Why Ford's in Detroit's Driver's Seat: Mulally

CEO Has Focused on Core Businesses, Didn't Have to Ask Congress for Bailout

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DETROIT (AdAge.com) -- Amid all the turmoil in Motor City over the auto bailout, one carmaker has managed to set itself apart: Ford Motor Co.

Alan Mulally
Alan Mulally Credit: John Russell
Ford CEO-President Alan Mulally told Congress earlier this month the automaker doesn't need a short-term bridge loan since the automaker isn't facing a near-term liquidity issue. Still, he asked Washington earlier this month for access to $9 billion in bridge financing as a line of credit in the event the economy sours further or General Motors Corp. or Chrysler is forced into bankruptcy.

Focusing on core businesses
So how did Ford manage its current position in Detroit's driver's seat? "I'd have to say one word: Mulally," said Bob Austin, founder of consultant Auto Futures Group. He credited Mr. Mulally with focusing on the automaker's core businesses, the Ford, Lincoln and Mercury marques, and selling off Aston Martin in early 2007, followed by the sale of Jaguar and Land Rover earlier this year. Mr. Mulally also isolated redundancies in production and product development; motivated the team; hired a Toyota veteran to oversee marketing; upgraded marketing messaging; and made it work harder by spending less in measured media.

Last month, Ford said it was selling down its 33.4% stake in Japan's Mazda Motor Corp., leaving its equity stake at just over 13% to strengthen its balance sheet. A few weeks later, Ford announced it is considering options for the Volvo brand, including a sale.

Mr. Mulally joined Ford as an outsider in September 2006 from his CEO post at Boeing Commercial Airplanes. The new Ford CEO "hit the ground running" and learned how things got done, said Todd Turner, president of CarConcepts. One of his first actions was to meet with the global product-development teams, where he discovered Ford had separate teams and parts. Mr. Turner said Mr. Mulally took Ford from nine different hood latches to one, a Toyota-like practice. Ford's CEO had studied and implemented some of Toyota's production methods while at Boeing, Mr. Turner said.

The CEO also called for "One Ford," a single global product-development team that will bring versions of Ford's European small cars to the U.S. in 2010.

Rocked the industry
On the marketing front, Mr. Mulally last fall rocked the U.S. industry by hiring Jim Farley away from Toyota Motor Sales USA for the new global post of group VP-marketing and communications. Mr. Farley managed to significantly improve dealer morale by bringing in key players to help develop a new ad campaign, themed "Drive One," by WPP's JWT Team Detroit, Dearborn, Mich.

He also improved the work. Mr. Austin called the launch campaign for the all-new 2009 Lincoln MKS sedan -- from Y&R Team Detroit, with the tag "Starships Don't Need Keys" -- eye-catching.

That's a big turnaround for the automaker, whose advertising was in need of a fix. The 2006 "Bold Moves" work for the Ford brand was lackluster, though Mr. Turner credited the integrated campaign with boosting internal worker morale and convincing staff to get onboard to help save the company.

And it was accomplished with lower spending: Ford reduced its outlay in U.S. measured media in the first nine months of 2008 to $757 million, from $1.13 billion in the same period in 2007, according to TNS Media Intelligence.

Just knew it needed liquidity
Within months of arriving at Ford, Mr. Mulally moved quickly to obtain more than $20 billion in financing in what many at the time saw as a bet-the-farm deal. It's not that Mr. Mulally had a crystal ball and foresaw the virtual credit freeze that has crippled the U.S. industry and economy since October, Mr. Austin said. Instead, Mr. Mulally knew Ford needed liquidity so it could execute its "Way Forward" restructuring plan.

Mr. Austin also said Ford's CEO somehow "has managed to get the organization to execute his direction," which wasn't happening when his predecessor Bill Ford, was in charge. (Mr. Ford remains executive chairman.) "Big Three automakers are very tough to spur into action," he said. "Middle management has an inertia all its own."

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