May 2 (Bloomberg) -- Mark Fields will take the keys to a Ford Motor Co. that is lean, profitable and a far cry from the near-bankrupt carmaker taken over in 2006 by his predecessor, Alan Mulally.
Fields nonetheless has his job cut out for him. The new chief executive officer will have to follow a CEO lauded by investors for saving an iconic American company from failure, and will face the challenge of steering Ford into an era when cars may no longer need drivers.
Company veteran Fields, 53, will become CEO on July 1 when Mulally retires from his post atop the second-largest U.S. automaker, Ford said yesterday. Fields also will take the board seat occupied by Mulally, the former Boeing Co. executive who navigated Ford through the economic crisis without the bailouts and bankruptcies that befell the predecessors of General Motors Co. and Chrysler Group LLC.
Top on Fields’s to-do list will be rolling out a record 23 new models worldwide this year, including an aluminum-bodied F-150 pickup, a technically advanced and difficult-to-build makeover to Ford’s top-selling and most profitable model.
Also looming are challenges to the automobile itself, as more of the world’s people are expected to migrate to big cities and abandon cars in favor of other forms of mobility to avoid global gridlock.
“There will be different realities,” Bill Ford, the company’s executive chairman, said yesterday in an interview. “Some we can anticipate, like mobility and this notion of global gridlock, and how we’re going to solve that. Some we can’t anticipate. The best thing Mark can do is to continue to make us a very adaptable, nimble company.”
Ford’s stock rose 0.4 percent to $15.98 at 9:40 a.m. in New York. The shares had gained 3.1 percent this year through yesterday.
The ascension of Fields, a 25-year Ford veteran, was widely anticipated since he was named chief operating officer under Mulally a year and a half ago. He will become just the 11th person to run the 111-year-old company, in a transition that has so far proceeded smoothly -- a departure from the mostly difficult handoffs dating to the exit of founder Henry Ford.
The company’s leadership team, in announcing the move, underscored that Fields will continue down the path laid out under Mulally, the longest-serving CEO not from the Ford family.
“In the past when we’ve had new CEOs, you have a new strategy and a new card with new behaviors on it,” Fields said in an interview yesterday. This time, he said, Ford would stick with a culture of openness and collaboration cultivated under Mulally, adding: “We’re not going to slip back into old ways.”
‘Hall of Fame’
Bill Ford, conceding that transitions at the top have “maybe never” gone well at the company founded by his great-grandfather, said this handoff will be smooth. Mulally is the rare “Hall of Fame CEO” who knows not to leave kicking and screaming, he said. “To Alan’s great credit, he could let go -- and a lot of CEOs can’t,” Bill Ford said.
“He has brought Ford back to greatness and he has also developed the next generation of management,” Bill Ford said. “He could check all the boxes.”
Mulally, 68, who had said he would stay at Ford through the end of the year, said in an interview yesterday that he decided to accelerate his departure when he saw the team he had developed was ready to take over.
“It was just absolutely the right time now for me to retire and let this team take Ford forward,” he said. “They are ready to take Ford flying. That may be the most important last gift that I give to Ford.”
Mulally teared up yesterday as employees gave him a standing ovation at the ceremony to announce his retirement in an auditorium at Ford’s world headquarters in Dearborn, Michigan.
Mulally returned Ford to profitability by restocking its namesake brand of cars with more fuel-efficient, technology-loaded models. Fields is credited with being the first leader there to adapt to Mulally’s new culture of collaboration, opening the way for others to move away from previous executive infighting and backbiting.
Fields also engineered a few turnarounds of his own during his quarter-century at Ford. At age 39 in 2000, he became CEO of Mazda Motor Corp., in which Ford then had a controlling stake. He led a turnaround there with several Ford executives with whom he later worked to revive Ford’s North American business.
“Mark has earned his stripes over time, even though he’s still fairly young as a CEO,” said Larry Dominique, a former top Nissan executive who is now president of ALG Inc., a unit of TrueCar Inc. that sets vehicle resale values.
Fields will have to manage Ford’s new model introductions, which require costly overhauls of factories, including 13 weeks of downtime at two U.S. plants to convert to making the new F-150s. The automaker has promised investors that the profit declines this year will lead to better 2015 earnings.
“We are all very focused on the 23 global launches,” Fields said. “It’s a very important step for us to position us for our next stage of growth.”
Bill Ford would also like Fields to focus on a future in which commuters will seek different way to move around cities.
“We’ll probably always be making cars and trucks, but we also have to venture into” alternate forms of mobility, Ford said. “Cars could be part of the solution, too. They just may look different and be propelled differently than they are today.”
Fields, given his age, may be in the position to lead Ford into the era in which he said cars could move by “auto-pilot platooning on highways.”
Asked how long he hoped to be Ford’s CEO, Fields said: “As long as they’ll have me.”
Bill Ford, who said he had “no idea” how long Fields would be CEO, added that leadership has become more demanding as constant communication has turned the top jobs into “meat grinders.”
“You’ve seen the average tenure of CEOs drop across the country over the years,” Bill Ford said. “When my Uncle Henry was running the company, it was pre-cellphone and pre-e-mail. So if something was going on in China, it waited until morning. Now nothing waits.”
Bill Ford said he is concerned some of the company’s executives could leave for other companies in the transition.
“Any time you have great talent, they’re going to be in demand,” he said, saying that high satisfaction among Ford executives is “probably the best insurance” toward keeping them.
Analysts and Ford dealers alike predict this transition will be less rocky than earlier ones at the company, thanks largely to the role of Bill Ford, the founder’s great-grandson.
Henry Ford overstayed through poor health and mounting losses in the 1940s. His oldest grandson, Henry Ford II, feuded with Lee Iacocca and pushed him out in 1978. Iacocca went on to lead and revive Chrysler Corp.
Alex Trotman delayed his retirement in the 1990s, unable to groom a successor. He was followed by Jacques Nasser, whose attempts to remake Ford into a consumer-products company were undone by Bill Ford and Mulally. Nasser’s tenure ended in 2001 after crises with sport-utility vehicle rollovers caused by faulty Firestone tires.
Bill Ford, who served as CEO from 2001 to 2006, tried to turn around a company that was unprofitable and mired in its third restructuring in less than five years. In 2006, he made the unusual move of stepping aside, recruiting Mulally from outside the industry to shake up a moribund corporate culture.
The company earned $42.3 billion in the past five years -- compared with a loss of $30.1 billion from 2006, the year Mulally arrived, to 2008. Ford’s North American operations are the envy of the industry, earning a record operating profit of $8.78 billion last year with profit margins above 10 percent in an industry where 5 percent is respectable.
“Alan Mulally was integral in Ford’s turnaround, but Bill Ford also deserves significant credit,” Brian Johnson, an analyst with Barclays, wrote yesterday in a note.
Johnson cited Ford’s decision to pick Mulally, borrow $23.4 billion in late 2006 to support Mulally’s changes and oversee a timely transition to Fields. “To his credit, Bill Ford helped engineer the hand-off smoothly,” he wrote.
The executive chairman has taken on the role of a coach and a guarantor of the automaker’s direction, according to several longtime Ford dealers.
“What you have is a very happy group of dealers,” said Maryann Keller, an auto-industry consultant who has served as a director at Dollar Thrifty Automotive Group Inc. and Lithia Motors Inc. “They see Bill Ford as a sort of stabilizing force in keeping Ford on track.”
Keller attended a meeting last month that included several dealers who held Mulally and Bill Ford in equally high esteem, she said. The dealers viewed the chairman as helping to ensure that the new CEO would remain on course -- a key point amid questions about what leadership style will be adopted by the relatively young Fields, who thrived under both Nasser’s top-down leadership and Mulally’s more collaborative style.
Fields, who will be president as well as CEO, takes over a company in its prime. It was a lot to take in yesterday for a kid who grew up in Paramus, New Jersey, and graduated from Rutgers University.
“Growing up and then coming into Ford, I never thought I would rise to this level in the company,” Fields said. “It’s really humbling, but at the same time, hugely exciting.”
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