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11:01 pm
Sun March 11, 2012

How Ford's CEO Helped Restore The 'American Icon'

Seven years ago, when journalist Bryce Hoffman started covering the Ford Motor Co. for The Detroit News, he knew he was either witnessing the end of an American icon or its resurrection.

Back then, Bill Ford Jr., great-grandson of founder Henry Ford, was still at the helm — but he wouldn't be there much longer. In 2006, Ford brought Alan Mulally, a Boeing executive with no automotive experience, on as chief executive officer. At the time, many in Detroit questioned the hire. But three years later, when Chrysler and General Motors were filing for bankruptcy protection, Mulally helped Ford post its first annual profit since 2005.

In his new book, American Icon: Alan Mulally and the Fight to Save Ford Motor Company, Hoffman explores how Mulally helped Ford avoid the fate of its fellow automakers. He describes the CEO as an older version of the character Richie Cunningham from the sitcom Happy Days, writing that he had "the same reddish-blond hair" and the "same gee-whiz grin."

Hoffman tells Morning Edition's Renee Montagne how Ford changed under Mulally's leadership, and what the CEO may yet want to accomplish before he retires.


Interview Highlights

On Ford's culture before Mulally's arrival

"It was one of the most caustic corporate cultures ever seen anywhere in business. This was a company where people put the advancement of their own careers and the success of their own divisions ahead of the company's success, ahead even of the bottom line. People rarely made it to retirement age at the top of Ford Motor Co. It was a place of sharp-elbowed corporate politics and boardroom intrigue. People's phones were wiretapped; their products were purposely designed so they couldn't be sold in one market so that someone else could benefit from a new product while kind of undercutting their rival at the top of the company."

On Mulally's decision to go to Ford in 2006

"It was a huge gamble and it was really a gamble on both sides. On the one hand, Mulally was already famous in business circles for saving Boeing after the terrorist attacks of Sept. 11 cut its order book by more than half. If he went to Ford and failed to turn Ford around, he would not be remembered as the guy who saved Boeing. He'd only be remembered as the guy who lost Ford. On Ford's side, they were bringing in someone with no automotive experience at all to lead one of the largest automobile companies in the world."

On how Mulally's attitude changed Ford

"It really had a tremendous effect on morale at the company. I mean, Ford had been down for so long people had forgotten which way was up. And Mulally came into this company with this just, you know, incredible grin plastered across his face that never faded. And everyone kind of waited for this to kind of wear off. Everyone waited for him to realize just how serious the problems were and kind of become dejected and fall into the morass that so many of his predecessors had when they recognized the scope and the magnitude of Ford's problems. Mulally never did that. He never capitulated to fear. He never capitulated to the tremendous challenges Ford was facing. He always saw one of his key roles as kind of being the cheerleader-in-chief, keeping everybody motivated and focused, you know. It was almost a little corny often, you know, to have this 'rah-rah' attitude, especially when things were so dire. He never diminished the magnitude of the problems. He just believed that Ford could fix them."

On Mulally's ability to unite people

"Working together is kind of the name of his own personal philosophy and the way that he did that was by showing each person and each constituency that they had a vested interest in making Ford succeed. So at the executive level, he tied executives' performance — and therefore their bonuses — to the success of the whole company rather than their own divisions. That meant that if they undercut another one of their counterparts at the top of the company, they were only going to hurt themselves in the end."

On Mulally's weakness as a leader

"The one area that I think that he has been tone deaf about is his own compensation. I mean just last week he received another stock award worth approximately $35 million. He took an extra million-dollar bonus kind of infamously in early 2007, the same day that 10,000 white-collar workers found out they were losing their jobs."

On speculation of how long Mulally will stay at Ford

"He still has one more part of his turnaround that he hasn't accomplished that he wants to accomplish ... and that is to restore Ford to investment grade. When Ford's credit rating is restored to investment grade, the company gets back all of the assets that it mortgaged back in December 2006 in order to finance this turnaround plan. And that includes the Ford name, the Ford blue oval itself, which right now are still in hock. He wants to get that back to kind of put a period at the end of this."

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

The Ford Motor Company has made money for 11 quarters in a row. It was the only one of the big three automakers to avoid a government bailout, even though a few years ago, even before the recession, it came close to failing.

The new book, "American Icon," details how Ford avoided that fate under the leadership of CEO Alan Mulally.

Renee reached the author of that book, Detroit News reporter Bryce Howard at member station WDET in Detroit.

RENEE MONTAGNE, HOST:

Good morning.

BRYCE HOFFMAN: Good morning, Renee.

MONTAGNE: You started reporting on Ford in 2005. What kind of story did you think you were going to be telling?

HOFFMAN: Ford was such an iconic company, and I knew that I was witnessing either the failure of an American icon or its resurrection, and either one was going to be an amazing story to tell.

MONTAGNE: And at that point Bill Ford Jr., the great grandson of Henry Ford, was the CEO. What was the breaking point that led to him to give up that post?

HOFFMAN: Bill had been trying for a number of years to find someone to help him lead a turnaround of the automaker. He had reached out to some of the real rock stars of the auto industry and they had all turned his request down. He really reached a breaking point in the summer of 2006, and Bill was convinced by the board to step aside and to make room for someone from outside the automobile industry. And the one thing they knew they wanted was someone who had experience turning around a major corporation and doing it successfully.

MONTAGNE: Well, they got that with Alan Mulally. He had turned around Boeing. Let's listen to Mulally in a story NPR aired in 2007. At this point he's been on the job for just over half a year.

ALAN MULALLY: Everybody said Boeing couldn't compete and the United States couldn't compete. We didn't have the work ethic, and we didn't have the commitment. And well, Boeing's back as the number one airplane company in the world, and there's no reason that Ford and the United States can't compete.

MONTAGNE: And he sounds so calm, but yet, Ford was heading towards bankruptcy at that moment in time. And it reminds me of something you describe throughout the book, Mulally always was the first one to get over bad news.

HOFFMAN: It really had a tremendous effect on morale at the company. I mean, Ford had been down for so long people had forgotten which way was up. And Mulally came into this company with this incredible grin plastered across his face that never faded. And everyone kind of waited for this to kind of wear off. Everyone waited for him to realize just how serious the problems were and become dejected and fall into the morass that so many of his predecessors had when they recognized the scope and the magnitude of Ford's problems. Mulally never did that.

MONTAGNE: Well, the challenges, as you suggest, were great from the outside. But also, the corporate culture at Ford, you describe as noxious.

HOFFMAN: It was one of the most caustic corporate cultures ever seen anywhere in business. This was a company where people put the advancement of their own careers and the success of their own divisions ahead of the company's success, ahead even of the bottom line. You know, a car was designed in Europe and it was designed in such a way that the car could not be sold in other regions. And as a result, America lost out on a really good product. So Mulally came in to a company that was really at war with itself.

MONTAGNE: So he was able to bring people together and get people, at every level, working together.

HOFFMAN: Yes. Working together is kind of the name of his own personal philosophy. At the executive level, he tied executives' performance - and therefore, their bonuses - to the success of the whole company, rather than their own divisions.

With the unions, he held a secret meeting with United Auto Workers President, Ron Gettelfinger. He told Gettelfinger, if you work with me to come up with a contract that will allow me to make small cars profitable in the United States, I will take this key product – the Ford Focus – and I will build it in the United States instead of Mexico.

MONTAGNE: OK, at this point, really, one wants to say, what's Alan Mulally's weakness?

HOFFMAN: The one area that I think that he has been tone deaf about is his own compensation. I mean just last week he received another stock award worth approximately $35 million. He took an extra million-dollar bonus, kind of infamously, in early 2007, the same day that 10,000 white-collar workers found out they were losing their jobs. That's probably, you know, one of the things that he's had a blind spot about, is his own compensation.

MONTAGNE: There is a lot of speculation about how long Mulally will stay at Ford. When might he leave and what would that mean for the company?

HOFFMAN: Well, I think that's a very important question, Renee. I mean, the thing that he's waiting for is he still has one more part of his turnaround that he hasn't accomplished that he wants to accomplish. It's very important to kind of put a flag at the end of this, and that is to restore Ford to investment grade. When Ford's credit rating is restored to investment grade, the company gets back all of the assets that it mortgaged back in December of 2006 in order to finance this turnaround plan. And that includes the Ford name, the Ford blue oval itself, which right now are still in hock. He wants to get that back to kind of put a period at the end of this.

MONTAGNE: Bryce Hoffman is author of the new book "American Icon: Alan Mulally and the Fight to Save Ford Motor Company." The book is out tomorrow. Thank you very much for joining us.

HOFFMAN: Thank you, Renee. Transcript provided by NPR, Copyright National Public Radio.