Boeing Executive Will Replace Ford at Ford Motor Co.

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Bill Ford Jr. will step down as CEO of the Ford Motor Company, and will be replaced by Boeing Co. executive Alan Mulally. Ford Jr. will still be executive chair. Dave Cole, chairman of the Center for Automotive Research at the University of Michigan says it's a good move for the troubled automaker.

ROBERT SIEGEL, host:

Ford Motor Company has a new CEO. Alan Mulally is 61 and a vice president at Boeing. He's an engineer who has spent his entire career at Boeing. Ford's current CEO, Bill Ford, will step down but will remain chairman of the struggling automaker.

Here is what Bill Ford had to say about Mulally at a news conference this afternoon.

Mr. BILL FORD, JR. (Ford Motor Company): Everybody that you talk to who's ever dealt with Alan, everybody who's ever worked with Alan, whether they're a part of Boeing or a customer, they all say this guy is a great teambuilder. He sets very tough objectives and then motivates the team to go get it. And that's frankly exactly what we need.

SIEGEL: Well, joining us now to talk about the changes at Ford is David Cole, who's chairman of the Center for Automotive Research. Mr. Cole, Mr. Mulally, the new CEO, is the quintessential outsider. He's never spent a day working in the auto industry.

Mr. DAVID COLE (Center for Automotive Research): Well, that's exactly right. And of course this does raise some concern that there might be a little bit of a sharp learning curve, but when you look at Boeing, building very complex systems, as the auto industry, it has similar labor issues to the industry and very complex market, although they only have one competitor.

But what Alan Mulally went through there was a major turnaround. Boeing was in deep trouble a few years ago. And Alan was very much a part of the group that helped bring literally almost from the ashes to where they are today as the preeminent large aerospace company in the world.

And I think what he brings is expertise at a turnaround that is almost independent of the kind of industry. He knows what to do, he's been there, done that, and that can be extremely valuable to a company like Ford.

SIEGEL: But, as you say, at Boeing he really had one competitor, Airbus. Ford is competing not just with GM, but with Daimler Benz and Toyota and Nissan. It seems like a very different competitive market.

Mr. COLE: Yeah, it's an extremely competitive environment. And it's not gonna get any less competitive in the future. We characterize what is going on in the auto industry as being a part of the perfect storm, where we've had tremendous increases in material prices. Of course, fuel prices have escalated dramatically, which has impacted the market psychology of the most profitable vehicles. And benefit costs have risen at several times the rate of inflation, particularly health care.

And this is all in the context where for the last ten years, the real price -that is, adjusted for inflation for price of cars and trucks - has declined. So this is not an easy business. But neither is aerospace. And it's a business that I think needs to have absolutely profound fundamental change more quickly than anticipated. And that's what I think is necessary at Ford.

SIEGEL: Should we read the change of manager at Ford as the same as change of manager at a ball club that's in last place, that has been in a lot of trouble?

Mr. COLE: I don't really think so. I mean, first of all, Bill Ford I think is where he is today a little ahead of what anybody anticipated because of some serious problems that he had a few years ago. He had to reconnect the leadership with the people in the company and with dealers. And that was a very important role that only Bill could play.

I think now when you're looking at the turnaround, a persona from the outside is very, very useful in doing this. It really tells the people in the company that it's business as unusual. It's not business as usual. And when you look at somebody like Bill, who has his ego totally under control, what Bill and the family very clearly want is the most successful Ford possible.

SIEGEL: That's David Cole, chairman of the Center for Automotive Research. Thank you very much for talking with us.

Mr. COLE: Good to be with you, Robert.

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