By BILL VLASIC
THE NEW YORK TIMES
DEARBORN, Mich. — In recent months, as Ford Motor Co. executives watched $4-a-gallon gas and a softening economy take a growing toll on sales and market share, Chief Executive Alan Mulally prodded his management team for answers.
“Everybody says cut and cut some more, but how are we going to sustain this company?” Mulally said in one meeting in his Ford Headquarters office, according to people in attendance. “What does a sustainable Ford look like, gentlemen?”
The answer certainly isn’t a quarterly earnings reports such as the one issued Thursday, which showed a net loss of $8.7 billion. But Thursday’s report included big changes in Ford’s lines of business, a huge shift in production to build more small cars and fewer pickups and sport utility vehicles, changes that resulted from asking questions such as that.
In less than two years since he arrived as an outsider from The Boeing Co. to run Ford, Mulally already has mortgaged the company to raise cash, sold off three brands and cut truck production in the face of rising gas prices.
Having spent 37 years with Boeing, Mulally often refers to his old company in describing how Ford can emerge from crisis conditions.
As head of engineering for the Boeing 777 in the early 1990s, Mulally would urge employees to stay focused even as the economy and airline industry struggled.
In a documentary film about the making of the aircraft, Mulally repeatedly stressed that sticking to the plan was paramount, words that could as easily apply to Ford today.
“We can’t let the anxiousness of today’s environment in any way slow us down,” he said. “Don’t let current events affect our intensity of getting this program done.”
Industry analysts are beginning to see Mulally as an executive willing to take big chances to reinvent a way of doing business in Detroit.
“He has become the symbol of change for the American auto industry,” said John Casesa of the consulting firm Casesa Shapiro Group. “Because he’s from the outside, he’s not tied to the past.”
Rapidly shifting consumer tastes have forced Mulally to quickly find a way to break Ford’s dependence on pickups and SUVs for profits in North America.
“Mulally is far more of an activist than the traditional Ford chief executive who was a 35-year lifer in the company,” David Healy of Burnham Securities said.
Mulally also has made a believer of Kirk Kerkorian, the financier who has invested more than $1 billion in Ford stock since April.
Kerkorian previously had taken large stakes in General Motors and Chrysler and then sold out after running afoul of management. But his interest in Ford appears primarily based on Mulally’s leadership and strategic direction.
Restoring Ford’s car business has been paramount for Mulally since he succeeded William Clay Ford Jr., a Ford family scion, as chief executive.
As recently as 2004, two-thirds of Ford’s U.S. sales were of truck-based products. Many people in the company were skeptical that Ford could be profitable with more small cars in the showroom.
But Mulally has challenged those notions.
At a meeting this year, he expressed frustration when one employee suggested that making small cars was a money-losing proposition.
“Why can’t we make money on small cars?” Mulally reportedly said. “Do you think Toyota can’t make money on small cars?”
He often exhorts his employees to “take a point of view of the future” and then devise a plan supporting it.
By betting on the growth of small cars, Ford will move billions of dollars in investments away from the pickups and SUVs that have provided the bulk of its profits for nearly two decades.
Mulally is committed to building global platforms for Ford cars that can be sold throughout North America, Europe and Asia.
And his senior managers have been hand-picked for expertise in international markets.
Ford had been famous for its culture of executive fiefs that insulated senior officials from one another. One of Mulally’s first tasks was to institute regular Thursday meetings of top managers to review business plans and encourage debate among departments.
