By Bernard Vaughan
NEW YORK (Reuters) - Like aging empires, the "Big Three" Detroit automakers slogged along the same downward trajectory for decades, with unrealistic labor contracts, Byzantine bureaucracies and a general complacency crippling them in the face of international competition. The decline culminated, of course, with the bankruptcies and government-sponsored bailouts of two of them, General Motors Corp. and Chrysler, in 2009, amid the dark days of the Great Recession. All survived. But only Ford Motor Company can say it did so on its own, mortgaging its corporate logo in the process, as journalist Bryce G. Hoffman describes in his book "American Icon: Alan Mulally and the Fight to Save Ford Motor Company." As the title suggests, the prime mover in Ford's epic turnaround was Mulally, an inveterate optimist from Kansas with a wholesome grin whom Hoffman likens to Richie Cunningham, the all-American boy from the "Happy Days" sitcom. The author was given generous access to spend a year visiting the CEO's office and the offices of many of his disciples, learning that Mulally's success did not hinge on an in depth knowledge of a complex and dysfunctional business.
Instead, he built a comeback on the power of a consistent message, meaningful language and accountability. When he arrived at Ford in 2006, Mulally had no experience in the auto industry. But he had won praise for turning around Boeing's Commercial Airplanes Group, which, like Ford, required him to transform a divisive corporate culture while fending off foreign rivals, the author writes. Hoffman describes how, after assuming the helm at Ford, Mulally dramatically transformed the corporate culture, starting with top management. A drive for "One Ford," with slogans and mottos on wallet cards and posters and all sorts of internal messaging to reinforce, went into high gear. Ford executives once could fiddle on their BlackBerrys while underlings did their bidding at high-level meetings. Not any more. Mulally reformed Ford's confusing and cumbersome command structure with a "matrix" he'd used at Boeing designed to boost communication among business unit executives and the CEO, Hoffman writes. "Executives had been accustomed to dealing only with the big picture," says Hoffman, who began covering Ford for the Detroit News in 2005. "Now they were being asked to explain the minutest details of their divisions." Hoffman in his book thanks Ford executives for their cooperation and access in putting together his narrative -- a portrait one auto industry blogger said reads like "an extended length director's cut of a Ford press release." To be sure, Hoffman doesn't include, or failed to dig up, all of the gruesome and embarrassing details behind Mulally's bloody and imperfect turnaround. Mulally, like any corporate giant, has skeletons, and this book fails to reveal them. But Hoffman relates many fly-on-the-wall accounts of Mulally negotiating deals and Ford overcoming challenges from inside and outside as the turnaround plans are pushed.
There are covert meetings in an empty office building behind a Detroit Lions practice facility with United Auto Workers chief Ron Gettelfinger that prove critical in securing a labor contract with major union concessions.
The author also paints a portrait of a leader whose almost childlike simplicity confounded a city that has long found it impossible to get out of its own way. There's a 2008 meeting with embattled GM CEO Rick Wagoner - who, like many in Detroit, underestimated Mulally, Hoffman says - in which Wagoner proposes a merger between the companies with GM maintaining overall control. When a Ford executive reminded Wagoner that Ford was then worth more than GM, Wagoner suggests he'll take the proposal elsewhere. "Mulally did not think much of that threat, nor did he think much of Wagoner's pitch," Hoffman writes. Ford under Mulally worked hard to avoid bankruptcy, cutting costs, diversifying its products and above all securing $23.6 billion in financing before the credit markets froze up in 2008, Hoffman writes. All of that tells a story of making your own luck. So Ford executives were bitter when the federal government bailed out GM and Chrysler -- especially GM, investing $30 billion and absolving GM of liability for past errors, extricating it from a class-action lawsuit over asbestos in which Ford was also a defendant and forcing the UAW into even deeper concessions than the ones Ford had struggled to negotiate, Hoffman writes. "As jealous as Ford's executives might have been about the ease with which the two other Detroit automakers were undoing decades of mismanagement, none of them wanted to trade places with their bankrupt competitors," Hoffman says. "American Icon" does read like a tribute to Ford Motor Co and Mulally. But it also amounts to a paean to the ingenuity, grit and optimism that once defined American industry and to capitalism played with government on the sidelines. "Mulally and his team had done what many thought impossible even in the best of times," the author writes. "They had restored the American people's faith in Ford Motor Company." It's an interesting story. Unfortunately for Ford, it could very well revert to an unhappy ending in any updated edition of such a history book.
Mulally is 66. Any student of the car business knows that automakers only ride the crest for so long before they come tumbling back to earth with an abrupt, dramatic and painful reckoning. In that sense, "American Icon" doesn't answer the key question of the day: How well is the next generation of Ford leadership prepared for that next crash?
(Editing By Peter Bohan)