept did start with Veraldi, and now Alan's bringing it back to Ford."

You may e-mail Leslie J. Allen at lallen@crain.com

You can reach Leslie J. Allen at lallen@crain.com. -- Follow Leslie on Twitter

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