The House that Henry Built was close to ruin when Junior Bill fell on his sword to bounce Boeing’s best to The Blue Oval. One year later, BusinessWeek (BW) gives FoMoCo CEO Alan Mulally an A-. And yet the reaper’s blade still hangs over Dearborn. And Mulally still toils to prove that his first year’s effort was worth $133.55 per minute (based on a 60 hour work week). Meanwhile, surveying the lay of the land post-Mulally, we reckon BW’s senior correspondent had more than sweetened tumbâk in his hookah when he penned this report card.
David Kiley grades the new CEO in seven categories: Profit and Loss, Restructuring Savvy, Products, Marketing, Personnel, Culture Change, and The Vision Thing. While Kiley’s overall mark might be correct, he gets most of the individual scores wrong; grading high where Mulally struggles and low where he shines.
The biggest gaff is the A Kiley bestows for Profit and Loss. It’s based on the $750m profit that NYSE:F booked for its second quarter. That same 10-Q report showed that the earnings were buoyed in part by the one-time sale of Aston Martin. Palming-off Auntie Aston netted the struggling automaker $187m in profit, infusing nearly $1b in cash into Ford’s corporate coffers.
Ford’s positive second quarter is hardly evidence of a turnaround. As Kiley sticks a gold star on Mulally’s forehead for P&L brilliance, he acknowledges that Ford expects to record a full year loss for 2007 and 2008 before turning a full year profit (pretty please) in 2009. Selling Aston Martin was an overdue obligation, not an insightful act reflecting CEO enlightenment.
My grade for P&L: B. This assessment is propped-up by benefit of the doubt, since it’s too soon to be ascribing Ford’s [potential] financial performance to anything Big Al initiated during his first 365 days.
Mulally also earns the top mark from BusinessWeek for Products. Does this mean Ford finally has a replacement for the aging, uncompetitive US Focus? Don’t be silly. Kiley writes, “Mulally, of course, hasn’t had time to bring any new products to market… But Mulally has busted through the Ford culture and structure of regional fiefdoms that created waste and duplication throughout its global enterprise, and bedeviled his predecessors.”
For this he gets an A? Ford’s American product pipeline is bone dry. In ’09, dealers will see a refreshed F-150, a reskinned Ford Fusion and Lincoln MKZ, and the “new” Lincoln MKS and Flex. And that’s it. Aside from renaming and fixing some of the worst bits of a poor-selling Taurus and its badge-engineered bretheren, nothing has changed down at the showroom… lately. Or will… soon. My score for Products: a C-.
It’s easily argued that challenging the automaker’s recalcitrant corporate culture has been Mulally’s greatest impact thus far. Yet BusinessWeek bestows a paltry ‘B+’.
During his tenure, Mulally has attacked the bureaucratic plaque that has slowly strangled the company’s lifeblood. Executive managers have been shaken from their organizational silos. Big Al meets with his executive committee daily and forbids them from hiding behind reams of financial reports. Executive must be fluent with their operational metrics and fiscal results. Most of all, Mr. Mulally has introduced a concept forgotten long ago by the insular silver haired boardroom Town Car jockeys. It’s a term familiar to the rest of the working world: accountability.
His influence has sent tremors of discontent throughout the gilded good ole boy network, delighting the few remaining FoMoCo ideologues who want to get back to the business of making great cars. More needs to be accomplished; I’d like to see some high-profile firings and organizational shakeups. But for a first year effort in the face of systemic opposition, Mulally deserves a resounding A.
Lest I be accused of harboring feelings of ill will toward BusinessWeek, let me point out that I fully agree with their conclusions regarding Mulally’s Restructuring Savvy (B+), Marketing (B), and Personnel (B-).
BW’s final assessment: FoMoCo’s new chief deserves an A for The Vision Thing. Certainly, some hope has been restored within The House of Ford, stemming from the former Boeing exec’s efforts to reform the culture and from its [fleeting] recent financial results. While this hope is fundamental to motivating the organization toward success, we have only seen baby steps towards recovery.
In year one, Mulally’s throw down to the status quo created some genuine organizational momentum. To really rock The Glass House in year two, he must capitalize on the big Mo. He must reach outside the myopic automaker’s in-house talent to recruit execs who aren’t afraid to question everything.
Early indications are that Alan Mulally’s a good thing for Ford. For the sake of Ford’s 283,000 employees, dealers, suppliers and shareholders, let’s hope he’s not too little too late.
[Read the BusinessWeek article here ]
While I generally agree with you, one statement stands out as a bit naive.
Accountability is just about dead outside Detroit as well. Only people with no power are held to any standard at all by anyone other than the customer. The modern “thin” management structure has managed to trim out most of the people who actually did anything in favor of those with extreme climbing skills.
Leadership is dead.
I can’t quibble with your analysis over all.
I suspect the real answers are impossible to come up with at this point. The mess is (was?) so big that no one could seriously impact the bottom line by now.
But Mullaly impresses me every time he says something. It never seems to be BS or patronizing and usually make very good sense. He actually grasps the fact that there are problems to solve and doesn’t hide it. Seems to be sticking to his game plan without making panic induced reactions.
Contrast that with some other companies “leadership” this past month.
I think he may have the goods. I hope he came in time.
I have to give Bill Ford some credit too. How many top executives have the ability to see that they are not the man for the job and actually do something positive, like get out of the way. It’s really rather impressive, IMHO.
…only time will tell.
I think Mullaly has been laying internal framework for it. That is the reason not much looks to have been done from outside. The 2nd yera will be key.
Mullaly…while not perfect such a complete opposite from Rabid Rick just might make him seem like a god.
Renaming the 500 a Taurus was an interesting if not original idea. They should work on the small trucks they neglect and try to bring more hybrid cars to market. The proved they can sell a hybrid with the escape, it was just the wrong platform.
When Mullaly joined Ford, I had high hopes for him. They picked a guy who has had a proven turn around experience (Take note, Rabid Rick!) and didn’t have the short sightedness of most of Detriot “hard working” execs. He has pubicly stated his admiration for Toyota and wanted to make Ford just like them (something which many on TTAC have said). Here was a guy who could turn Ford around and give the company a vision and a new chapter.
But like Mr Montgomery points out, the reality has been somewhat off mark. Mullaly is nowhere near the level of Rabid Rick and “Senile” Bob Lutz, but he does need to increase his level of urgency. Remember, everything is on the line for Ford, if this doesn’t work, they won’t even own their own brand! I’m glad Mullaly is smashing down fiefdoms and trying to get other departments to work together, but his real focus should be a Focus (see what I did there?!). Without some killer cars on the market, all this cost cutting will be pointless. Creating a vision, having sustainable growth and all other manner of management buzzwords and phrases can wait. Ford needs to have customers to keep Ford going. Without that, Ford is toast. If you’re starving and someone offers you some food you wouldn’t say “Excuse me, you better have a plate and a knife and fork! I’m not an animal!”
Mullaly has done some good, by paring brands down. This has given Ford some free capital in the short term, but as I pointed out, short term isn’t good enough. I am in disagreement with Mullaly about not having a global luxury brand, but that’s a minor bugbear.
Overall, Mullaly needs to concentrate on what’s important, getting new cars (and more importantly, cars people want) to market and get some profits flowing in.
Incidentally, Mullaly could also work on Ford’s quality and reliability, too. My next door neighbour has a 4 year old Ford Focus and according to him, it has been nothing but a nightmare. Bits falling off and cracking. The final straw was when he was driving his little girl to school and the girl pushed the electric window switch. The window fell off its rollers and slid into the door! Luckily, the window didn’t shatter but it scared the pair of them! My neighbour has said “I’m going back to Toyota!”. There’s another customer who won’t be bothering Ford anytime soon!
Ford still have a lot to learn from the transplants…..
Heres an idea for the great one. workers need trucks. The era of the poser is just about over so forget the blinged out hemi bumble bees, gtx, daytona and king ranch models. The ford ranger is basically the same truck as the 99 model when is was the best selling small truck in the universe. You people let it rot on the vine??? Why didnt someone say “Hey-toyota and nissan are perfecting their samall trucks into mid size trucks people want!” Now I hear it may be discontinued. What are these people smoking? What a squandered opportunity. I would not even consider a ranger as it can never hope to catch up it is so far behind the competition.
@Katie
With respect to “respecting” Toyota. It seems that the 3-headed dog didn’t just admire Toyota they have decided to buy its management.
If that isn’t grabbin’ life by the horns…
ex-dtw
Clearly, Cerebus liked Toyota’s management so much, they bought them!
Victor Kiam would be proud!
“His influence has sent tremors of discontent throughout the gilded good ole boy network, delighting the few remaining FoMoCo ideologues who want to get back to the business of making great cars. More needs to be accomplished; I’d like to see some high-profile firings and organizational shakeups. But for a first year effort in the face of systemic opposition, Mulally deserves a resounding A.”
Is there actual evidence to back this up? In fact, can anyone name one concrete thing Mullaly has done? Restructure the company? No. New product? No. Bet the farm? Bill Ford. Let ~10,000 low level employees go? Bill Ford. Improved cycle time. No. New partnership with UAW eliminating invflexible work rules (supposedly one of his strengths? No. I’m not saying Mullaly isn’t going to be a great leader for Ford, simply that he hasn’t been there long enough to change one single thing in any meaningful way. He spent the first 3 months studying the company. In fact, he was there for at least 2 months before he so much as said, “Hi, I’m your new CEO.” Everything from a top level leadership perspective you see on paper from Ford right now can be credited to Bill Ford and Mark “rock star” Fields or in the case of selling assets just pure desperation.
Wow, so the Ranger may be discontinued just like the Windstar and Freestar?
Ford Executive: “Yeah, it’s too much work to either inprove the Ranger, or to design a new small pickup, so let’s just give up like we did with minivans.”
Simply amazing. It’s like all of the big 2.8 executives just sniff glue all day. I don’t know how else to explain the current state of “domestic” vehicles. Obviously, no one at these companies cares to find out what real potential customers want. I remember our neighbour had an old 1986 Mazda B2000, and that thing went forever. Small 2.0 litre engine, decent fuel economy, etc. It was a strippo truck, but I’d personally buy a basic truck with crank windows and a hose-out interior if it was offered. Better yet, offer a diesel option along with the strippo truck. A lot of VW fans have been waiting 20 years for something like the Rabbit pickup to be available. A guy in my auto shop class had a mid-80s diesel Rangers. Those were cool pickups! Dirty engines, but unique. Oh well, I’m just dreaming now, there’s no way in hell a small B2000 type truck will reappear in 2007.
At least Mulally has a plan. That is more than can be said for GM. That is unless GM’s plan actually is to poke along like everything is rosy until the money is about out, file for Chapter 11, get the UAW and dealership contracts tossed, make the pink slips fly like pre-approved credit card offers, and completely overhaul the NA operation from soup to nuts.
Actually Ford was in pretty good shape until “Jaque the Knife” took over. It takes a generation to recover from a toxic executive like that………
Actually, Ford has decent product of good quality as measured by both Consumer Reports and JD Power (especially models launched over the past 3 years)
Decent product should help keep the Ford loyalists. They need to come up with superior product to drive competitive conversion. The succuss of the new products (Flex, F150, MKS) will be Mulally’s most important report card.
Thanks brettc. Now we have the obvious answer. How else do you expain detroit these days. Glue sniffing in the conference room! My ribs still hurt!
I would argue that it’s going to be hard to judge Mulally fairly so early in his position, try back in 5-10 years. Look at Henry Ford II – he was creative in his early years with the Whiz Kids, destructive in his later years with his direction, favoritism, and whim. It would be safe to say he the root reason why Ford is in the crapper it is today.
Same with Jim Press going from Toyota to Chrysler, but can the man exist without TPS which he has been swimming in for the past 37 years? I hope he doesn’t find himself a fish out of water.
Bob Lutz, on the other hand, has been at GM for 5 years. Enough said.
There was a book and accompanying PBS miniseries on how Alan Mulally ran the Boeing 777 program. He completely changed the way Boeing built airplanes, starting with getting the airlines in at the ground floor, asking them what they wanted in a new plane. Boeing had never done that before. He then tore up the old way of designing airplanes, installing the CATIA system so that the design would come together perfectly at the manufacturing stage. Obviously, given that there are just two players in the business, he could be excused for continuing with the status quo. This sort of revolution has continued with the 787, though he won’t be around to see it fly.
Let’s also mention that he fixed the 737 production mess his predecessors had left behind, and restructured Boeing Commercial Airplanes to deal with a post-9/11 world.
This is the guy who saw Casino Royale and asked why isn’t the Mondeo sold here. This is the guy who drove a Lexus before arriving at Ford, so he has firsthand knowledge of “the best,” as he called the car. This is the guy who openly went to visit Toyota.
The point is, as an outsider he can plainly see what’s wrong, at Boeing he showed the ability to change and fix things — and the Ford Motor Company will benefit. One year on the job, given the development time for new products and given the notorious Ford corporate culture, simply is too soon to even begin to judge Alan Mulally.
A history of incompetent CEOs surely is the root reason why Ford is in the crapper. But now, what Ford has to do is reverse one result of that incompetence: freezing successful models like the (old) Taurus, Ranger and Town Car until the competition has passed them by. Waiting three years to fix obvious shortcomings in the 500 may have poisoned the (new) Taurus’ chances.
I too am baffled why Ford would squander the tremendous good will it had with the Ranger, which seems destined for extinction. Moreover, even cash-starved Ford should have funds to freshen a small pickups. After all, those little trucks are now hotbeds (so to speak) of innovation. Form limits opportunities for restyling.
So how would YOU re-do the Ranger with limited funding? Install a diesel (if pollution laws permit it) that’s already in use somewhere? Add options like plush interior trim, lift-off bed shell, big box rear or flatbed? Make anti-NVH refinements? Turbocharger? There has to be a huge market out there for a nice small pickup.
brettc my dad had an ’87 Mazda B2000 he bought new. It got replaced it with a Nissan Frontier in 2004. Sure he drove it practically into the ground but after 17 years and almost 300,000 miles of Heavy use. Parts wore out over time but it was easy for him to fix himself 95% of the time. That little truck moved me about a dozen times from FL to NY to KY to GA and back and forth a few times. It was slow as dirt through the mountains with a topped out load in the back but it made it every time. I would buy one like that in a heart beat if they still made them compact and reliable like that.
I emailed Subaru telling them to hurry up and get off there asses and come out with a small AWD pickup(no Baja crap) using a stripped Outback platform, like a Honda unibody truck. I got a real response back but I don’t think they tok me seriously. If they could keep a basic one right around $20k I would be waiting in line for it, provided it doesn’t look like the new Impreza.
Maybe I’m crazy but does anyone else think Subaru could make a kick-ass little truck.
Alan’s pretty good at getting out in the front of the parade, but CATIA and customer based design were present at Boeing long before the 777. So far, his only product related action at Ford has been to badge engineer the 500 into a “Taurus”. When I go car shopping I don’t much care about the organization charts at the factory. I say the best he deserves is a gentleman’s “C”.
Opps I guess I should have posted at least one tiny thing about Ford. I agree with the post that its way too soon to tell if his changes are working. He has a lot of work to do and time is not on his side, but he’s doing things different and that’s a huge positive.
Everything that Landcrusher said, to the power of ten.
Executive accountability, as manifested by severe consequences (being ‘forced’ to retire a million 10-20 or more times over is not ‘punishment’)is a myth.
Mullaly should get an A+ for surviving. Honorable mention to Bill Ford Jr. for not meddling. I imagine there’s been lots of behind the scenes sniping.
A rear wheel drive Fusion with a V8. 2 or 4 door. Manual or auto. That would sell nicely. What they’ve got ain’t no different then a Focus! Get that through your thick head Ford. Front wheel drive four bangers(hell, maybe it’s even got a six banger in it); you can change up the sheet metal, but underneath, it’s all the same. Boring, uncompelling, uninspiring, nothing to get excited about, bland, average, mediocre, common, same ol, same ol. It might as well just be a 1988 Ford Tempo. Unimpressive power, mileage, performance, the price sucks. Lame duck product does not sell.
Mustang platform, Fusion platform. Why two? Either could be built on either platform.
Then they’d essentially just be the same car if they shared drive lines too?
Part of Ford’s problem is the complex nature of everything they build. Why do they think more complex is better?
You all know what a Honda looks like under the hood. It’s all packed in there, it’s cramped, and it sucks to work on.
Now if they looked like this from the factory, it would be awesome and a pleasure to work on:
http://img385.imageshack.us/img385/4780/june0715pv8.jpg
Nothing more then necessary. All that’s required. ~300 hp or more at the tires to boot. Pretty peppy I’d imagine.
There’s nothing wrong with a push rod V8. It’s proven and it works. There’s no way in hell your 3V “mod motor” costs you less to make then the old style V8. So why bother? It’s better in what way?
Here’s what you do. Take one of your cars. Go to this website: http://www.evsource.com/ Purchase the motor/controller/charger pictured on the front page. Have this guy build you a BMS for A123 batteries: http://killacycle.com/
Load up enough batteries so you have 500/700/1000 mile range between charges. Now you have both performance and range. You could have more performance and more range then the Tesla Roadster if only you wanted it.
Ditch the non competitive fuel burner and step into the future. A123 has a factory in China. You can get those batteries built for ten cents each at your volumes.
The prices on that first link represent retail prices(potentially high margin). Those motors are (currently)low volume, low demand = high price. Those chargers and controllers are both hand built by the owner of each company. Once again, (currently)low volume, low demand, high price.
I think an electric car can be better then a gas car, and be lower cost. Ford has proven over the past 35 years they can’t build a four banger motor equal to quality to a Honda four and get the same amount or better mileage. If you can’t do it in 35, your likely not going to in the next 35.
Now if Ford was a Chinese company; I’d really wonder if they couldn’t clone the Honda motor/ecu to the point where the quality was equal and so was the fuel mileage. R&D. Research and duplicate?
1,000 mile range and more performance then a gas powered vehicle? No noise, exhaust, maintenance or concern about the price of gasoline. No, just roll out more 22mpg 2009 model 4 cylinder cars MSRP, $22,000(base model).
Flex is dead in the water. Boxy minivan, stretched/lowered Xb clone depending on who you ask. Not fooling anyone with that sheet metal. Look at Ford Edge. Premium priced vehicles such as that(a basic utility vehicle), do not sell in today’s repressed and dampened economy.
If fuel is $3/gal now; a better then real good chance exists that it will be 4 or 5 dollars a gallon next year or after. If wages remain the same and fuel increases; are people really going to spring for a $30,000 Ford Edge? The price is too high.
In Australia & NZ, Mazda sells a smallish 3.0 diesel suv called a BT50……
Mazda Speed 3 in a Ford Focus RS jacket for $2000 less. I’d buy that.
No new product??
Ignoring the geriatric and about to be discontinued Panther platform (Crown Vic, Grand Marq, Town Car) and the Ranger, everything in Fords lineup dates from MY2004 or newer.
Recent introductions:
2005
refreshed Focus
New 500, Montego
Mustang
2006
Fusion/Milan/Zephyr
Explorer/Mountaineer
2007
MKZ
Edge/MKX
Expedition/Navigator
2008
Taurus/Sable
Focus
Escape/Mariner
SuperDuty
2009
refreshed Fusion/Milan/MKZ
refreshed Mustang
Flex
refreshed F150
MKS
2010-2012
new everything
Ford needs some killer ads to get people to take another look at its lineup to get back in the game.
“Ford needs some killer ads to get people to take another look at its lineup”
That is certainly part of the problem. The most recent Ford ad I can remember is the idiotic Ford Edge as a skateboard zooming along railings and sides of buildings. That was a horrible ad in so many ways. Most of the demographic who would buy an Edge is pissed off by the real world skateboarders who think every railing, half wall and picnic table exists only to be pounded into bits while they have their bit of fun.
The Ford lineup is ok I guess, but other than the retro-Mustang and the last-of-breed Panther cars there is very little unique from Ford which would make a person prefer it instead of a competing product.
Ford’s latest angle seems to be in selling the safety of it’s vehicles. Considering Ford’s spotty past (Explorer rollovers anyone?) in this regard that is a stretch. The new Taurus/Sable are world class safety wise thanks to their Volvo roots, other than that the lineup is competitive to poor.
For example, if Ford was really safety obsessed they would be out in front of improving the rollover resistance of large vans equipped for many passengers. You know, the ones you always read about where kids are killed coming home from a church retreat. Ford and the rest of the industry have done nothing about this problem:
http://www.vanangels.org/
It seems that Ford’s latest advertising campaign is built around safety. Well fine, walk the talk. Start by addressing the well known product issues with engine bay fires and roll over prone vehicles by setting the engineers loose on the problem and muzzling the lawyers.
All in all the question remains. Why buy a Ford car instead of a Honda or a Ford truck instead of a Chevy or Toyota? For that matter why buy a Ford instead of a Mazda?
Re-badging the 500 as the “new” Tarus was a stroke of genius (a stroke being caused by a broken blood vessel in the brain).
And it ain`t matter, what Mullaly has experienced before or what he plans to do, what matters is, what tangible things has he done that would be directly product related. because there is only one alpha reason why ford is bleeding so heavily- lack of real PRODUCTS. by real products I mean in-house built domestically engineered reliable, high quality cars that would be no rebadge versions of each other. Today ford`s line up may sound good, except when you go deeper into each car, it turns out either to be old, japanese based, or rebagded. No wonder ford will sell mazda only over its dead body, because mazda is the last unsold foreign carmaker, from which ford can comfortably suck out platforms, trannies, engines etc.(what hardcore Ford -fan wants german engineeered, japanese mazda3 based ford Focus?) Yesterday I paged through Popular Mechanics and Popular Science. what I paid attention to were ads there. And I tried to classify them by advertizers country origin and branch they represented. What I found from US-baseed companies were- cat scoops, meguiar`s cleaners, beef, shaving foam,milk,burgers and insurance companies. And that is in a science journal! What i found more saddening were the presence of japanese companies and the branches they represented- sony, fujitsu, kyocera, canon, nikon, lexus, acura, toyota, nissan etc. so ,Mullay ,I wouldn`t blame only you. How can you become genuinely product related if your whole country is service and cat-scoop oriented?
“No wonder ford will sell mazda only over its dead body, because mazda is the last unsold foreign carmaker, from which ford can comfortably suck out platforms, trannies, engines etc.(what hardcore Ford -fan wants german engineeered, japanese mazda3 based ford Focus?)”
The vast majority of customers could care less where the platform engineering was done. Do you think ANY Hummer H3 buyers care that it is built on the Chevy Colorado platform which goes back to an Isuzu/GM joint design and was largely engineered in Brazil?
How about the new “Swap Your Ride” campaign? Has any auto campaign in recent memory been more confusing? We’ve already had numerous people ask employees at our dealership how long they could drive one of our cars before they had to give it back.
If by “Swap Your Ride,” Ford wants dealers to overnight customers in demos nationwide, they should say so (this is a terrible idea btw). That’s not what they mean, however. They want people to believe others on the commercials who have tried out a Ford for a week and like it better than their current vehicle – nevermind that their current cars are probably 3-20 years old.
I’ve seen the new lifetime powertrain warranty commercials for Chrysler before and after the Ford commercials, and although Chrysler doesn’t sound threatening to many Ford dealers (save the 300/Charger), these commercials are far superior to the Ford commercials. Although everyone knows Chrysler’s vehicles aren’t “Suberbly Engineered,” they’re commercials certainly are. Their website actually serves to further explain the warranty, unlike Ford’s website, which offers little explanation as to what Swap Your Ride entails for the buyer.
Given that Ford incentives have actually decreased this month from last month and September is typically slow to begin with, expect the September numbers (and the Swap Your Ride campaign) to be devastating failures.
What the hell is this company doing?!
jthorner- If customers don`t care, why do you have to rebadge daewoos as chevys or saturns? sell them as they are- daewoos. why dodge stealth? why ford probe? why pontiac vibe? why saturn astra? not that most customers don`t care, it is that most customers buy without knowing the truth, trying to support locals, who cheat, actually selling them the same imports renamed as domestics.
And in case of Silverado it doesn`t matter if it was built in Brazil as long as the facility in brazil is an official gm subsidiary. And as long as the joint venture with isuzu doesn`t mean complete engineering burden on isuzu and advertizing on gm. but history teaches us, that there is no single american- foreign manufacturing venture where us-based party would have equally participated in engineering/construction work. So my intuition tells that the platform was built by isuzu, while gm most likely gave them some opel parts. goddamned americans , will you ever roll up your sleeves and start engineering work yourselves or all you can do is wobble your bellies? 10.2 trillions………………………….
As a lifelong Ford man, Ford is dangerously close to losing me as a customer, perhaps permanently.
I will be in the market for a replacement for my (second) Ranger in another couple of years, and they have nothing even remotely comparable to offer me.