Boeing Cost Cutter Takes Ford Top Job

07 September 2006

DETROIT: Struggling US automaker, the Ford Motor Company, has named Boeing exec and successful cost-cutter Alan Mulally as its new ceo and savior.

Mulally, currently head of the US airplane maker's commercial division, is widely credited with resolving production problems and piloting Boeing's "lean manufacturing" strategy.

Ford's longterm failing fortunes, especially in its domestic market, have prompted the change at the very top. However, Bill Ford, whom Mulally replaces, will remain as executive chairman of the business his great-grandfather founded.

The appointment is part of a grand recovery plan to be made public within weeks. The company reported first half losses of $1.3 billion (€1.01bn; £688m), while its US market share slid to 16% in August from 18.1% a year earlier and a peak of more than 25% in 1995.

Reaction has been mixed.

Himanshu Patel, analyst at JP Morgan said Mulally might have a tough time making his presence felt, at least in the short-term, because details of the recovery plan have already been finalised.

He avers: "Longer-term changes in product cycle decisions by the new ceo could clearly take some time to yield results."

Robert Barry at Goldman Sachs, however, believes Mulally - the first outsider to be appointed as ceo in Ford's 103 year history - might help stem the brain drain the company has suffered in recent years: "In the near term, he is likely to boost morale which could aid productivity."

Bill Ford is confident Mulally is the man for the difficult task ahead. He told employees: "Alan knows what it's like to have your back to the wall - and fight your way out with a well-conceived plan and great execution."

And the new ceo pledges product development and productivity and quality improvements as his priorities. He adds: "I can't wait to be a car guy."

Data sourced from Financial Times online; additional content by WARC staff