5/20/2009 | 3 MINUTE READ

A Leader When Detroit Needs One

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At a time when the global auto industry is in panic mode, one leader is taking charge and putting his company on the right path.


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When Alan Mulally took over as president and CEO of Ford in June 2006, many industry observers-this scribe included-questioned whether a man who had no automotive industry experience could lead a business as complex and challenging as building and selling cars and trucks. Sure, Mulally had spent nearly forty years at Boeing, working on numerous aircraft programs, including the 747, 757, 767 and leading the development of the 777. He had intricate knowledge of what it took to manufacture complex products, but the aircraft business isn't the same as making cars, those of us who have spent decades insulated in Detroit said.
The supporting arguments went something like this: Boeing only manufactured a few hundred planes per year, costing millions of dollars a copy, a far cry from the millions of units Ford makes, some with little or no profit margins. Besides, he had no concept as to what a successful car or truck looked like-he never spent a minute in a design studio and had no pulse on what trends were taking shape in the auto market. Thankfully, I and many of my compatriots here in the Motor City are being proven wrong.
Mulally, in fact, needs to be heralded for his combination of keen business sense and impeccable timing. The timing scenario played out pretty well for him when six months after his arrival he decided the company needed to hoard all the cash it could, to prepare itself in the event of any potential downturn. He mortgaged virtually all of Ford's assets, including the Blue Oval itself, for $23.4-billion and carefully shepherded the cash toward funding crucial new product programs, while also dutifully saving a significant portion of it for a potential rainy day. Little did Mulally know that two years later, the auto industry would face a torrential downpour that would last several months, putting GM and Chrysler on the brink of failure. The lone exception to this dire situation was Ford, since it had more than ample cash that was borrowed at a time when credit flowed freely and cheaply. In another surprising move, Ford managed to cut its debt load 28% by convincing creditors to take equity in the company in exchange for previous debt. The exchange is likely to save Ford upwards of $600-million per year and raises the stakes as GM and Chrysler try to get their creditors to make equal sacrifices.
Mulally also deserves credit for taking a careful, yet persistent, approach to realigning Ford to become a global company that thinks collectively about how its vehicles can meet the demands of customers across the globe, as opposed to the regional thinking of the past. He calls it "one Ford" and it seems to be working as designers and engineers across the globe collaborate on developing products that break borders. The fruits of Mulally's labor are about to take root when the company launches its Fiesta B-class car in the U.S. early next year, the first product developed under Mulally's "one Ford" mantra. Having been to Europe within the past few months, I have had the opportunity to examine the Fiesta close-up and I can tell you this is one product that's likely to turn Mulally into a Detroit rock star. The design is cutting edge for a small car and the interior puts other domestic small cars to shame.
Still, the house that Mulally has built could come crashing down if everything doesn't work according to plan. That's a scary reality, but it's one that I give him and the team at Ford huge credit for building, because in this era of bailouts and bankruptcies we need someone who can lead our industry toward recovery. That leader, it appears, didn't have to come from the industrial Midwest or a foreign shore, just from outside the confines of the bubble we call "Detroit"-maybe it's time we look for more Mulallys to help our industry rebuild.


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