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New Ford CEO brings lessons of Boeing success

The automaker is confident that Alan Mulally's experience in aviation will transfer well to the auto world.

By ASSOCIATED PRESS
Published September 7, 2006

DETROIT - Alan Mulally, the man Ford Motor Co. has tapped to revive its stalled turnaround, helped revolutionize product development at Boeing Co. in part by taking inspiration from the broad, team-based approach Ford used to create the hit Taurus in the 1980s.

Ironically, those ideas failed to catch on at the automaker, some industry observers say.

Mulally's role in the 1990s managing the development of Boeing's enormously successful 777, a project to which he applied the Taurus model, may not be the most significant of the credentials that led to his appointment Tuesday as Ford's new chief executive. But the story illustrates how his experience in the aviation industry could transfer well to the auto world.

As head of Boeing Commercial Airplanes, Mulally, 61, successfully guided a major manufacturer through crisis, cutting costs and improving efficiency. Executive chairman Bill Ford, who relinquished the CEO post to Mulally, expressed confidence that Mulally will do the same at Ford.

Ford shares rose 16 cents Wednesday to close at $8.55 on the New York Stock Exchange.

After the Sept. 11, 2001, terror attacks devastated Boeing's airline customers, Mulally streamlined its commercial jet making business operation and managed to keep it in the black. He trimmed the work force by more than half to 50,000 employees, revised assembly-line operations to make production quicker and introduced the popular 787 jet, which has snagged record orders well before its first flight.

Ford of Dearborn, Mich., meanwhile, has been battered by rising health care and material costs, tough competition from Asia and, perhaps most ominously, the rapid decline of the market for pickups and sport utility vehicles, the high-margin products that for years have sustained U.S. automakers' bottom lines. The company, which lost $1.4-billion in the first half of 2006, said in July that it was caught off-guard by the speed of this shift, which it attributes to high gas prices.

Mulally's Boeing experience should transfer well to Ford, said James P. Lewis, a project management consultant and author of Working Together, a book that chronicles the development of the 777 and for which Mulally wrote a forward. Bill Ford cited the book in Tuesday's announcement.

"Ford's in crisis right now. What better kind of person to take over than someone who's been through it and survived it?" Lewis said.

Lewis' book describes how the 777 project, unlike previous product programs at Boeing, involved not just engineers, but all stakeholders - manufacturing people, pilots, machinists - from the early stages, making it possible to eliminate flaws early.

In one example, baggage handlers were brought in to look at a mock-up of the cargo bay door. They told them the door's handle was poorly designed and would be impossible for a gloved hand to open, Lewis said. The team redesigned it.

Like the 777, the Taurus, introduced in 1985, was a home run. It was the top-selling U.S. car from 1992 through 1996.

In recent years, the aging Taurus has been more a symbol of the automaker's product woes and its shortage of fresh sedan models than the innovation it once stood for. Production is scheduled to stop later this year.

Today, product development is key to Ford's long-term recovery, but Mulally's recent cost-cutting experience will come in handy in the near term.

Wall Street analysts were cautiously optimistic about Mulally's appointment, but wondered how quickly a Lexus-driving airplane guy could become a Detroit car guy.

"The Detroit auto industry is known for being insular and difficult to change," Morgan Stanley analyst Jonathan Steinmetz said in a research note. "Mulally is the ultimate outsider."

[Last modified September 6, 2006, 23:05:07]