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US:Mulally already shaking up Ford
Mulally already shaking up Ford
In ways big and small, new CEO sets tone for change at ailing automaker.
Bryce G. Hoffman / The Detroit News
Alan Mulally took one look at the jam-packed executive meeting schedule at Ford Motor Co. last week and shook his head.
"That doesn't work for me," he said.
That's a favorite phrase of Ford's new president and CEO -- his way of saying things are going to change in Dearborn -- quickly.
Mulally told executives there are too many meetings and he asked when they found time to focus on the customer.
So he implemented a standing Thursday meeting of his senior leadership team where he expects them to show up prepared and ready to take action.
"We are the decision-makers," he told them. "We need to make decisions and not pass the buck."
Though Mulally will not take over officially as CEO until Oct. 1, he's already shaking things up at the top of the Glass House, several people at Ford have told The Detroit News in recent days.
He's eating in the cafeteria instead of the executive dining room, personally answering e-mails from employees and driving every Ford vehicle he can get his hands on.
He's focusing on creating a team atmosphere and promoting a new directness and honesty meant to cut through Ford's often-hidebound culture.
"Maybe one of the drawbacks of our culture is that we've been too democratic, and that may have slowed us down," Executive Chairman Bill Ford Jr. told The News after announcing that Mulally would replace him as CEO. "I think Alan will sharpen our edge."
Those who have watched Mulally at work describe a man who is affable and approachable but clearly in charge.
He's taken the lead in the few meetings he's attended, asking probing questions and demanding firm "yes" or "no" answers. He's endorsed the revised Way Forward restructuring plan Ford announced last Friday, but made it clear he won't allow it to fall victim to the same market forces that forced Ford to scuttle promises made in its original plan detailed in January.
That blueprint called for idling 14 factories and cutting some 30,000 factory jobs by 2012. It was supposed to restore Ford's North American operations to profitability by 2008.
But a dramatic market shift away from the gas-guzzling trucks and sport utility vehicles Ford relied on for big profits caught the automaker off-guard. Its losses mounted -- $1.4 billion in the first half of the year.
Ford's new restructuring plan pushes its profitability goal back to 2009 and calls for deeper cuts by the end of next year.
New Way Forward on track
"My marching orders are pretty clear," Mark Fields, president of Ford's Americas group, told The Detroit News in an interview Wednesday. "Deliver the plan."
Fields said Mulally is insisting on weekly, monthly, quarterly and annual reviews to make sure the recovery plan stays on track. He's directed executives to flyspeck the progress on cutting costs, improving factory utilization and market share.
"He wants to make sure that we rigorously measure it," Fields said, adding that the turnaround plan will be modified as needed.
The task of tracking retail sales and market share falls to Cisco Codina, Ford's top sales executive. In a separate interview Wednesday, Codina told The News that Ford executives will now take "a very honest and conservative approach" to analyzing the numbers, hinting that the company's leaders have been too optimistic about their projections in the past -- and too reluctant to alter them in the face of changing market realities.
An example is Ford much-publicized promise to sell at least 900,000 F-series pickups this year.
Ford made the pledge at the New York auto show in April even as soaring gasoline prices and rising interest rates were slowing full-size pickup sales. The automaker was counting on sales to rebound. By August, however, it was clear that was not going to happen, forcing Ford to abandon the target.
"Now, we're being brutally honest," Codina said. "That's different from what we did a few months back. The sense of urgency has redoubled."
Honesty is demanded
Mulally expects transparency and realistic assumptions to extend throughout the organization.
He's told executives he wants everyone to use the same set of numbers, whether they are talking to Wall Street, dealers, employees or Ford's internal planners.
Mulally wants Ford's finance staff to support the business, not control it as in years past. The number-crunchers will have a place at the table, but inferior or stripped-down vehicles won't go on the road just to make budget.
Ford insiders say financial executives have traditionally had a broad say over the budget, including vehicle programs. That has engendered what some call a "culture of stretch," in which product development executive executives overestimate sales volumes and revenues in order to get vehicle programs approved by finance.
That created unrealistic assumptions that inevitably came back to haunt the automaker.
Fields had already begun challenging this system after he was named head of Ford's Americas group a year ago.
He sought to foster a more far-sighted, customer-oriented approach to product decisions. Rather than strip out vehicle content to cut costs, he has insisted on adding features to Ford's cars and trucks to make them more attractive to consumers. Fields was successful in pushing through standard side air bags on the 2007 Fusion, which added cost but made the vehicle more competitive and increased its three-year resale value.
Mulally has said he wants to intensify the focus on the customer.
And he has signaled the company will be clear and straightforward in its external communications.
During a meeting last week in preparation for last Friday's restructuring announcement, he rejected a carefully nuanced response Ford's communications staff had prepared to questions about the possibility of selling the money-losing Jaguar brand.
Mulally preferred a simple and direct statement: Ford has no current plans to sell the brand.
Mulally also is acting like a man who has a lot of catching up to do behind the wheel of Ford's vehicles.
He's working on getting rid of his Lexus in favor of a Ford, possibly a Five Hundred sedan. He also has been familiarizing himself with Ford's lineup by driving a different model nearly every day, including the Ford Edge, the roomy crossover vehicle due on the market in November.
An engineer by trade, he has already been sharing impressions of the vehicles with his team.
The desire to win persists
If Mulally sounds like a man in a hurry, it's because he and other executives know the clock is ticking.
Wall Street lost patience with Ford's first Way Forward plan and was not bowled over by the accelerated version unveiled last week -- Ford stock dropped 12 percent the day it was announced.
Mulally's challenge will be to manage change and motivate employees at a time when Ford is dramatically reducing its blue and white-collar work force.
"It's somewhat tenuous around here," Fields said of the morale at Ford's headquarters. "They want to see Ford win."
So does Mulally. The man credited with pulling Boeing back from the brink of financial disaster after the Sept. 11 terrorist attacks knows how sweet victory tastes. In a recent meeting with Ford senior executives, Mulally gestured to a financial chart that showed a precipitous decline followed by an upward turn. He pointed to the lowest point.
"Guys," he said, "let's get to the bottom as quick as we can, because let me tell you, the ride up is a lot of fun."
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My next Ford.....