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Ford CEO, battling red tape, red ink, faces investors
Wed May 9, 2007 2:54pm ET

Alan Mulally and Bill Ford

By Poornima Gupta

DETROIT, May 9 (Reuters) - Ford Chief Executive Alan Mulally has made it his mission to change the way the automaker does business, cutting stifling bureaucracy and knocking down fiefdoms in a sprawling enterprise he has criticized for lacking a unifying strategy for too long.

Analysts say the task is urgent and the clock is ticking for Ford as Mulally attempts to engineer a turnaround from last year's record $12.7 billion loss and reinvent the iconic American automaker as a leaner and more flexible competitor.

Now, nine months into the job, Mulally, who declined to be interviewed for this story, will face a skeptical audience of Ford shareholders at the company's annual meeting on Thursday in Delaware.

Enticed to Ford in September from Boeing with a $39 million pay package, Mulally and his predecessor, Ford Executive Chairman Bill Ford Jr., are expected to face tough questions on reform efforts and the role of the Ford family.

Two restructuring plans under Bill Ford sputtered out, leaving Ford's stock down 70 percent over the six years since he stepped in to run the automaker founded by his great grandfather.

The Ford family's influence at the automaker, and its control of 40 percent of voting power through a separate class of shares, have been cited as contributing to a corporate culture critics call inward-looking, politically charged and risk averse.

"There are some individuals who still say they work for the Fords and that is a hangover from a long time ago and one of the problems," said Kim Cameron, professor at University of Michigan and an expert on corporate culture. "It's a legacy of 100 years. It's going to be very difficult to alter."

Whether Ford can change the way it works could determine whether the 103-year-old automaker survives, said Erich Merkle, director of forecasting for consulting firm IRN Inc.

Ford, Merkle said, needs to "inject a level of passion" in vehicle designs and avoid the "constant internal fighting" that has marred the company's recent history.

"The long-term viability of Ford depends on changing the corporate culture," he said.


Ford has long been under the influence of strong personalities, such as Henry Ford II and former CEO Jacques Nasser.

Family scion Bill Ford Jr., who succeeded Nasser in 2001, recently told Portfolio magazine that the bureaucracy at the company stymied his efforts to turn it around.

"When I gave a directive, the system would slow-walk it... You know, if you have enough meetings...if you slow the train down long enough, people will lose interest," Ford said.

Ford told the magazine that he "literally didn't want to get out of bed some mornings" when he was working as CEO.

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