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Flawed Bill Ford

New and old: Alan Mulally (left) and Bill Ford this week.

Former Boeing chief takes the reigns at Ford as Bill Ford steps down as FoMoCo CEO

Ford logo7 Sep 2006

FORD’s new white knight is former Boeing Co aircraft executive Alan Mulally.

Mr Mulally, 61, assumed the reins at the troubled car-maker this week after Ford’s chief executive officer, Bill Ford, stepped down.

Mr Ford is the great-grandson of the struggling car-maker’s founder, Henry Ford. Bill Ford will now become executive chairman and has vowed to stay involved in the family business, in which his family still holds a 40 per cent voting stake.

As late as last week, Mr Ford indicated that he would step aside if a suitable replacement was found. He has been CEO for the past five years.

Before Mr Mulally’s appointment, Ford was known to be courting Renault-Nissan chief, Carlos Ghosn and Dieter Zetsche, who is now chief executive officer of DaimlerChrysler AG.

US analysts have welcomed the move, with several saying the fact the family was prepared to hand over the company to an outsider reflected the magnitude of the turnaround it faces as it faces mounting losses.

The managing partner at Casesa Strategic Advisors, a financial consultant in New York, John Casesa, told Bloomberg that the move was "exactly what this company needs".

This is not the first time Ford has sought outside executive help with the company.

Several years ago Ford handed the family business over to former Ford Australia chief, Jac Nasser, who was CEO from 1999 until 2001 when he was unceremoniously sacked.

Under Nasser’s control, Ford acquired Volvo and Land Rover and set about forming the Premier Automotive Group, which apart from Volvo and Land Rover included Aston Martin, Jaguar and Lincoln.

Mr Mulally said he welcomed the chance to put into practice some of the lessons learned at Boeing.

"I also recognise that Ford has a strong foundation upon which we can build. The company’s long tradition of innovation, developing new markets, and creating iconic vehicles that represent customer values is a great advantage that we can leverage for our future," he said in a statement.

Since becoming CEO in 2001, Bill Ford, 49, has been unable to stem a decade-long slide in US market share at the world’s second-largest car-maker.

Sales dropped 9.9 per cent through to August as rising gasoline prices caused sales of pick-ups and sport-utility vehicles to plunge.

Ford’s large F-Series utilities and Explorer SUV are among its best-sellers in the US and petrol prices have seen buyers downsizing.

F-Series sales are down 12.7 per cent this year and Explorer sales are off a massive 30 per cent.

Mulally, 61, led Boeing’s defence unit for two years before becoming head of commercial aircraft in 1998.

He is expected to bring to Ford cost-cutting skills honed at Boeing, where he trimmed more than 30,000 jobs to make commercial airplanes profitable even as demand slumped.

He will have the titles of chief executive officer and president at Ford.

Mulally was passed over for Boeing’s top job in July 2005, when the world’s second-largest commercial jet-maker tapped 3M Co’s James McNerney to be chief executive officer.

Bill Ford acknowledged in an email to employees last week that times were tough. He said the way Ford has traditionally done business "is no longer sufficient to sustain profitability".

The email also said there were three proposed fixes for the company: turnaround Ford’s North American business leverage its global assests and bolster its leadership team, including recruits "from outside when we need additional skills."Ford is preparing to announce within weeks the company’s third restructuring plan in five years.

Under its first plan the company closed five North American plants and axed 35,000 jobs, but its North American operations failed to turn around.

In January, Ford said it would cut 30,000 jobs and close 14 plants in North America by 2012. The company will also broadened its restructuring beyond North America, its largest market.

Last week, Ford put its profitable UK-based Aston Martin luxury-car unit on the auction block. The car-maker also is debating the fate of its Jaguar and Land Rover luxury vehicle subsidiaries.

Ford has said over the past year he was not necessarily going to have a long run as CEO.

Ford has lost $US1.4 billion ($A1.8 billion) in the first half of this year.

After the Mulally announcement, Ford shares on the New York Stock Exchange rose 36 cents, or 4.3 per cent, to $US8.75 ($A11.35).

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