Ford's bold move
Ford's bold decision to name top Boeing executive Alan Mulally as its new chief executive officer may well end up being precisely the wrong move at the wrong time.
Mr. Mulally made his name at Boeing for his strong cost-saving and efficiency program. But he lacks what analysts say are crucial skills in marketing, product development and branding at a time when there's unprecedented competition and pressure, particularly from Japanese and Korean automotive brands.
"It's a very difficult thing for a guy who didn't come up in the auto industry to grasp it,'' Kelley Blue Book's Jack Nerad said yesterday, a day after outgoing Ford CEO Bill Ford Jr. announced the surprise change after the markets closed Tuesday. Ford shares rose 16 cents, or 1.9 percent, yesterday to close at $8.55.
"It's a totally different scale of operation'' in the automotive vs. the aviation industry, Mr. Nerad said. "Lead times are long in both the airplane and auto industries, but in aviation, you have only a few competitors. In the auto industry, you have 15 or so global companies competing and close to 45 brands in the market. It's tough to take all that in for somebody who hasn't made cars their career."
Other analysts, while agreeing that Ford's leadership -- more than General Motors and DaimlerChrysler -- badly needs better product development and marketing skills, cautioned against expecting Mr. Mulally to bring that to the table and to "fix" Ford's product mix. What really matters is whether he can find the people he needs to do those jobs, they said.
"Mulally's role is to get the management team in place so that Ford can get a really exciting product lineup and generate some much needed revenue," said Rebecca Lindland, associate director of the automotive group at Lexington, Mass.-based researcher Global Insight. "It's important that distinction be made. He's not that product marketing guy and he knows that."
The problem, some analysts say, is that they don't believe Mr. Mulally will be left alone to find those people or to make tough but necessary decisions. They think the Ford family will interfere too much and as a result, things at the company will remain much as they are now.
Even Bill Ford, who brought in his replacement, has criticized his company for being too conservative and for repressing creativity and bold moves. When naming Mr. Mulally his successor, he said, "We have a lot of car guys here already. What they need is permission to be bold."
Whatever he does, Mr. Mulally had better do it fast, said George Magliano, director of automotive industry research for Global Insight. "He has a very short time to show that he has a grasp for this and pick it up and improve on it."
Some analysts are troubled that Mr. Ford will still be heavily involved in running the company, thus reinforcing one of Ford's biggest problems. Mr. Ford, who will retain the title of chairman, already has said he wants a strong working relationship with Mr. Mulally. History has shown that he has made similar moves in the past, only to shed executives when they did not live up to his and the family's expectations.
Indeed, Mr. Ford took over the CEO position in the first place because of dissatisfaction with former CEO Jacques Nasser, whom he had tapped for the role in 1999, only to force him out two years later.
"It's great that Bill Ford has stepped aside, but it's terrible that Bill has not stepped aside," is how Mr. Morici, a professor at the Robert H. Smith School of Business at the University of Maryland, characterized the latest move atop Ford. "This tells us that Bill will still be there everyday.
"You remember the relationship [Bill Ford] had with Jacques,'' Mr. Morici said. "They drove [Mr. Nasser] crazy. He had to meet quarterly with the family. Are they really going to let [Mr. Mulally] manage the place? That's not at all clear to me that he will have a free hand."
Mr. Morici suggested that one reason Mr. Mulally was hired was that he made Bill Ford comfortable that he would not think much differently from him but would better execute the comeback plan already in place. "My feeling is that won't be enough,'' Mr. Morici said. "The kinds of things that Bill said Tuesday showed he is not anticipating radical changes in strategy -- and that's not encouraging.'"
In any case, "The family needs to step aside and they need to let the doctors do their job here. Bill Ford needs to get that message to them," Ms. Lindland said, adding: "There's a very good reason why surgeons never operate on their own family members. You're too close and you lose your objectivity."
Mr. Mulally made his name by slashing Boeing's work force as well as the amount of time it takes to manufacture a jet. He also earned plaudits for being a key architect of the resurgence of Boeing's commercial airplanes unit over the past couple of years, fueled by its highly successful 777.
But industry analysts and observers say he has the wrong skills for what really needs to happen at Ford: sell lots of cars and trucks. Ford, whose market share plummeted from 21.9 percent in October 2001 to 16.8 percent this year, has a "Way Forward" plan that would cut up to 30,000 jobs and close 14 plants by 2012. But saving money won't bring people into showrooms, analysts say, unless the savings are used to make better styled, better marketed and better branded cars and trucks.
Fortunately, Ford has the designers, marketers and others that can get the job done. It now has some of the best, most respected vehicle designers in the industry, analysts say. But because most have only been on board for a few years, and because auto design cycles take several years, their best efforts may not be on the market just yet.
Mr. Mulally made his name at Boeing for his strong cost-saving and efficiency program. But he lacks what analysts say are crucial skills in marketing, product development and branding at a time when there's unprecedented competition and pressure, particularly from Japanese and Korean automotive brands.
"It's a very difficult thing for a guy who didn't come up in the auto industry to grasp it,'' Kelley Blue Book's Jack Nerad said yesterday, a day after outgoing Ford CEO Bill Ford Jr. announced the surprise change after the markets closed Tuesday. Ford shares rose 16 cents, or 1.9 percent, yesterday to close at $8.55.
"It's a totally different scale of operation'' in the automotive vs. the aviation industry, Mr. Nerad said. "Lead times are long in both the airplane and auto industries, but in aviation, you have only a few competitors. In the auto industry, you have 15 or so global companies competing and close to 45 brands in the market. It's tough to take all that in for somebody who hasn't made cars their career."
Other analysts, while agreeing that Ford's leadership -- more than General Motors and DaimlerChrysler -- badly needs better product development and marketing skills, cautioned against expecting Mr. Mulally to bring that to the table and to "fix" Ford's product mix. What really matters is whether he can find the people he needs to do those jobs, they said.
"Mulally's role is to get the management team in place so that Ford can get a really exciting product lineup and generate some much needed revenue," said Rebecca Lindland, associate director of the automotive group at Lexington, Mass.-based researcher Global Insight. "It's important that distinction be made. He's not that product marketing guy and he knows that."
The problem, some analysts say, is that they don't believe Mr. Mulally will be left alone to find those people or to make tough but necessary decisions. They think the Ford family will interfere too much and as a result, things at the company will remain much as they are now.
Even Bill Ford, who brought in his replacement, has criticized his company for being too conservative and for repressing creativity and bold moves. When naming Mr. Mulally his successor, he said, "We have a lot of car guys here already. What they need is permission to be bold."
Whatever he does, Mr. Mulally had better do it fast, said George Magliano, director of automotive industry research for Global Insight. "He has a very short time to show that he has a grasp for this and pick it up and improve on it."
Some analysts are troubled that Mr. Ford will still be heavily involved in running the company, thus reinforcing one of Ford's biggest problems. Mr. Ford, who will retain the title of chairman, already has said he wants a strong working relationship with Mr. Mulally. History has shown that he has made similar moves in the past, only to shed executives when they did not live up to his and the family's expectations.
Indeed, Mr. Ford took over the CEO position in the first place because of dissatisfaction with former CEO Jacques Nasser, whom he had tapped for the role in 1999, only to force him out two years later.
"It's great that Bill Ford has stepped aside, but it's terrible that Bill has not stepped aside," is how Mr. Morici, a professor at the Robert H. Smith School of Business at the University of Maryland, characterized the latest move atop Ford. "This tells us that Bill will still be there everyday.
"You remember the relationship [Bill Ford] had with Jacques,'' Mr. Morici said. "They drove [Mr. Nasser] crazy. He had to meet quarterly with the family. Are they really going to let [Mr. Mulally] manage the place? That's not at all clear to me that he will have a free hand."
Mr. Morici suggested that one reason Mr. Mulally was hired was that he made Bill Ford comfortable that he would not think much differently from him but would better execute the comeback plan already in place. "My feeling is that won't be enough,'' Mr. Morici said. "The kinds of things that Bill said Tuesday showed he is not anticipating radical changes in strategy -- and that's not encouraging.'"
In any case, "The family needs to step aside and they need to let the doctors do their job here. Bill Ford needs to get that message to them," Ms. Lindland said, adding: "There's a very good reason why surgeons never operate on their own family members. You're too close and you lose your objectivity."
Mr. Mulally made his name by slashing Boeing's work force as well as the amount of time it takes to manufacture a jet. He also earned plaudits for being a key architect of the resurgence of Boeing's commercial airplanes unit over the past couple of years, fueled by its highly successful 777.
But industry analysts and observers say he has the wrong skills for what really needs to happen at Ford: sell lots of cars and trucks. Ford, whose market share plummeted from 21.9 percent in October 2001 to 16.8 percent this year, has a "Way Forward" plan that would cut up to 30,000 jobs and close 14 plants by 2012. But saving money won't bring people into showrooms, analysts say, unless the savings are used to make better styled, better marketed and better branded cars and trucks.
Fortunately, Ford has the designers, marketers and others that can get the job done. It now has some of the best, most respected vehicle designers in the industry, analysts say. But because most have only been on board for a few years, and because auto design cycles take several years, their best efforts may not be on the market just yet.
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