June 26, 2014 at 1:00 am

Daniel Howes

Can Ford keep transforming after Mulally exits?

Ford CEO Alan Mulally, left, with Ford executive chairman Bill Ford Jr., will retire on Tuesday after eight years at the helm. Ford executive Mark Fields will take his place. (David Coates / The Detroit News)

On the September day when Bill Ford Jr. introduced his new CEO to the world, I expressed deep skepticism that an outsider could succeed where so many before him had failed, left town or both.

Didn’t matter that Alan Mulally had spent 37 years at Boeing Co., an engineering-driven aerospace giant. Didn’t matter that the guy whose name is on the building threw that column across his office in disgust. What matters now is that Mulally’s management style, a unique mixture of discipline, candor and sunny optimism, would prove me and so many others wrong — and Bill Ford right.

Nearly eight years later, as Mulally prepares to vacate the CEO’s office and make way for Mark Fields to succeed him Tuesday, Ford Motor Co. is a fundamentally different company. Its vehicles are better, its finances are stronger and its credibility largely is restored, all of it evidence that an American industrial renaissance in Detroit and the heart of the Midwest is possible.

It took an outsider with a leadership style suited to the challenge to prove it, to a point. For as much as Mulally seems destined for the pantheon of American CEOs — and he should be, considering the mess he inherited from his predecessor — the truth is that Mulally’s years-long leadership clinic is as much about the Ford veterans he led as it is about him.

They winced when he told them the place had “been going out of business for 25 years,” even if they knew he was right. They heard his amazement that the marketing geniuses killed the Taurus nameplate, one of the most successful in the company’s history, because they realized Ford had systematically devalued it with the buying public.

They sensed unmistakable seriousness, cloaked in affability, when he began to make difficult calls to close plants, to eliminate tens of thousands of jobs, to jettison six of Ford’s eight brands, to pledge the Blue Oval and other assets for a $23.5 billion “home improvement loan” that enabled Ford to restructure amid the Great Recession.

They saw a boss who intuitively understood mass executive firings, all too common atop Ford’s legendary bureaucracy, mostly sowed turmoil where stability and leaders pulling in the same direction were so badly needed. He calmed the place down, charted a clear path, followed it, adjusted as necessary, and they helped.

It says something about Mulally, and the effectiveness of his style, that you could count on one hand the number of senior brass cashiered in his tenure. He didn’t clean house, to borrow the cliche, so much as rearrange the furniture to form a more efficient (and profitable) organization.

Ford’s union leadership, led by United Auto Workers President Ron Gettelfinger and his head of the Ford department, Bob King, trusted Mulally enough to entertain his version of a “grand bargain.” If the UAW would agree to competitive labor contracts, he would repatriate more investment and auto assembly to the United States from Mexico, among other places.

He did, just as his tenure eventually restored Ford’s dividend and repaid the controlling Ford family’s bet on him. Ask a family member, as I have, whether the tens of millions paid to Mulally in salary, bonus and stock are worth it, and you’ll get a resounding yes.

Now, anyway. Five years ago, I recall a decidedly different answer. Here was a cash-strapped automaker suspending its dividend, mortgaging its assets and counting paper clips betting family control on a guy who didn’t appear to own a suit or know a Fusion from a Toyota Camry.

His response? Results, measured in 19 straight profitable quarters, billions in repaid debt, a revived dividend, a cohesive management team, a rationalized and globalized product portfolio, and rehabilitated credibility among customers, investors and industry analysts.

Into this pool of great expectations steps Fields, a Ford lifer many expected would not survive the early days of Mulally much less rise to become his heir apparent and official successor. He becomes CEO as Ford (and the Detroit-based industry in general) face a simple question: Can they manage prosperity?

More specifically, can Fields? Like his soon-to-be counterpart at General Motors Co., Mary Barra, Fields is a product of the culture Mulally spent the better part of a decade trying to either dismantle or redirect in a more competitive, value-added direction.

The corollary at Ford, and for Fields, is whether eight years of Mulallyism sufficiently exorcised demons of the past — complacency, overconfidence, a sense that the return of good times measured in billions in net income means restored concessions for hourlies, fatter bonuses for salaried, gilded perks for the people at the top.

With Mulally gone, the velocity of Ford’s change — and the discipline it exacted — are likely to slow, presenting his successor with a different set of challenges that will demonstrate whether Fields is the heir Mulally and Bill Ford believe him to be.

daniel.howes@detroitnews.com
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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays.