Ford CEO Alan Mulally Talks To AOL Autos And To You

In fifth year at the helm, Mulally answers our questions and yours.

When Ford CEO Alan Mulally arrived at the automaker five years ago this month, he seemed an unlikely choice to lead the most storied and iconic auto company in the U.S. Today, at 65, he is probably destined to go down as one of the best all-time CEOs in the auto industry.

Having been passed over twice at Boeing for the top job and admitting to being the owner of a Lexus sedan, he appeared to many to be just another outsider coming to Detroit's insular culture who would crash and burn like so many before him. Detroit, history showed, did not treat outsiders very well. And only the most steel-hardened executives had succeeded without growing up within one of the automotive cathedrals of the Motor City-Ford, GM or Chrysler.

Mulally, however, set the tone and perhaps blazed a trail for other outsiders who have good ideas and the management skills and discipline to turn them into real cars and trucks. He helped steer the automaker through the industry's near collapse in 2009, when both GM and Chrysler found themselves in bankruptcy proceedings.

Mulally's success in some ways proved the point that the right outsiders could revamp Detroit's automakers and point them on successful paths. After Mulally came Sergio Marchionne from Fiat to Chrysler, and Ed Whittacre Jr. and Dan Akerson from the telecommunications industry to General Motors.

Getting through the Carpocalypse

The "Carpocalypse" in late 2008 and early 2009, was, of course, Mulally's finest time on the job. Having ordered the company to maximize its cash position in 2006, the CEO had enough reserves -- more than $30 billion -- to weather the financial meltdown without entering into bankruptcy or asking for a bailout from the U.S. taxpayers as his crosstown rivals were forced to do.

That wasn't luck. Mulally drew stares and raised eyebrows in the fall of 2006 when he told the board of directors that he wanted to mortgage everything Ford had to raise cash for what he predicted would be a tough slog back to profitability in an uncertain economy. He even wanted to leverage the global rights to the Ford Blue Oval logo. He literally mortgaged the family jewel.

Mulally was recruited by Ford Chairman Bill Ford who had held the CEO post since the fall of 2001, presiding over a rebuilding strategy that could at best be called sputtering. Ford had been losing billions. Market share was falling. Worst of all, the company's culture was sick and undisciplined.

Bill Ford may not go down in history books as a good CEO, but he proved to be an excellent chairman when he fired himself and hired Mulally.

Mulally had run Boeing's commercial airline division. But in two management shakeups at the aerospace company, he had lost out in executive suite soap opera dramas worthy of TV miniseries; debacles that ranged from malfeasance to improper sexual relationships that ruined two CEOs. It was clear that Mullaly, 60, who was not touched in the controversy, was not going to be CEO of his beloved Boeing. But executive recruiters and friends of Bill Ford knew it wasn't for lack of talent, but opportunity.

Ford back to being a profit machine

Since Mulally took the wheel at Ford, the company is making real money again: $2.7 billion in 2009; $6.6 billion in 2010; and $5 billion in the first half of 2011. Every metric by which a car company is measured -- sales, profit, operating margin, market share, quality -- has gone up the last few years as Mulally has driven his discipline throughout the company.

Discipline? What does that have to do with Ford's success? Before Mulally arrived, senior executives had a talent for becoming distracted from the task of making great Ford cars and trucks in the most efficient manner possible on a global scale. They had bought foreign brands that were profit and time suckers -- Jaguar, Land Rover, Volvo, Aston Martin. And they allowed Ford's regional hubs around the world -- Europe, South America, Asia-Pacific and North America-- to create separate companies within Ford with vast amounts of waste and duplication. Mullaly sold all the extra brands, shut the unprofitable Mercury brand, streamlined the global operations and made investments in China that were late in coming.

Today, the company is built around the Ford brand globally, as well as the addition of the Lincoln luxury brand in North America.

It sounds easy when you say it fast; he streamlined and focused the company. But it took an outsider, with no friends or history inside the company, to look at Ford with fresh eyes, and with a skill-set that was equal to the task.

Mulally is not without challenges or mistakes on his watch.

* He famously stared down members of Congress during auto industry hearings in late 2008. When asked if he should take a pay cut, or work without pay, he non-chalantly said, "No. I'm okay." More recently, it came to light that the CEO's compensation was $12 million in salary and other benefits, and about $33 million in stock awards, at a time when the United Auto Workers, with whom Ford is negotiating this month, is being asked to maintain sacrifice and pay/benefit cuts it agreed to in 2009.

* On his watch, a few vehicles have come out that, while successes in quality, have been duds with the buying public: The Ford Flex, Lincoln MKT and Lincoln MKS.

* Ford's stock price climbed from a low of $1 a share in November of 2008 to above $19 last January. But since the beginning of this year, the share price is down more than 40%, a substantially worse performance than the Dow Jones Industrial Average during the same period.

* Consumer Reports, after a couple of years of praising quality improvements in Ford vehicles and calling them at virtual parity with Toyota, punched Ford earlier this year for its MyTouch dashboard interface in some of its vehicles for being too cumbersome and distracting to the driver.

On the occasion of his fifth anniversary as CEO, Mulally talks to AOL Autos about the new fuel economy requirements that will be above 54 mpg by 2025; Ford's share price; his attack on recent quality setbacks, union negotiations, his love for the Ford Taurus and also his big-time compensation package.

Our talk with the CEO, in which he answers a few questions submitted by you -- our readers -- is part of our Detroit Week feature section, which includes coverage of the annual Woodward Dream Cruise, reviews of top Detroit products and some videos that spotlight what makes the Motor City Special.

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