How Ford's CEO Helped Restore The 'American Icon' In 2009, when the other Big Three automakers were filing for bankruptcy protection, Ford CEO and auto-industry outsider Alan Mulally helped the company post its first annual profit in four years. In American Icon, journalist Bryce Hoffman explores how Mulally helped Ford avoid the fate of its fellow automakers.
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How Ford's CEO Helped Restore The 'American Icon'

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How Ford's CEO Helped Restore The 'American Icon'

How Ford's CEO Helped Restore The 'American Icon'

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The Ford Motor Company has made money for 11 quarters in a row. It was the only one of the big three automakers to avoid a government bailout, even though a few years ago, even before the recession, it came close to failing.

The new book, "American Icon," details how Ford avoided that fate under the leadership of CEO Alan Mulally.

Renee reached the author of that book, Detroit News reporter Bryce Howard at member station WDET in Detroit.


Good morning.

BRYCE HOFFMAN: Good morning, Renee.

MONTAGNE: You started reporting on Ford in 2005. What kind of story did you think you were going to be telling?

HOFFMAN: Ford was such an iconic company, and I knew that I was witnessing either the failure of an American icon or its resurrection, and either one was going to be an amazing story to tell.

MONTAGNE: And at that point Bill Ford Jr., the great grandson of Henry Ford, was the CEO. What was the breaking point that led to him to give up that post?

HOFFMAN: Bill had been trying for a number of years to find someone to help him lead a turnaround of the automaker. He had reached out to some of the real rock stars of the auto industry and they had all turned his request down. He really reached a breaking point in the summer of 2006, and Bill was convinced by the board to step aside and to make room for someone from outside the automobile industry. And the one thing they knew they wanted was someone who had experience turning around a major corporation and doing it successfully.

MONTAGNE: Well, they got that with Alan Mulally. He had turned around Boeing. Let's listen to Mulally in a story NPR aired in 2007. At this point he's been on the job for just over half a year.

ALAN MULALLY: Everybody said Boeing couldn't compete and the United States couldn't compete. We didn't have the work ethic, and we didn't have the commitment. And well, Boeing's back as the number one airplane company in the world, and there's no reason that Ford and the United States can't compete.

MONTAGNE: And he sounds so calm, but yet, Ford was heading towards bankruptcy at that moment in time. And it reminds me of something you describe throughout the book, Mulally always was the first one to get over bad news.

HOFFMAN: It really had a tremendous effect on morale at the company. I mean, Ford had been down for so long people had forgotten which way was up. And Mulally came into this company with this incredible grin plastered across his face that never faded. And everyone kind of waited for this to kind of wear off. Everyone waited for him to realize just how serious the problems were and become dejected and fall into the morass that so many of his predecessors had when they recognized the scope and the magnitude of Ford's problems. Mulally never did that.

MONTAGNE: Well, the challenges, as you suggest, were great from the outside. But also, the corporate culture at Ford, you describe as noxious.

HOFFMAN: It was one of the most caustic corporate cultures ever seen anywhere in business. This was a company where people put the advancement of their own careers and the success of their own divisions ahead of the company's success, ahead even of the bottom line. You know, a car was designed in Europe and it was designed in such a way that the car could not be sold in other regions. And as a result, America lost out on a really good product. So Mulally came in to a company that was really at war with itself.

MONTAGNE: So he was able to bring people together and get people, at every level, working together.

HOFFMAN: Yes. Working together is kind of the name of his own personal philosophy. At the executive level, he tied executives' performance - and therefore, their bonuses - to the success of the whole company, rather than their own divisions.

With the unions, he held a secret meeting with United Auto Workers President, Ron Gettelfinger. He told Gettelfinger, if you work with me to come up with a contract that will allow me to make small cars profitable in the United States, I will take this key product – the Ford Focus – and I will build it in the United States instead of Mexico.

MONTAGNE: OK, at this point, really, one wants to say, what's Alan Mulally's weakness?

HOFFMAN: The one area that I think that he has been tone deaf about is his own compensation. I mean just last week he received another stock award worth approximately $35 million. He took an extra million-dollar bonus, kind of infamously, in early 2007, the same day that 10,000 white-collar workers found out they were losing their jobs. That's probably, you know, one of the things that he's had a blind spot about, is his own compensation.

MONTAGNE: There is a lot of speculation about how long Mulally will stay at Ford. When might he leave and what would that mean for the company?

HOFFMAN: Well, I think that's a very important question, Renee. I mean, the thing that he's waiting for is he still has one more part of his turnaround that he hasn't accomplished that he wants to accomplish. It's very important to kind of put a flag at the end of this, and that is to restore Ford to investment grade. When Ford's credit rating is restored to investment grade, the company gets back all of the assets that it mortgaged back in December of 2006 in order to finance this turnaround plan. And that includes the Ford name, the Ford blue oval itself, which right now are still in hock. He wants to get that back to kind of put a period at the end of this.

MONTAGNE: Bryce Hoffman is author of the new book "American Icon: Alan Mulally and the Fight to Save Ford Motor Company." The book is out tomorrow. Thank you very much for joining us.

HOFFMAN: Thank you, Renee.

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