Ford schools U.S. firms on turnarounds, succession
By Antony Currie and Kevin Allison
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
The end of Alan Mulally’s reign at Ford is corporate America’s opportunity to learn. In almost eight years as chief executive, the former Boeing executive not only engineered a textbook case in how to drive a company out of the scrap yard. He, along with Executive Chairman Bill Ford and the rest of the board, also did an enviable job of paving the way for his successor.
That Mark Fields’ promotion to the top job comes as no surprise shows how successful the succession process was. He has been the heir apparent since being promoted to the long-vacant role of chief operating officer in late 2012, a position that will now be eliminated.
Other executives who reckon they should be in the mix for the top job often leave once the lead contender is named. That did not happen in Ford’s case, in part because Fields’ 2012 elevation fit into a broader reshuffle.
Mulally also, though, seems to have succeeded in the difficult task of changing corporate culture, including at the executive level. Initiating weekly meetings and a policy of admitting and learning from mistakes has fostered a more collegial, cooperative environment.
Fields also takes control of a company that has vastly more power under the hood than it had in September 2006, when Mulally became CEO. Ford was hemorrhaging money then, ending 2006 with just $3.9 billion of net cash, and it would soon have much less. Its core North America autos division was hit with a $15.9 billion pre-tax loss.
By the end of 2013, however, Ford had $9.1 billion in net cash and expected that amount to double by the end of 2016. The restructured North American business’s nearly 10 percent operating margin on $89 billion of sales – 29 percent above its 2006 showing – made it one of the auto sector’s best performers. Ford is also making headway in China, the industry’s biggest growth market. From almost a standing start just a few years ago, market share is now 4.1 percent.
Fields, a two-decade Ford veteran, cannot just hit cruise control, though. Keeping up momentum in North America is bound to get tougher as carmakers reckon with a younger generation that drives less. Consumer Reports surveys also show Ford quality taking a hit. These, though, are speed bumps that the rehabilitation under Mulally has left Ford well positioned to handle.