Detroit, Michigan - Under intense competition and with the company's future in the balance, the Ford Motor Co reached outside the auto industry for the first time in more than half a century to put a CEO in the driver's seat.
The automaker disclosed it had hired Alan Mulally from the Boeing Co to serve as its president and chief executive officer.
For the past eight years, Mulally, 61, had led Boeing's commercial aircraft division in its duel with Airbus but last year he was passed over when the Chicago-based aerospace company picked another candidate to fill the role of Boeing's chairperson and chief executive.
Mulally, who will start his new job on October 1, said he was looking forward to the challenge of turning around the fortunes of another American icon.
Boeing has now surpassed Airbus in new orders and will certainly surpass its European rivals in deliveries next year, he said during a conference call from Ford headquarters.
Better products, better service
One of the reasons for the turnaround was that Boeing had chosen to compete by offering better products and better service. Ford can do the same, he said.
"Some people believe that the US can't compete in the design and manufacturing of sophisticated products like airplanes. I'm not one of them," said Mulally, who was in charge of Boeing's Commercial Airplanes since September 1998.
Bill Ford, the automaker's chairperson who is relinquishing the CEO post to Mulally, noted that Mulally is on a very short list of executives with hands-on experience turning around a major industrial company.
Craig Hutson, senior investment grade analyst with Gimme Credit, an independent research service on corporate bonds, noted that Ford had hinted as recently as late last week it was considering leadership changes when it announced it was considering putting Aston Martin up for sale.
"The challenges the company faces are much tougher than initially envisioned," he said.
Business model not working
"Ford admitted its historical business model was no longer sufficient in the current business climate.
"Ford's North American turnaround effort has stalled, but the hiring of Mulally is expected to jump-start the company.
"Further news of the acceleration of the Way Forward plan and a report by strategic advisor Kenneth Leet are anticipated by mid-month, but Mulally's hiring might delay expected decisions," Hutson noted.
"The business model that sustained us for decades is no longer sufficient to sustain profitability," Bill Ford noted in an e-mail to employees last week as he tried to boost sagging morale.
During the conference call, Bill Ford stressed he planned to remain actively involved in the day-to-day management of the company.
He also said he expected the revisions to the Way Forward to be approved by Ford's board as soon as next week.
Bill Ford co-driver
The automaker was not looking to build alliances with other companies, though it was certainly looking at the possibilities because the industry is changing rapidly, the Ford chairperson stressed.
Mulally also stressed that he would not have taken the job in Detroit without a firm commitment that Bill Ford intended to remain chairperson and actively involved in running the company.
"I was really impressed." Bill Ford took over as CEO in 2001 after the disastrous reign of former CEO Jac Nasser, who had left the company in the red and with a barren product development pipeline.
After the losses in 2001, the automaker managed to put together three straight years of profitability through 2005 before a steady decline in market share led to another financial crisis that began unfolding last year.
The company's problems continued to fester during the first half of the year as losses mounted. Ford lost $254m in the second quarter, including $1.5bn on its struggling automotive business.