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Ford's culture shift to stability drives progress

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Ford's culture shift to stability drives progress



When Ford holds its annual meeting Thursday in Wilmington, Del., the automaker can show its shareholders tangible financial results of a turnaround plan four years in the making, as well as a confident American automaker poised for rebirth.

Ford has delivered four consecutive profitable quarters, and its stock price has almost doubled over the past year. Alan Mulally, president and CEO, credits Ford's new lineup of cars and trucks for much of the progress.

But interviews with Ford executives reveal that the progress also is the result of a cultural transformation driven by Mulally's straightforward, can-do approach.

• Shareholder issues

Mulally has pulled together a strong, cohesive management team by instilling a sense of camaraderie and security among the ranks -- there have been no big shake-ups since he arrived.

"We are so stable in terms of our management," said Sam De La Garza, brand manager for the Ford Fiesta subcompact car that is scheduled to launch this summer. "When you've got this stability, you are just able to ... make decisions and move on."

Ford once was known for fierce internal politics and a weak bench. But many employees say that is all in the past.

"It's one team, from the marketing team, to the manufacturing team to the product team," said Frank Davis, executive director of North American product programs. "Everybody is on the same page. ... The teamwork is the best I have seen it in 26 years."

Automaker gains even during crisis

Ford Fiesta chief engineer Steve Pintar calls his colleagues in Thailand every week to compare notes as Ford prepares to launch the Fiesta subcompact car in both countries.

Five years ago, that level of global cooperation did not occur, said Pintar, who has worked at Ford for 21 years.

The change is one example of a cultural transformation driven by Ford President and CEO Alan Mulally. "When you meet Alan, one of the key things that hits you is he is very straightforward," Pintar said.

"He sets a vision that is not mistakable. It's clear as a bell, and people can rally around it."

In recent years, shareholders have praised Mulally for his management style, which has been getting results as Ford executes its 2006 turnaround plan. He's likely to hear compliments again this week at Thursday's scheduled annual meeting in Wilmington, Del.

In addition to last year's surprise $2.7-billion profit, Ford also has reported a $2.1-billion first-quarter profit and achieved a 32.3% U.S. sales increase -- outpacing the industry's 16.7% increase. Its stock closed at $11.51 on Friday, nearly double its year-ago close of $6.06 per share.

That's in sharp contrast to the nearly $30 billion in losses Ford amassed between 2005 and 2008. And the progress was made in the midst of a global economic crisis that could have thrown Ford off course.

Taking on Toyota

But Ford cleverly played its hand by rejecting emergency federal loans -- a move that gave American consumers a reason to embrace Ford and its hot lineup of cars, such as the Focus, Fusion and Taurus.

Now, Ford is seen as a threat to Toyota.

"Ford is really in a particularly advantageous spot to build on their momentum, and I think they are a legitimate contender with Toyota," said Rick Wainschel, senior vice president of market intelligence and brand strategy for Kelley Blue Book.

Last week, Kelley Blue Book released results of a study showing that consumers ranked the Ford brand first in the company's automotive brand-indicator study. Ford unseated Toyota, which dropped to second. The survey measures brand perception, shopping consideration, Web site traffic and several other measures.

Growing confidence

Ford's recent successes have employees and shareholders complimenting Mulally's management style and results.

"I have a lot of confidence in Bill Ford and Mulally ... they make a good team," said Tom Dougherty, a shareholder who lives in Livonia. "They have a good plan going, especially with the new Fiesta and Focus coming out."

Frank Davis, executive director of North American product programs, said Ford's products and marketing have improved because the stability of its management team has fostered trust and teamwork. Ford was once known for shuffling workers around the organization every year or so, but Davis has been in the same job for the last three years.

"By the end of this year... I will have launched every new vehicle in the lineup -- from Fiesta to Super Duty," Davis said. "It's about experience and knowing you can trust the guys, and putting the right people in the right jobs."

Chantel Lenard, group marketing manager for global small and midsize cars, said the growing trust among executives creates opportunities for risky ideas, such as the Fiesta Movement social media and marketing campaign launched last year.

"That could have been a real problem, but instead, it was a huge success," she said. "Trying new things, and having confidence -- I am seeing that now more than I've seen it in the past."

Challenges remain

Ford still faces plenty of challenges. It owes $34.3 billion in debt -- far more than the $17 billion that General Motors had when it left Chapter 11 bankruptcy last year.

The company's Mercury division is starving for new products, and its revamped Lincoln lineup has sold 29,689 cars and SUVs so far this year, or 10,980 fewer than rival Cadillac.

Meanwhile, Ford is racing to invest in its Asia Pacific division because it has just 2% of total industry sales in China -- now the world's largest automotive market -- and is behind its rivals there.

What's more, GM, fresh out of bankruptcy and starting to gain steam, might also steal some of the spotlight that Ford has been enjoying.

Ford executives are aware of these challenges, as well as what some say is Ford's greatest risk: complacency.

"It's really important that we continue to keep the pressure on and that we recognize that we can't fall back in our old ways," Lenard said.



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