Ford Motor (F) made it official this morning: Chief Operating Officer Mark Fields will slide into the corner office July 1. That’s sooner than initially expected, an accelerated timetable that outgoing Chief Executive Alan Mulally credited to the readiness of his executive team. But for Fields, a longtime company man, the timing is tricky. After Ford’s incredible turnaround, maintaining its momentum, let alone building on it, isn’t going to be easy.
A CEO’s legacy is largely determined by when he or she takes control. When things are going well, the best-case scenario is keeping the company on course, also known as not messing up. When the wheels are coming off, as they were when Mullaly took over in 2006, the upside is far greater. Any improvements—even those that came from external sources, such as a bankruptcy restructuring or the tailwinds of an improving economy—are generally credited to the new boss’s strong leadership and cunning strategy.
As Fields’s first day in the corner office approaches, Ford looks fairly impressive. Unlike GM (GM), it isn’t navigating a protracted recall crisis through Congress and a wolfpack of attorneys. And unlike Chrysler (F:IM), its executive isn’t stretched from 8-Mile Road to Italy, trying to manage a huge garage of brands.
It does have the bestselling vehicle in the country in the F-150, a burgeoning brand in China, and an efficient and fresh product mix. Ford is even doing relatively well in Europe, which is to say its losses are shrinking. If its zany new Mustang ad is any measure, the company is downright giddy.
The credit for getting the corporate machine so finely tuned belongs to Mulally. Ford lost $12.6 billion the year he took over, and with its six disparate brands, plenty of fruit was hanging low in Dearborn.
Most notably, Mulally raised $23.5 billion in capital just before the credit crisis hit and survived without a stopover in bankruptcy court. By 2009, the company was back in the black. In the past five years, Ford has booked $42.3 billion in profit and realized a net margin of 6.4 percent. Last year it sold 6.33 million vehicles, a bit fewer than it did in 2006. But it made an average profit of $1,130 on each one.
Holding on to those advantages may be difficult. For one thing, some of Ford’s most promising markets are looking shaky—namely Russia, Argentina, and Venezuela. The company is also grappling with rising warranty costs. Meanwhile, as competitors ramp up production, supplies are surging. Selling a lot of vehicles may not be as challenging as resisting the urge to crank up incentives and pricing battles.
Finally, Fields is facing some steep U.S. efficiency mandates—a big challenge for a company so reliant on burly pickup trucks. One in five vehicles the company sells has a flat bed. Not surprisingly, its U.S. fleet, cumulatively, gets about 23 miles per gallon. Among many other things, Ford will have to steer that number toward 54.5 mpg in the coming decade.
One more thing for the Fields to-do list.