Commentary: Mulally Turns 65; No Replacement Yet, But Plenty of CandidatesBy Doron Levin August 4, 2010
Editor's Note: Ford CEO Alan Mulally turns 65 today, prompting questions about how long he will stay at the automaker. His recent response has been a vague "a few more years."
With each quarter the stature of Ford Motor chief executive Alan Mulally grows more impressive. It's difficult to overstate the healing impact of his tenure on the No. 2 U.S. automaker, which posted a $2.6 billion second-quarter profit.
When he was brought aboard in 2006 Ford was bereft of ideas and leadership, beset with losses, forced to suspend its dividend and sliding toward a recession that would engulf the world industry. Fortunately Ford already was undertaking a plan to borrow $23.6 billion against its future, which gave the company the cash reserves to avoid almost certain insolvency in late 2008 during the credit meltdown.
Bickering and conflict had become a way of life at the company. Hence the new boss's introduction of the motto, ``One Ford,'' meant to lay down the law that internal rivalry and self-aggrandizement no longer would be tolerated. Mulally took responsibility to ensure that his mandate for teamwork and cooperation among top executives was more than empty talk. How deeply has the cultural transformation filtered to Ford's distant corners? Time will tell.
Ford's main risk, for the moment, is economic. Another deep recession and soaring interest rates could, due to Ford's heavy borrowings, overwhelm its improving balance sheet. Ford's next biggest worry is what life could look like in a post-Mulally world.
Ford chairman Bill Ford Jr. has wisely let Mulally know he's welcome for as long as he'd like to stay. Mulally today turns 65, the customary date for retirement. A cadre of seasoned executives stands behind him, including Mark Fields, Jim Farley, Lewis Booth, Derrick Kuzack and Joe Hinrichs -- any of whom might be possible successors.
Yet Ford is a company whose history is rich with examples of succession stumbles at the chief executive level, caused in part by the sometimes-erratic nature of control by the Ford family. The Fords no doubt are hoping that the youthful Mulally might pull a Bob Lutz, the GM executive who stayed on the job until he was 80.
But that outcome isn't likely; and it mightn't even be healthy since potential successors could decide to look elsewhere for a chance at the brass ring. What the Fords want -- and should want -- is whatever evolution of Mulally's tenure can restore unqualified financial health and, with it, cash dividends.