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At Ford, Turnaround Is Job One


Brad Thornton

on 31 January 2013

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Transcript of At Ford, Turnaround Is Job One

At Ford, Turnaround Is Job One A Brief History of Ford Born in 1863 in Deroit, Henry Ford
Sr. began engineering professionally. In 1899 he founded his own car manufacturing industry called the Detroit Automobile Company. However he soon left over disputes with colleagues who
didn't shat his vision for faster
production of lower-margin vehicles in 1908 and sold over 15 million in about 15 years. Over time, Ford acquired partial of full ownership of many satellite brands, such as Jaguar, Aston Martin, Land Rover and others. By the end of 2001 the In 1903 he founded the iconic Ford Motor Company to pursue his vision. Ford Introduced the Model T company had lost nearly $5 Billion. In 2006, with the company still losing
market share they launched a 'turnaround effort dubbed "The Way Forward" and brought in Alan Mullaly to do the job Turnaround is Number One CEO the company had been losing money In 2006 when Alan Mulally became for years. Ford's marketshare has been in a steady decline since 1995 dropping from 25 to 16.8 in 2006, with the company losing up to $8 billion. Ford was losing its marketshare to the likes of GM and Toyota who would soon pass Ford as the two largest car manufacturers. Alan Mullaly With previously no precedent for hiring outside of the company ford brings in a 37
year veteran of Boeing. Although his hiring was seen as somewhat of a surprise it was generally agreed upon as the right choice. Ford and Boeing share many similarities Subject to global to global competition

Fast changing technologies Unionized work force Both Companies need a quick turnaround Complex regulations
Ford had become synonymous with poor quality and uninteresting vehicles. Despite its founding principle on simplicity, Ford had become extremely complex. It now owns countless independent brands and thousands of configurations changing from region to region, dealership to dealership. Furthermore growing dependence on high margin cars such as SUVs did not prepare Ford and other brands for the rising fuel pricing and the inevitable economic recession Strategy created a new turnaround effort he branded, "One Ford". That stood for one team, one Shortly after becoming CEO Mulally plan, one goal. In other words his plan was to build on the themes of focus and simplification.

To help make money for these new low- margin cars Ford created packages of high-margin 'must have' technology packages.
He starts be focusing on two brands, Ford and Lincoln, selling or divesting in most all others. Mulally wants quality, fuel efficient, safe cars.
Operations The first aspect of Mulally's turnaround plan was to improve the manufacturing productivity to match the demands of the market. Which in turn means slashing the work force nearly in half and closing up to 12 North American Ford plants.
The second key aspect of productivity is to limit and simplify the product line up. Ford cut the number of chassis used from 20 to 8 and the number of car models from 97 to 45. This resulted in 'parts commonality'. Mullally claimed that by 2011 80% of all Ford would be the same no matter where they were made Financials Mulally privately raised over $26 billion - enough to stave of bankruptcy, fund the companies turnaround, and protect against the economic downturn to come. As 2008 comes to a close GM and Chrysler were in danger of going out of business. Thanks to the money raised by Mulally Ford was on of the few that did not use any government bail out funds. The Leadership Factor capital markets were thriving will go down as one of the most significant moves in the companies 105-year history." According to the New York Times, "Ford's decision to borrow billions in 2006 when the In 2007 he sold Jaguar, Land Rover, Volvo, and Aston Martin Mulally fostered a culture of transparency review. Bad new is never punished as openness in a necessity Every Thursday at 7 am he requires everyone involved in the turnaround effort to a 2 and a half hour business plan Although Mulally was not a 'car guy' in a car industry being such allowed him to ask innocent questions.

In one meeting he showed his employees that 12 different rods for holding up hoods was not only impractical but very costly. Furthermore Mulally took it upon himself to familiarize himself with his own product by driving
a different Ford to work every day. this allowed him to see the impracticality of having essential car buttons placed in different places in almost all Fords Steps Back That Payed Off Between 2006, when Mulally was hired, and
2008 Ford lost more than $30 billion However in 2010 Ford had its highest rating by J.D. Power & Associates in its history breaking into the top 5 for quality. That same year Ford won Car & Truck of the year Not only were the awards flowing but so were the sales with a market share reaching almost 20% again Alan Mulally was Automobile Magazine's 2010 Man of the Year Q & A Which of the 5 qualities of leadership does Mulally display the most? Which could he improve on? What, in your opinion, was Mulally's best move as CEO? What about Mulally's time at Boeing helped him the most at Ford?
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