Ford Death Watch 37: Is Mulally Making the Grade?

ford death watch 37 is mulally making the grade

The House that Henry Built was close to ruin when Junior Bill fell on his sword to bounce Boeing’s best to The Blue Oval. One year later, BusinessWeek (BW) gives FoMoCo CEO Alan Mulally an A-. And yet the reaper’s blade still hangs over Dearborn. And Mulally still toils to prove that his first year’s effort was worth $133.55 per minute (based on a 60 hour work week). Meanwhile, surveying the lay of the land post-Mulally, we reckon BW’s senior correspondent had more than sweetened tumbâk in his hookah when he penned this report card.

David Kiley grades the new CEO in seven categories: Profit and Loss, Restructuring Savvy, Products, Marketing, Personnel, Culture Change, and The Vision Thing. While Kiley’s overall mark might be correct, he gets most of the individual scores wrong; grading high where Mulally struggles and low where he shines.

The biggest gaff is the A Kiley bestows for Profit and Loss. It’s based on the $750m profit that NYSE:F booked for its second quarter. That same 10-Q report showed that the earnings were buoyed in part by the one-time sale of Aston Martin. Palming-off Auntie Aston netted the struggling automaker $187m in profit, infusing nearly $1b in cash into Ford’s corporate coffers.

Ford’s positive second quarter is hardly evidence of a turnaround. As Kiley sticks a gold star on Mulally’s forehead for P&L brilliance, he acknowledges that Ford expects to record a full year loss for 2007 and 2008 before turning a full year profit (pretty please) in 2009. Selling Aston Martin was an overdue obligation, not an insightful act reflecting CEO enlightenment.

My grade for P&L: B. This assessment is propped-up by benefit of the doubt, since it’s too soon to be ascribing Ford’s [potential] financial performance to anything Big Al initiated during his first 365 days.

Mulally also earns the top mark from BusinessWeek for Products. Does this mean Ford finally has a replacement for the aging, uncompetitive US Focus? Don’t be silly. Kiley writes, “Mulally, of course, hasn’t had time to bring any new products to market… But Mulally has busted through the Ford culture and structure of regional fiefdoms that created waste and duplication throughout its global enterprise, and bedeviled his predecessors.”

For this he gets an A? Ford’s American product pipeline is bone dry. In ’09, dealers will see a refreshed F-150, a reskinned Ford Fusion and Lincoln MKZ, and the “new” Lincoln MKS and Flex. And that’s it. Aside from renaming and fixing some of the worst bits of a poor-selling Taurus and its badge-engineered bretheren, nothing has changed down at the showroom… lately. Or will… soon. My score for Products: a C-.

It’s easily argued that challenging the automaker’s recalcitrant corporate culture has been Mulally’s greatest impact thus far. Yet BusinessWeek bestows a paltry ‘B+’.

During his tenure, Mulally has attacked the bureaucratic plaque that has slowly strangled the company’s lifeblood. Executive managers have been shaken from their organizational silos. Big Al meets with his executive committee daily and forbids them from hiding behind reams of financial reports. Executive must be fluent with their operational metrics and fiscal results. Most of all, Mr. Mulally has introduced a concept forgotten long ago by the insular silver haired boardroom Town Car jockeys. It’s a term familiar to the rest of the working world: accountability.

His influence has sent tremors of discontent throughout the gilded good ole boy network, delighting the few remaining FoMoCo ideologues who want to get back to the business of making great cars. More needs to be accomplished; I’d like to see some high-profile firings and organizational shakeups. But for a first year effort in the face of systemic opposition, Mulally deserves a resounding A.

Lest I be accused of harboring feelings of ill will toward BusinessWeek, let me point out that I fully agree with their conclusions regarding Mulally’s Restructuring Savvy (B+), Marketing (B), and Personnel (B-).

BW’s final assessment: FoMoCo’s new chief deserves an A for The Vision Thing. Certainly, some hope has been restored within The House of Ford, stemming from the former Boeing exec’s efforts to reform the culture and from its [fleeting] recent financial results. While this hope is fundamental to motivating the organization toward success, we have only seen baby steps towards recovery.

In year one, Mulally’s throw down to the status quo created some genuine organizational momentum. To really rock The Glass House in year two, he must capitalize on the big Mo. He must reach outside the myopic automaker’s in-house talent to recruit execs who aren’t afraid to question everything.

Early indications are that Alan Mulally’s a good thing for Ford. For the sake of Ford’s 283,000 employees, dealers, suppliers and shareholders, let’s hope he’s not too little too late.

[Read the BusinessWeek article here ]

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  • Jurisb Jurisb on Sep 11, 2007

    jthorner- If customers don`t care, why do you have to rebadge daewoos as chevys or saturns? sell them as they are- daewoos. why dodge stealth? why ford probe? why pontiac vibe? why saturn astra? not that most customers don`t care, it is that most customers buy without knowing the truth, trying to support locals, who cheat, actually selling them the same imports renamed as domestics. And in case of Silverado it doesn`t matter if it was built in Brazil as long as the facility in brazil is an official gm subsidiary. And as long as the joint venture with isuzu doesn`t mean complete engineering burden on isuzu and advertizing on gm. but history teaches us, that there is no single american- foreign manufacturing venture where us-based party would have equally participated in engineering/construction work. So my intuition tells that the platform was built by isuzu, while gm most likely gave them some opel parts. goddamned americans , will you ever roll up your sleeves and start engineering work yourselves or all you can do is wobble your bellies? 10.2 trillions...............................

  • Fallout11 Fallout11 on Sep 13, 2007

    As a lifelong Ford man, Ford is dangerously close to losing me as a customer, perhaps permanently. I will be in the market for a replacement for my (second) Ranger in another couple of years, and they have nothing even remotely comparable to offer me.

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