In the rough-and-tumble world of automakers, one company has really begun to stand out. Ford (NYSE: F) was in serious trouble in late 2005, plagued by declining sales and profitability woes. Enter our hero: Alan Mulally, who provides proof that a new CEO can completely change the course of a company's future, even in an industry as tough as auto manufacturing.
Bird of a different feather
Mulally has been with the company only since 2006. His last job? An engineer-turned-executive who put in 37 years at Boeing. Yes, these industries are quite different; even Mulally's mother was quoted as saying, "But Alan, you're an airplane guy."
Mulally was credited with turning Boeing around, steering the company through the airliner-market decline that followed the 9/11 attacks. Ford needed a similar turnaround, and Mulally was able to pull it off. He sold off Ford's luxury brands to Tata Motors (NYSE: TTM), emphasized smaller vehicles, and guided the company bailout-free through the financial crisis of 2008 and 2009.
Plans for growth
Ford was No. 2 in U.S. auto sales for May, but lately, Mulally has more on his mind than domestic sales. The CEO recently announced ambitious plans for Ford's global growth, including increasing sales by a whopping 50% over the next four years. If it makes that goal, Ford will sell 8 million vehicles globally, putting it on par with Toyota (NYSE: TM), the world's No. 1-selling automaker.
Ford has some ground to gain in Asia, where companies such as General Motors (NYSE: GM) and Volkswagen have more prominent brands and larger market share. GM currently holds 14% of the market share in China. Ford has 4%, but new models built on a global platform put it in much better position to ramp up sales in foreign markets than in years past.
Numbers are up
According to Consumer Reports, Ford is the most improved automaker over the past few years, as reflected in its year-to-date sales of 878,600 vehicles, a 12% increase from last year.
On top of the sales progress Mulally is spearheading at Ford, the company has also paid down a total of $2.5 billion in net debt in the first quarter of 2011. For more on Ford's recent numbers, check out fellow Fool John Rosevear's June 3 writeup.
Future at Ford
Investors often debate the importance of incredibly successful CEOs and whether or not their departures would doom their companies -- Steve Jobs at Apple being one of the most notorious example. At Ford, Mulally has instituted changes internally to prevent that sort of chatter.
When Mulally came on board in 2006, he stressed communication and transparency, among other things. Weekly meetings expanded to include representatives from every functional area in the company, including previously unrepresented areas such as HR and IT. This move effectively exposed executives to all aspects of the company.
Before Mulally's arrival, Ford acknowledged that in-house executives were not as well-rounded or prepared to lead the company. Now, Chairman Bill Ford has gone on record saying that Mulally's successor will probably come from inside Ford.
Management is crucial
It's no secret that companies need strong management to execute turnarounds and achieve lasting success. Balance sheets and quarterly sales reports allow us to track management's progress, but paying attention to internal administrative changes can be just as important in determining which companies have the best chance for lasting excellence. With Ford's future looking bright, now may be a great time to get in.
