Ford's outgoing CEO mainly brought his A-game, but technology and luxury were struggles
DETROIT -- After an eight-year run in which he spearheaded the salvation of Ford Motor Co., Alan Mulally hands the CEO job to Mark Fields on Tuesday, July 1.
Mulally, a homespun Kansas native and former Boeing Co. executive, made himself a welcome fixture in a town that regularly has rejected outsiders and their ideas.
Now, everyone who works for Ford knows the few simple principles Mulally championed and the plan for carrying them out. He will surely go down as one of the greatest CEOs in auto industry history.
But, like all great leaders, Mulally did not succeed in everything he tackled.
Here's a scorecard of his tenure.
"Profitable growth for all" has been the Mulally man-tra. When he joined the company in September 2006, Ford racked up pretax losses of $15 billion. Shortly after he took the helm, Ford mortgaged its assets, including its cherished blue oval, for $23.5 billion, a move Mulally referred to as the "world's largest home improvement loan." That enabled Ford to avoid taking a government bailout after credit markets collapsed in 2008.
The company slowly began climbing out of the hole and got its investment-grade bond rating back in 2012, along with the blue oval. Led by record profits in North America and Asia-Pacific-Africa, Ford notched a $7 billion pretax profit in 2013.
With his One Ford plan, Mulally pushed to make Ford -- once known primarily for gas-guzzling pickups, SUVs and muscle cars -- into a diverse carmaker with a global fleet of vehicles built on a simplified array of platforms.
The company reduced the regional complexities of its offerings and began bringing some of its best European vehicles to the United States with minor revisions.
Using the kinetic design language developed in Europe, Ford now offers vehicles that are competitive with imports. The sleek Fusion, with its Aston Martin-inspired front end, is a particularly striking example. Sold as the Mondeo in Europe and China, it's the new face of Ford. Even the all-American Mustang is going global for 2015.
With his relentless optimism and cheer, Mulally broke down internal barriers and destroyed the fiefdoms that once made Ford dysfunctional.
In his weekly business plan review meetings, he made it OK for executives and managers to own up to problems.
The ultimate cheerleader, Mulally seldom used the word "Ford" without putting the adjective "wonderful" in front of it. He relished tough challenges and made people believe tackling them actually could be fun. He made Ford employees believe in themselves again, tapping the company's reservoirs of talent.
And with one simple gesture in 2007, asking a stadium full of Ford employees to yell, "We love you!" to dealers, the former aircraft exec won retailers to his side immediately.
In the last several years, Ford launched a belated but aggressive assault on the booming Chinese market, now the world's largest. Ford has spent $4.9 billion to double the size of its manufacturing capacity there, its biggest industrial expansion since the postwar boom of the 1950s in the United States. Ford sales in China surged 49 percent in 2013, passing Toyota to become the country's fifth largest automaker.
With growth plans in India and elsewhere and vehicles such as the EcoSport small SUV and Ranger pickup, sold widely throughout the world but not in the United States, Ford is well-positioned for the future. But in recession-racked Europe, Ford's recovery plan is a work in progress, though it is gaining traction.
Mulally, an engineer by trade and a technology believer, pushed Ford to be an industry leader in areas from in-car infotainment to vehicle lightweighting to new, efficient powertrains -- with mixed results.
Ford stumbled badly with the MyFord Touch and MyLincoln Touch infotainment systems, which customers found balky, confusing and difficult to use. Ford was slow to respond to complaints, which reversed its hard-won gains in quality surveys.
With new vehicles such as the 2015 Lincoln MKC, which has more tactile knobs and buttons, Ford has recognized that customers prefer simplicity to technology overkill.
Ford's customer satisfaction numbers began to tick upward in the J.D. Power Initial Quality Study released this month.
Mulally also set out to make Ford a leader in fuel economy and alternative powertrains. But on June 12, Ford announced it would lower the window-sticker miles per gallon numbers for six vehicles. Following last summer's downward revision of the C-Max miles per gallon figure, this was an embarrassment.
The biggest technology challenge will come when Ford launches the 2015 F-150 pickup at the end of the year. For the first time, the F-150 will have an aluminum body, which requires major changes in Ford's manufacturing systems and dealer collision repair shops. Mulally took a calculated gamble to make such a big change with Ford's biggest money-spinner.
If the F-150 proves to be as great as Ford says it is -- and if the company can get a grip on infotainment complexity and fuel economy -- Ford's grade could rise to an A. But for now ...
As Ford struggled to dig out of its deep financial hole last decade, the company sold its stable of European luxury brands: Aston Martin, Jaguar, Land Rover and Volvo. That enabled Mulally and his team to focus primarily on the core Ford brand under the One Ford plan.
That simplified life for Ford's overworked executive team but left the company with just one moribund luxury brand: Lincoln. Ford is struggling to forge a new identity for Lincoln.
In the relentless push for a global One Ford plan, it took Mulally a while to see how Lincoln fit in. Lincoln's reinvention has taken a painfully long time. The launch of the MKZ, the first new-era Lincoln, was marred by delays and quality glitches. The MKC compact crossover comes out this fall. Lincoln also is launching in China this fall but is unlikely to enter Europe in the foreseeable future.
Luxury brands enjoy hefty profit margins. Indeed, Jaguar Land Rover, now owned by Tata Motors, racked up a record $3.2 billion profit in the last fiscal year, ended March 31. Ford sold the brands to Tata in 2008 for $2.3 billion.
Despite recent encouraging gains and quality reports, Lincoln still has a long uphill climb to win a significant share of the lucrative luxury business.
You can reach Bradford Wernle at email@example.com.