Ford Death Watch 6: Is Alan Mulally Billy Ford's Human Shield?

ford death watch 6 is alan mulally billy fords human shield

Thirty-five million dollars, the keys to the corporate jet and a Detroit McMansion is a pretty good compensation package for any aspiring executive. Obviously, if freshly-minted Ford CEO Alan Mulally reverses The Blue Oval’s declining fortunes, it will be shareholder money well spent. If, however, Mulally turns out to be too little CEO too late, his paycheck and parachute will mark the final chapter in a sad story of Ford family interference and/or mismanagement. So what say you Billy Ford? The “biggest problem facing Ford today is a lack of confidence.”

On the face of it, hiring an aerospace engineer to run a car company isn’t exactly what you’d call confidence inspiring. The auto industry in general, and Ford in specific, has a history of betting on outsiders– and losing. Robert McNamara’s tenure at Ford is only one example where “the smartest guy in the room” was hoisted by his own retard. Mulally supporters point to Sergio Marchionne, the Canadian lawyer who runs FIAT, and Jean-Martin Folz, a French businessman helming Peugeot. These are not, as yet, success stories. Mulally’s challenges are at least as daunting, even without considering Billy Ford’s refusal to surrender power to his well-paid [s]minion[/s] CEO.

When Mulally stepped up to the microphone on Wednesday, he emphasized efforts to crank up the heat on new cars and to concentrate on fuel efficient vehicles to “complement the position Ford has with trucks." In the meantime, someone’s calling the shots, and they’re coming quick. The Detroit News reports that FoMoCo will attempt to bribe more than four thousand white collar workers and at least twice as many UAW members to leave the company's employ. Clearly, Billy's boys are downsizing as fast as they can.

And more cuts are coming. Roughly 25% of the 82k United Auto Workers (UAW) members will be jettisoned, whether through more plant idling, shuttering or buyouts. At that rate, Union locals stand to lose about $4.9m a month in lost dues contributions. That’s a big whack, but the union isn’t likely to stop the rats from leaving the sinking ship. They may even believe that letting their people go is in their remaining members’– and Ford’s– best interest.

At the same time, it’s no longer a question of “if” Ford will cut loose brands from its Premium Automotive Group, but which ones for how much. Wall Street Whiz Kid Kenneth Leet is looking to pimp Aston, Jaguar and Land Rover. Ford values Aston at $2b; industry experts peg it at $750m. Jaguar is virtually worthless, but a sale would make it someone else’s problem. Thanks to the Range Rover Sport, Land Rover is back from the brink– and priced to go, for another couple of billion or so.

Will it be enough? Should it be enough? Despite Ford’s platform perfidy of its Japanese subsidiary, Maryann Keller reckons Mazda may be the next brand to be cut adrift. In fact, the straight-talking auto industry analyst believes Volvo and Ford are The Blue Oval’s only viable brands. Her comments suggest the long-anticipated shuttering of Mercury, and the termination of once-proud Lincoln, a luxury brand without a V8, profits or a strong, independent identity.

Ford needs the cash; Mulally’s new control tower is losing Dreamliner loads of the stuff. August SUV and truck sales fell a further 20.8% compared to last year, and the fourth quarter won’t get much better. While production cuts ensure that there’ll be less “new” metal to move, the pileup won’t deplete. There are already enough F-150’s to keep 3000 customers a day busy until the end of 2006 (and in debt until 2012).

Mulally and his generous employer need market share, and they need it fast. Mulally-inspired metal won’t appear until the 61-year-old CEO is eligible for retirement. Meanwhile, the Ford Edge and Lincoln MKX (Em-Kay-Ex) are FoMoCo’s Obi wan Kenobi. Early buzz indicates that the 150K units (slated for annual production in Ford’s Oakville plant) won’t be left longing for custody. But even if sales are double, the crossover’s profit margins are still small SUV’s. Add to that the upcoming loss of FoMoCo’s dismal minvan(s) and the importance of the cross border crossover becomes alarmingly apparent.

The arrival of Alan Mulally marks the fourth time in four years that the Blue Oval has made Bold Moves at the top. Will anything change? Not for some time. Ford is still struggling to move the metal; the new product cycle is still vapid; the union straightjacket (though roomier) is still on. And despite invitations to bow out gracefully, and the pressing need to jettison brands, Ford’s bloated dealer network will remain desperately obese for many moons to come. The only difference is that shareholders have someone new from which to seek answers– or blame.

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  • Rtz Rtz on Sep 13, 2006

    I have heard from a good source that he will most likely bring his Boeing buddies over to Ford with him. Source also believes this guy will have a good shot at turning Ford around.

  • Voice of Sweden Voice of Sweden on Jan 09, 2007

    You should be glad that Boeing isn't doeing like the 2.5! A airplain going down. Boeing is fighting back Airbus rather well.

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