“We’ve said 2025, maybe it should be 2030,” Ford joked to reporters today after the automaker’s annual meeting in Wilmington, Delaware. Ford referred to possible retirement dates for Mulally, who would turn 80 in 2025. “It’s been really fun for the two of us to work together and I for one would like to see it continue for some time.”
To which Mulally responded, “Me, too.”
Mulally, 66, engineered a turnaround at Ford by globalizing operations, cutting costs, improving quality and expanding its lineup with fuel-efficient models such as the Fiesta subcompact. Ford earned $29.5 billion in the last three years after $30.1 billion in losses from 2006 through 2008. Bill Ford said he is not worried about losing talent at the top of the company over uncertainty about when Mulally will retire.
“I don’t think there’s any anxiety on anyone’s part about the timing” of Mulally’s departure, Bill Ford said. “You don’t see any dissatisfaction among anybody, quite the opposite, they come to work fired up.”
Mulally said Ford will continue to do well after he leaves.
“We have a very robust succession plan,” Mulally said. “The strength of the leadership and the succession plan bode well for continuing to profitably grow Ford.”
‘Tough to Replace’
Uncertainty about Mulally’s retirement is weighing on the stock, said Bernie McGinn, president of McGinn Investment Management in Alexandria, Virginia, which owns 300,000 Ford common shares. Investors, also concerned about losses in Europe and Asia, have traded Ford down 29 percent from a year ago. Ford rose 0.2 percent to $10.71 at the close in New York.
“It’s tough to replace a guy like Alan Mulally, that’s the worry,” McGinn said. “Nobody coming in is going to be the manager that he is. But they also won’t be facing the company he did when he came in.”
The CEO hasn’t said when he’ll step down or who will replace him. Mark Fields, 51, Ford’s president of the Americas, is considered the leading candidate to succeed Mulally, according to people familiar with the deliberations.
“I haven’t been particularly happy,” McGinn said of the share performance. “It’s still a good company and a great story. Hopefully, the price will catch up with the story.”
After Mulally arrived, Ford borrowed $23.4 billion in late 2006 before credit markets froze. The company pledged all major assets, including its blue oval logo, as collateral to secure that financing. That enabled Ford to avoid the bailouts and bankruptcies that befell the predecessors of General Motors Co. (GM) and Chrysler Group LLC in 2009.
Ford gets the assets back once two major ratings companies restore the automaker to investment grade. The first of those, Fitch Ratings, lifted the automaker to investment grade on April 24, ending six years of so-called junk status.
“I can’t wait until they get the blue oval back,” McGinn said. “That will be really cool.”
The automaker has repaid more than $21 billion of the money borrowed in 2006, Mulally said in an April 27 interview on Bloomberg Television.
Ford resumed paying a dividend in March following a five-year suspension. The automaker March 14 declared a second-quarter dividend of 5 cents a share payable June 1 to shareholders of record on May 2.
Mulally has promised Ford this year will equal 2011’s pretax operating profit of $8.8 billion. After Ford’s net income fell 45 percent in the first quarter to $1.4 billion, Mulally said the company will make more money in the year’s second half as it rolls out new models such as redesigned versions of the Fusion sedan and Escape sport-utility vehicle.
Ford said May 8 it will reduce its annual summer shutdown at 13 North American factories to one week instead of two. The move, aimed at meeting growing demand for its models, will boost production by about 40,000 vehicles, Ford said. Ford records revenue when cars and trucks are sent to dealers from the factory.
“We are bullish on Ford and see it as ‘further ahead’ as a company than GM (especially in North America),” Brian Johnson, an analyst for Barclays Capital, wrote in an April 30 note. He rates Ford “overweight.”
Ford earned a pretax profit of $2.1 billion in North America in the first quarter, the most since at least 2000, and had an operating margin of 11.5 percent, more than twice the return considered respectable in the U.S. auto industry.
“We expect that engine that’s pulling the company ahead to keep on pushing us along,” Bob Shanks, Ford’s chief financial officer, said April 27 of North American operations.
Ford lost $190 million overseas in the first quarter, including pretax losses of $149 million in Europe and $95 million in the Asia Pacific and Africa region. Ford has said it will make money in Asia this year, while losing $500 million to $600 million in Europe, where the sovereign debt crisis has sapped consumer confidence and sent auto sales to a 17-year low.
“Europe is not anything that is going to be fixed soon,” McGinn said.
Mulally’s turnaround of Ford was so successful that it’s raised unrealistic expectations among investors, McGinn said.
“Ford used to be considered a lousy company with no hope,” McGinn said. “Now it’s considered a great company that’s not living up to expectations. But nobody could.”
Shareholders for the eighth straight time rejected a proposal, opposed by directors, to strip the founding Ford family of its 40 percent voting control of the automaker.
The proposal won the backing of 29.5 percent of the shares voted. Last year, 31.5 percent supported it, the highest ever. The board includes two family members, Bill Ford, 55, and his cousin, Edsel Ford II, 63.
To contact the reporter on this story: Keith Naughton in Wilmington, Delaware at firstname.lastname@example.org
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