At his first press conference as CEO of Ford, Alan Mulally was asked how he could run such a complex company with no experience in the car business.
The former Boeing executive responded that cars, which have around 10,000 parts, are indeed very sophisticated. Then he smiled and noted that a jumbo jet has 4 million parts -- and it flies.
If there were doubters when Mulally joined Ford in 2006, there aren't many now. The year he took over, the company lost $17 billion. Last year, it made $6.6 billion, its biggest profit in 11 years. Within weeks of arriving, Mulally took out a huge loan and began pushing through a restructuring that continued even as the recession sent rivals General Motors and Chrysler into bankruptcy.
Behind his sunny demeanor and fuzzy red sweater vests, the 66-year-old Kansan had the steel to rein in the bureaucracy and infighting at Ford. He promoted managers who could work together and fired those who couldn't. He shed money-losing brands like Jaguar, Volvo and Mercury. He closed six U.S. plants, cut thousands of jobs and saved billions in engineering costs by developing fewer cars for the global market, such as the Fiesta and Focus, instead of unique models for each region.
>Q: What are your biggest worries about the economy?
A: We're generally on the right track, but it is going to be a slower recovery than we've ever had before. The private sector leading us out of this recession is the most important thing.
>Q: Why aren't companies using their cash stockpiles to hire more?
A: The consumer has pulled back. We're ready with the products and services that people really do want, but we're going to match our production of goods and services, cars and trucks, to what the real demand is. We're very disciplined about that. The worst thing you could do is make more than what the market wants, which our industry has done sometimes in the past. The demand is still very, very low.
>Q: How do you make change happen at Ford? How do you change the employee's mindset, on down to the engineer and into the assembly line?
A: Every Thursday, we're all linked up on the Internet and in two and a half hours, we go through about 320 charts. All the charts have the areas that need special attention. We review the entire operation. You can't fool anybody. Do you have a compelling vision? Do you have a comprehensive strategy to deliver that vision? And are we going to work together to relentlessly implement that? When you do that, it's like everybody is involved. We have a laser focus now. Every vehicle had to be best in class, quality, fuel efficiency, safety. That is benchmarked against the competition. Everybody knows everything.
>Q: Some Ford workers are upset about your compensation. (Mulally made $26.5 million in salary, stock options, bonuses and other compensation last year). What would you say to an hourly worker who asks why your pay is fair when a new hire makes less than $30,000 a year?
A: My compensation is entirely tied to the success of Ford. The vast majority of my compensation is at risk, because the numbers that you see are only realizable if we profitably grow the corporation. And that's the way it should be. I believe in it so much that most of the management team and most of the salary team -- and also our wonderful employees that are represented by the UAW -- have had profit sharing plans.
>Q: Would you say there's a problem in this country because of the gap between what the richest make and what the middle class is earning?
A: I really believe in capitalism and I think it has served the United States fantastically. It's so important that we just take stock about what is right about America. We're going through a rough patch. We're fixing some issues associated with a couple of really big bubbles that we all created, starting with all of us living beyond our means. We're straightening that out right now. It's going to take a little while but we can do it But what's really right is the economic model and capitalism and us holding ourselves accountable for making products and services that people really do want. And the market gets to decide who's successful, right?