Alan Mulally's Last Act at Ford: Change the World Again

DETROIT (TheStreet) -- Some people coast easily into retirement, but it doesn't appear that is the course Alan Mulally has selected.

Rather, for his final act as CEO of Ford (F), Mulally took on a major job: reducing the weight of America's best-selling vehicle, and perhaps eventually of all U.S. vehicles, by substituting aluminum for steel. It is not a task for which he is unprepared. At Boeing (BA), where he spent 37 years, Mulally presided over the start of a similar transformation when he ushered in the 787 Dreamliner.

Mulally departed Boeing, where he was passed over for the CEO job, before implementation of the production plan was completed. By many measures, the implementation was disastrous, resulting in billions of dollars in cost overruns and a three-year delay in delivery of the first aircraft.

I can imagine asking Mulally, in an interview, if he would take particular pleasure in having Ford get the implementation right after Boeing got it wrong. He would just stare at me. He might smile. He would never answer.

"Alan would have been an amazing Boeing CEO," said aviation consultant Richard Aboulafia of Virginia-based Teal Group. "He would have loved doing that job. But (Ford) involves a similar skill set."

Mulally was deeply involved in the decision to make the 787 from composite materials. "He's quite mindful of the importance of saving weight with better materials," Aboulafia said. "He is someone who has, in his DNA, the ability to make the strategic decisions involving strength, weight and cost."

Trained as an engineer, Mulally was program manager for the Boeing 777, "one of great American industrial success stories of the past century," before he took on the 787, Aboulafia said. As plans for the 787 took shape, Mulally faced "the opposition of people who didn't want to spend the cash," the McDonnellDouglas people who came to dominate Boeing following the 1997 merger.

"My take was that he could either launch a program that was heavily outsourced and deeply flawed, where the responsibility for design devolved onto the partners, or he could not launch at all," Aboulafia said. "He was forced to do outsourcing because the alternative was to do nothing. He had a gun to his head."

It is different at Ford, where the chairman and the board of directors back Mulally, who is surrounded by a management team he assembled. It is "probably the strongest team I've ever been associated with in all my 43 years," Mulally said at an investor conference on Wednesday, "The transparency, the honesty -- it's changed all of our lives. Everyone has felt the value of that. It has served Ford well."


The truck is being produced at two plants, in Dearborn, Mich., which is also Ford's headquarters, and in Kansas City. Dearborn will go first. "We are going to stagger the launches," said Mark Fields, Ford chief operating officer and Mulally heir-apparent. "That allows us to make sure we have good quality launches."

In a 2009 interview with TheStreet, Mulally declared that "the parallels between Ford and Boeing are tremendous" and referred to a dozen or more of them. Among the most important, he said, is "having a point of view about the future" and sticking to it. A core component, he said, is that energy costs will rise.

"It's exactly the same, at Boeing and Ford," Mulally said. "We believe at Ford that we are going to pay more for energy over time, which is one of the reasons that we are absolutely committed to improving the fuel efficiency of all of our vehicles, whether they are small, medium or large."

Perhaps, even then, he was thinking about an aluminum truck.

How silly the now discredited talk of Mulally going to Microsoft (MSFT) seems today, with so much focus on the F-150. Now it is widely known that Ford has been working on this transformational project for the past several years. In fact, development of the new truck was initially financed with a share of the $23.6 billion loan Ford took out in 2006, a few months after Mulally arrived, The Detroit News reported recently. Mulally pushed for the change in the truck, the newspaper said.

So put Mulally's options this way: Go to Microsoft, which involves switching to a new job with a new team in a new industry where you might spend a couple of years, or -- surrounded by a team you assembled, guided by concepts you have developed over decades, and informed by failure at a company that passed you over for the top job -- change the world again.

Written by Ted Reed in Charlotte, N.C.

To contact this writer, click here.

Follow @tedreednc

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