The Head of Ford Retires, Having Rejuvenated the Carmaker
DEARBORN,
Mich. — One of the first questions asked of Alan R. Mulally when he
joined Ford Motor as its new chief executive in 2006 was what kind of
car he drove.
His answer stunned an auditorium packed with Ford employees. “A Lexus,” he said. “It’s the finest car in the world.”
His
praise of a car built by Toyota was shocking, but it delivered a clear
message of how Mr. Mulally, an outsider who was recruited from Boeing,
viewed the products made by Ford, which at the time was spiraling into a
financial crisis and desperate for a savior.
It was that brutal honesty, along with Mr. Mulally’s vision, that would lay the foundation for a stunning turnaround.
On
Thursday, Mr. Mulally stood at the front of the same auditorium and
announced that he would retire as chief executive on July 1 and, as
expected, be succeeded by the veteran Ford executive Mark Fields.
This
time, instead of silence, he received a standing ovation. The company
he is leaving, the Ford workers knew, has been transformed from an
industry laggard into one of the most successful carmakers in the world.
As he leaves, Mr. Mulally is drawing comparisons with Lee Iacocca, the executive who resurrected Chrysler a generation ago.
“It
is terribly exciting and also terribly satisfying,” Mr. Mulally, who is
68, said Thursday of his personal odyssey and the transition of power
at Ford.
Mr.
Mulally said he never doubted that Ford could thrive again, even when
the company appeared headed for bankruptcy in 2009 along with its chief
American rivals, General Motors and Chrysler.
“I
knew we could do this,” he said in an interview. “Every week I got more
and more confident, even through the toughest of times.”
Ford managed to avoid bankruptcy and the government bailouts that G.M. and Chrysler needed to survive.
From
the day he arrived at Ford, he stressed that everything was up for
review at the company, and set out to streamline it by selling off
brands that diluted its resources, like Volvo and Jaguar, and closing
down the struggling Mercury brand.
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He
made painful cuts to the work force, laying off thousands in 2007 and
2008, and closing plants that were no longer needed in the face of
reduced demand.
At
the same time, he encouraged executives to emulate leaner competitors
like Toyota, adopting team-oriented procedures, and forced executives to
put aside their internal rivalries. As employees warmed to his
approach, improvements in the safety, styling and fuel efficiency of
each new Ford model followed.
Now
Ford is increasing its market share in North America, and expanding its
presence in China and other regions where the company had trailed other
automakers.
Last
week, Ford reported net income of $989 million in the first quarter of
this year — its 19th consecutive profitable quarter and further proof of
the staying power of Mr. Mulally’s turnaround plan known as One Ford.
Auto
analysts on Thursday cited Mr. Mulally’s influence on Ford, which
previously had a rocky history with chief executives who were fired or
replaced when the company stumbled.
“Whether
anyone else could have created the level of change and delivered
equally strong execution is immaterial,” said Stephanie Brinley, an
analyst with the firm IHS Automotive. “He was the one to do it.”
During
Mr. Mulally’s tenure, Ford vastly improved the quality of its passenger
cars, particularly smaller models like the Fiesta and Focus. He also
encouraged the company to take risks with its top-selling F-series
pickup, which is being revamped this year with a lightweight, aluminum
body.
While
he retooled Ford on the inside, Mr. Mulally also restored its
reputation among consumers and investors. In November 2006, shortly
after taking over as chief executive, he made his boldest bet, by
mortgaging most of the company’s assets — even the trademark on its logo
— to secure $23.5 billion in loans. It would finance a drastic
downsizing of its bloated North American manufacturing operations.
It
led to a high point in his career. During congressional hearings in
autumn 2008, he sat alongside the chief executives of G.M. and Chrysler
in seeking emergency financial aid for the domestic auto industry. But
after the first round of hearings, Mr. Mulally reversed course and told
lawmakers that Ford would not need government help to fix the company.
“His
leadership enabled Ford to avoid the bankruptcies that swallowed up and
then spit out General Motors and Chrysler,” said Jack Nerad, an analyst
with the auto research firm Kelley Blue Book.
Ford’s
executive chairman, William C. Ford Jr., has often told how he
recruited Mr. Mulally from the aviation industry by emphasizing Ford’s
unique heritage and respected status among American auto companies.
But
he still marvels at how Mr. Mulally’s brand of optimism and emphasis on
teamwork healed the company founded by his great-grandfather, Henry
Ford.
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“We
are enormously grateful for everything Alan has done — not only for
what he accomplished but how he did it with great style,” Mr. Ford said
on Thursday.
Mr. Mulally’s retirement had been expected, although he had earlier said he would stay through the end of 2014.
Mr.
Fields, who has worked for Ford for 25 years, was the logical choice to
become the new chief executive because he had run the company’s core
Americas division for seven years before being promoted to chief
operating officer in 2012.
The
company’s board did consider outside candidates for the job, as it did
with Mr. Mulally. But the decision to promote from within was to
preserve the culture Mr. Mulally created, rather than change it.
Despite
his own record of success, Mr. Fields will be judged initially on how
well he continues the One Ford approach he inherits from Mr. Mulally.
“When
Alan came in he was really able to turbocharge how we looked at things
globally,” Mr. Fields said Thursday. “We are still going to be judged by
results.”
Ford
does have challenges ahead. Sales in the United States fell slightly in
April, and it has said that profits will be flat this year as it
introduces new models.
Mr.
Mulally said his last goal was to ensure a seamless transition and
spread the word to dealers and investors that Ford’s future was in good
hands.
He
gave no indication what he might do after leaving Ford. He was a
contender last year to become chief of Microsoft, but took himself out
of the running before a selection was made.
“I
want to focus on this orderly transition, but I also look forward to
retirement and whatever that brings,” he said. “I love to serve, and I
want to see what the opportunities are to do that.”
A version of this article appears in print on May 2, 2014, on page B1 of the New York edition with the headline: A Complete U-Turn.
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