US:Change looks inevitable at Ford - Ford Forums

Stacy94PGT · 09-27-2006, 06:30

Change looks inevitable at Ford
Analysts expect more top rank shake-ups

BY SARAH A. WEBSTER

DETROIT FREE PRESS BUSINESS WRITER

Memo to Ford Motor Co. executives: Your new boss, Alan Mulally, may be a social guy who knows how to backslap in public, but his record at Boeing Co. shows he can be hard-nosed and data-driven and has no qualms about firing executives who don't measure up.

In 2004, Mulally sacked Toby Bright, whom he had hired 27 years earlier, as head of Boeing's jetliner sales unit. Mulally delivered the bad news over the telephone.

As Mulally embarks on his third week with Ford, experts say he'll be evaluating the leadership at the ailing Dearborn-based auto company and deciding who will make the cut for his management team.

David Cole, director of the Center for Automotive Research in Ann Arbor, meets with auto company officials regularly and expects Mulally to make changes at the top of Ford by the end of the year.

"That's where he would probably put his first mark on the company, is restructuring that management team," Cole said.

If Cole and others are right, the changes likely mean more executive losses for Ford, though there's already concern about a brain drain. The turnover has been so significant that some industry watchers and insiders question whether there is enough talent left to execute the restructuring.

This month alone, four corporate officers announced they're leaving. One is chief of staff and Ford family member Steve Hamp. The others are A.J. Wagner, a vice president who was president of Ford Credit; David Szczupak, group vice president for manufacturing in the Americas, and Anne Stevens, chief operating officer for the Americans.

John Casesa, a veteran analyst whose firm, Casesa Shapiro Group LLC, makes investments in the automotive sector, agreed Mulally probably will make over leadership.

"I'd be surprised if he didn't make changes with the existing management team," he said.

Ford spokesman Oscar Suris said he would not comment on speculation about management changes.

Mulally's status as an outsider -- neither a member of the tight-knit auto industry nor the Ford family -- has generated plenty of talk in Motown about who will, and won't, survive.

In recent days, the automotive Web site Jalopnik.com sought odds on the future of President of the Americas Mark Fields. He developed the Way Forward restructuring plan that was unveiled in January and retooled this month. The site also took a poll on whether Chief Financial Officer Don Leclair will last.

Meanwhile, several executives like the departing Anne Stevens have said management changes are needed.

On Sept. 15, 10 days after installing Mulally, Ford announced a retooled Way Forward restructuring plan that would cut 30,000 hourly and 14,000 salaried jobs by 2008 -- about one-third of the North American workforce -- and close 16 plants by the end of 2012. That day, Fields said the company must become "flatter and leaner," and changes are under way to remake the corporate officer ranks.

Sizing up executives

Going forward, Mulally, who was not available to comment for this report, will get to decide whether Ford's structure with four levels of vice presidents makes sense, and who among this group he might want as his closest confidants. While Cole called the organization at Ford "a little too complex," Paul Eisenstein, publisher of the Car Connection, an online automotive magazine, didn't think the structure and titles are as important to streamline as the politics behind them.

"A big problem at Ford has always been the political nature," he said.

Among the organization's most visible top executives is Fields, who is heading up the turnaround of the ailing North American division. It posted a $4-billion loss through the first half of the year. Profits in other parts of Ford partially offset the loss and helped the company post a $1.4-billion loss through June.

Six months after Way Forward was announced, Ford acknowledged the restructuring plan was not aggressive enough in the face of a gas-conscious marketplace that was rejecting pickups and SUVs. The retooled plan, also developed under Fields, set a more aggressive timeline to cut jobs and plants and roll out new products.

But it was largely rejected by Wall Street, in part because the plan pushed profitability projections for North America off a year, to 2009.

Fields and Leclair were point men in explaining the company's strategy on Sept. 15, and later they acknowledged they didn't do a complete job of explaining how they plan to bring personnel in line with demand by 2008 and have plant capacity matching demand by 2010.

Casesa said Fields "faces a credibility gap because of the way this plan was received."

Added, Eisenstein, "My gut tells me that Fields will have to prove himself again."

But despite Internet chatter and the visibility of Fields and Leclair, others said Mulally's primary concern should be the product development team, given that Ford vehicle sales are down 9.9% through August. That examination would put attention on J Mays, Ford's chief creative officer and group vice president for design.

"Anyone involved in product is going to have to be looked at closely," Eisenstein said.

For now, Mulally is getting acquainted with the vehicles, workers, management and problems at Ford. He's been driving the cars, eating with everyday workers in the cafeteria and attending his first meetings.

His learning curve could keep the executive team secure in the short term.

Cole and others say Mulally might be forced to move more slowly because of his lack of automotive experience and dearth of trusted comrades who can parachute in to help. That would leave Mulally leaning on Bill Ford's guidance.

With Mulally at the helm, Casesa said, Fields has the most to gain if he executes his plan properly. Fields, he said, might well be the next Ford chief executive.

"It's all about execution now," Casesa said.