Mulally to Hand Over Ford CEO Job Earlier than Expected
May 2, 2014 2:29 PM EST
Ford Motor Co (F.N) on Thursday made official what investors and analysts had been waiting for - Chief Executive Alan Mulally this summer will pass the baton of leadership to Chief Operating Officer Mark Fields, six months earlier than expected.
Mulally to Hand Over Ford CEO Job Earlier than Expected
The 68-year-old Mulally is credited with transforming the No. 2 U.S. automaker from a money-loser to a company that expects to realize a pretax profit of up to $8 billion this year after joining in 2006 from Boeing Co (BA.N).
The ascension of 53-year-old Fields as the next CEO, which the company's board approved on Wednesday, was expected, but the timing had been unclear. Mulally said the transition was moved up from year-end because he felt the team and Fields were ready.
Fields, who promised to hew to his predecessor's strategy, said his current COO position would not be filled when the CEO change occurs, adding in a later interview that the management team structure without that position was "appropriate."
When asked whether he considered promoting Joe Hinrichs, president of the Americas and an executive perceived by many in the auto industry as a rising star, Fields told Reuters that Hinrichs had a "really big job now running North America. He's very talented and he's got a bright future."
Mulally said in a later interview that he had no concerns that Hinrichs would leave as he is intimately involved in setting the company's strategy.
Fields also said he would stay in touch with Mulally even though he will leave the company board. Fields pointed out that Mulally remains a Ford shareholder. Asked why he was not remaining on Ford's board, Mulally said it was the right time for him to leave and turn it over to the next team.
WASH, RINSE, REPEAT
Analysts said Fields will inherit a much stronger company than Mulally did, one with a highly profitable North American operation underpinned by the top-selling F-150 large pickup truck. Ford also has a growing share of the China auto market, the world's largest, and is seeing a nascent recovery in Europe.
Wall Street does not expect big changes given Fields has been a major architect of the turnaround plan under Mulally.
"You know the plan, you know how to work the plan," Morgan Stanley analyst Adam Jonas said. "Mark (Fields) calls it 'wash, rinse and repeat.'"
The biggest challenge awaiting the new CEO is the launch this autumn of a redesigned, more aluminum-intensive version of the F-150, a key profit generator for the company, analysts said. UBS analyst Colin Langan called the new truck "a potential game changer in the industry."
Ford is introducing a company-record 23 new vehicles this year, most of them in North America. Those launches also will be a test for Fields, who has spent the last year focusing on improving quality.
MULALLY'S NEXT MOVE?
Fields said on Thursday that he does not plan changes to the company's leadership team, and said his primary focus will be to continue and accelerate progress on the "One Ford" plan established by Mulally. That strategy calls for sharing of engineering and design of vehicles around the globe to improve quality and cut costs.
"It's a story of continuity," Fields told a roomful of more than 400 employees and reporters at Ford's headquarters in Dearborn, Michigan.
Mulally is expected to seek another high-profile job. In 2012, he discussed a role in the Obama administration, but ultimately committed to two more years at Ford.
Bill Ford, great-grandson of company founder Henry Ford, said he would make sure the automaker does not revert to a corporate culture he once described as having "more intrigue than czarist Russia."
Bill Ford, who preceded Mulally as chief executive and is the company's executive chairman, said the automaker looked at outside candidates to replace Mulally, but quickly decided Fields was the best option.
Mulally said he has not decided on his plans after July 1 as he was focused on ensuring a smooth transition but he was looking forward to the next opportunity and was confident in Fields as his successor. "I have nothing left to teach him," he said.
Ford shares were down 1 percent at $15.99 on Thursday afternoon on the New York Stock Exchange.
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