After a successful 37 year sting at Boeing (BA), Alan Mulally has been named as the new CEO of Ford Motor Company (F). He will replace Ford family member Bill Ford, who is a grandson of the founder of the company. Bill Ford will remain on as executive chairman.
The move was made after the huge losses of $1.3 billion were reported for the first six months of the year. This is the first step taken by Ford in response to his own statement that the company needed a new business model in order to return to profitability.
Bill Ford recently sent an email to employees of the company saying that the turnaround strategy "required the additional skills of an executive who has led a major manufacturing enterprise through such challenges before."
The BBC's North American business correspondent Guto Harri concurred saying that Mulally is the catalyst of "making an old manufacturing company revive and thrive," in reference to his contribution at Boeing.
While this move is a good move, it should have been taken a long time ago. The problem with Ford is that they not only need to cut structural costs, which Mullaly has a lot of skill at, but they also need to be working on the right things; which they have not been.
In other words, costs do need to be contained, but at the same time the products the market is demanding need to be created and marketed. Ford has been acting as if the gas prices have been somewhat of a surprise to them and are just starting to respond to the increases.
It is better late than never, but the fact that they haven't been responding to the demand for vehicles with better mileage, seems to indicate that there is a huge problem in the executive branch of the company. How could they not respond a long time ago to the challenge?
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The naming of Alan Mulally to Ford CEO is huge, both for Ford and Boeing.
Mulally has been an integral part of the resurgence of Boeing, specifically their comercial group. There was a point about 8 years where Airbus and Boeing both made their stance on the future of air travel. Airbus announced their plans to create a new massive jumbo jet (A380) while Boeing derived the 787.
The divergence of these strategies will shape the air travel industry for years. The A380 was positioned as a hub to hub aircraft able to carry more passengers than any other commuter plane. In contrast, the 787 was designed to be airport to airport...taking people from their origin to their destination, no major hubs or connecting flights or special runways required. Well, I think we all know where this is heading and who picked the better long term strategy. Mulally was KEY to this.
He has long been overlooked for major CEO posts due to Boeings own lackluster performance. While previous CEOs arranged illegal contracts and had affairs with assitants...Mulally focused on building Boeing Commercial Airplane Group and seeing that the Dreamliner became more than just a dream. A reality.
Had this appointment happened a few years ago while other CEOs were in office for Boeing I would say Boeing would be in deep trouble. However, they tapped Jim McNerny and he will do amazing things for Boeing as well. Boeing is in good hands for sure, despite losing Mulally.
Now Ford has Mulally and Mulally has a rough road ahead (no pun intended). He's faced with restablshing a brand and figuring out which children to keep and which to let go. Im very confident in the skills he brings with him and no doubt think Ford will recover with him at the helm.
For the naysayers who think fixing Ford is an insurmountable task, I ask you to consider this: many people thought the same thing about Boeing post 9/11...and thanks to Mulally's leadershipe and the development of the 787 Boeing is stronger now than it has ever been in it's history. Fixing Ford doesn't seem so hard now...
Good luck Mr. Mulally.
Posted by: TM Richardson | September 5, 2006 5:56 PM | Permalink to Comment