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Detroit News: "Simplicity Is Job One"

From over at GMI:

July 18, 2007

Daniel Howes

For Mulally, simplicity is Job 1

CEO peddling foreign luxury lines to intensify focus on Ford's core

In his first town hall meeting as Ford Motor Co. CEO last September, Alan Mulally essentially dismissed a question about a corporate strategy team, saying those who run the company will chart its course -- and that's exactly what's happening in Dearborn.

Every week, it becomes clearer that the Mulally era at Ford is all about simplifying the business to save it. The architect is a 37-year veteran of Boeing Co. unencumbered by the pride, nostalgia, imperial delusions and parochialism that have stoked denial in Detroit and hobbled decision-making at Ford and its cross-town rivals.

Good thing, too, because Mulally's honeymoon is over. Sell Aston Martin, the bespoke British sports car icon, for $848 million? Certainly, and easily, in a market awash in private capital. Peddle chronic money pit Jaguar and the recently profitable Land Rover, a brand whose value may have peaked in these greener, anti-gas guzzler times? In a heartbeat, if it intensifies the focus on the core Blue Oval.

Entertain offers for Sweden's Volvo Cars, even if it contributes millions to Ford's bottom line and is renowned for safety? Absolutely, says a ranking Ford executive familiar with the situation, because the distraction of running Volvo, investing more there and integrating it into Ford's operations may outweigh its longer-term benefit.

And all of it simplifies the business and raises cash to plow into Ford's debt-financed restructuring, whether to speed product development or finance a union-managed fund to cover hourly retiree health care costs and remove the liability from Ford's strained balance sheet.

"The union leadership has been asking for years to clean up this portfolio -- for years," the Ford executive tells me, meaning the moves on Jaguar, Land Rover and probably Volvo are likely to help, not hurt, tough talks with the union beginning Monday.

A radical culture changer

For Mulally, probably Executive Chairman Bill Ford Jr.'s canniest personnel play since becoming chairman in 1999, none of his moves -- save his intense focus on the Ford brand worldwide -- is about tradition, or Ford's deep ties to the Brits, or the legacies of those who went before him, or Volvo's stellar quality reputation or whether Bill Ford Sr. is an avowed Jaguar man.

"Any good company is always reviewing their portfolio," Mulally told me. The goal is to deliver an "integrated, viable, leveraged Ford around the world -- no matter what."

He could have added: And it doesn't matter who looks bad in the process. Of course Volvo is for sale -- for the right price -- which is why Wall Street generally is greeting signals that Volvo is in play, too, with a calm satisfaction that says, "It should be."

The heart of Ford, from Dearborn and the capitals of Europe to China, Russia, India and South America, is the Blue Oval, not ancillary brands acquired in the go-go late '90s.

Back then, everyone from Ford's Jacques Nasser and VW's Ferdinand Pikch to Renault's Louis Schweitzer, GM's Rick Wagoner and Daimler's J|rgen Schrempp thought they could buy their way into every segment of the market. Only Schweitzer, the bookish French bureaucrat, appears to have succeeded.

Mulally's dismantling of the imperial Ford is not so much about returning the company to its roots, a twisted web of competing fiefdoms, regional rivalries and petty corporate politics that historically resisted change.

It's about radically changing Ford and its culture by paring the company to expose its automotive strengths and emulating Toyota Motor Corp., the automaker whose globally integrated operations Mulally studied closely during his Boeing days. And, second, showing that Bill Ford's No. 1 draft pick can live up to his billing -- and very soon.

Expectations and pressure are rising for Mulally to deliver some bold moves of his own to justify his mondo pay package and outsized reputation as the man who led Boeing's commercial aviation unit through its darkest days after the Sept. 11 attacks.

Much more at link.

Mercury is alive and well. It's called Lincoln.
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