This month’s management moves at Ford have a startling symmetry with those at Dearborn almost exactly sixty years earlier. Then a young Ford family scion realised that he needed help in getting to grips with the problems of a company that was out of synch with its industry and markets and losing money hand over fist. He reached out to an executive who had made his reputation in the aviation industry, writes Karl Ludvigsen.
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First with North American Aviation and later with Bendix Aviation Ernest R. Breech had proved to be an outstanding manager and leader. Both were properties of General Motors, which initially hired the accounting and business graduate for its finance staff. Considered by Alfred P. Sloan to be ‘an excellent prospect for top management’, Ernie Breech became a trouble-shooter for the Corporation. But before Sloan could manoeuvre him into a top slot Henry Ford II lured the 49-year-old Breech to Ford as executive vice-president, effectively Ford’s operating chief. He joined effective 1 July 1946.
The analogy with Bill Ford’s hiring of Alan Mulally from Boeing is striking. Once again a Ford realises that he’s out of his depth and needs the help of an experienced executive who’s been seasoned in the aviation industry. The big difference, however, is that Ford in 1946 was a tabula rasa on which Breech could write his own saga of success. Not only did Ford need help, Ernie Breech concluded, ‘it had to have help or the Big Three would surely become the Surviving Two.’ In spite of his strong ties to GM, Breech took the job because ‘it’s a great challenge and if I don’t accept it I shall always regret it.’
At Dearborn the executive found ‘run-down plants, obsolete products, almost non-existent financial control, an inadequate engineering staff and just sufficient cash to meet daily operating requirements.’ Ford’s balance sheet, he found, was ‘about as good as a small tool shop would have’. Breech found a Ford that he could mould in the GM image with decentralised profit centres and a differentiated staff and line organisation.
Ford today is not the basket case that Breech took over. Although its organisation is still in flux following the dismantling of the disastrous ‘Ford 2000’ effort at the end of the 20th Century, Ford does have the necessary people and processes in place. That its engineers are top-rank is shown by the excellence of its first full hybrids. One hopes — perhaps in vain — that the ‘Way Forward’ job losses won’t deprive Dearborn of its most experienced and capable senior managers.
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By GlobalDataMind you, one senior manager who could be shown the door is J Mays. It never ceases to amaze me that among the Jac Nasser appointments this one has survived Jac’s departure. Like other top carmakers Ford has first-class designers but under Mays they haven’t been able to show what they can do. Fortunately Peter Horbury has slid in below Mays, who’s been kicked upstairs. Horbury says he’s rejecting Euro-centric styling for Ford’s North American offerings, which will have distinctive design instead. This is very promising.
The more that Ford is seen to be in crisis, the better the opportunity that Alan Mulally will have to put into effect the changes that he finds that the company needs. People throughout Ford, among both management and labour, have to understand that change is necessary. Ford must find a new direction and pursue it aggressively. It must sweep aside the Titanic deckchair-arrangers, some of whom are emasculating Lincoln by saddling it with alphanumeric model names and eliminating its V8 engines. They should be borrowing V12s from Aston Martin instead!
Mulally could well find it desirable to hark back to the methods that Ford used in developing the Taurus, methods that he says he used in creating Boeing’s 777 airliner. Though this philosophical link between Ford and Boeing was much-touted in the release announcing Mulally’s appointment, the irony is that the methods referred to were those introduced to Ford in the 1980s by then-CEO Don Petersen.
‘Pete’ took the radical — by Detroit standards — step of bringing in Dr. Edwards Deming, the efficiency expert whose teachings on quality made him a god in Japan. He implemented Deming’s principle of driving decisions down to the lowest possible level, assigning respected Ford executive Tom Page to the task of spreading the gospel throughout Dearborn. This created the atmosphere in which a Taurus could be conceived.
Of course in time-honoured Ford tradition this vital and productive campaign was abandoned after Petersen’s departure in 1990. His successor, the ultra-dry Red Poling, had no mandate to continue down the Deming-driven direction. Neither did Alex Trotman, author of Ford 2000. Between them they snuffed out the most potentially productive initiative ever launched at the Ford Motor Company. Is there anyone at Ford who remembers the efforts of Petersen, Deming and Page? If so I hope they’ll have a word with Mulally.
Needless to say the highly politicised atmosphere at Ford will pose a challenge for someone parachuted in at such a high level as Mulally’s. He’ll need to move fast to implement the mandate he’s received from Bill Ford. Bill in turn will need to show solid support for his new president and CEO.
The new man has a huge advantage in his impeccable engineering credentials. In no aspect of the auto business is it easier to buffalo ignorant managers than in engineering. Mulally will be able to cut through the technical obfuscations to find out what’s really going on. He’ll have to adjust his thinking from hundreds of units a year to hundreds of thousands but that shouldn’t be a problem.
Alan Mulally will also have the urgent task of trawling Ford’s management ranks to find the people who are really good at their jobs. Will Mark Fields measure up? It’ll be interesting to see. The ex-Boeing man shouldn’t overlook fellow engineer Ulrich Bez, who has done such a fine job at Aston Martin. In any rational world Bez would be rewarded for his work at Aston by being given the top job at Volvo — plus a shareholding in the Swedish company to compensate him for relinquishing his plan of a management buyout of Aston Martin. Bez would know just what to do to make Volvo live up to the Latin meaning of its name: ‘I roll’.
There’s lots positive to say about the Alan Mulally appointment. In only one respect is it problematic. The new man is 61 years old. That gives him far too little time to make his mark on the Ford Motor Company. He’ll be long gone before any important new models designed on his watch will be launched. If in those four years he can steady the ship, identify and promote the real producers and inculcate a firm policy of quality and creativity, Mulally will have achieved a lot for Ford.
– Karl Ludvigsen
Karl Ludvigsen is an award-winning author, historian and consultant who has worked in senior positions for GM, Fiat and Ford. In the 1980s and 1990s he ran the London-based motor-industry management consultancy, Ludvigsen Associates. He is currently an independent consultant and the author of more than three dozen books about cars and the motor industry, including Creating the Customer-Driven Car Company
