But these are desperate times in Dearborn. Since 2001, Ford Motor has suffered more than $9 billion in losses from its North American auto operations. Companywide, Ford lost $254 million in the second quarter. Ford's market share in August, 16.8%, was the second lowest on record. Sales of pickup trucks and SUVs, Ford's only major profitable segments, have plummeted in the last year, hit by high gas prices and stiff competition from GM and Toyota. A 21% production cut is in store for the rest of the year. Any way you slice it, Ford is shrinking fast. And it may be years before the company consistently posts profits again.
Bill Ford, who ran the automaker for the last five years, certainly realized the gravity of the situation, which explains why he brought in Mulally. At Boeing, Mulally had a reputation as an ace engineer and turnaround guy. He helped develop hit models like the 777 jetliner, launched in the early '90s, and the 787 Dreamliner, expected in 2008. After plane orders plummeted following the 9/11 terrorist attacks, Mulally stabilized the commercial aircraft division, which is now earning handsome profits. Nor has he shied from downsizing. Under his reign, Boeing's commercial division layed off 30,000 workers, shuttered factories and killed products that weren't pulling their financial weight, like the 100-seat 717 plane. Says Bill Ford, on his decision to recruit Mulally: "I wouldn't have made this move unless I found the right person... I felt our management team needed a leader who had earned his stripes in a very tough situation."
Not many chief executives would even hint that they aren't up to the job. But Bill Ford never appeared all that comfortable running his namesake company. An avowed environmentalist, he tried unsuccessfully to turn Ford into a green car leader and was forced to backtrack as the company's finances fizzled. In Detroit, the buzz is that he's too nice a guy, unwilling to impose draconian job cuts at the risk of angering the UAW. In an interview last winter with TIME, he acknowledged that he found the CEO's role confining at times. And it has been clear for some time that he wanted out. In a press conference a year ago, he obliquely acknowledged that he had held discussions about a possible job at Ford with two of the industry's premier executives: Carlos Ghosn of Renault-Nissan and Dieter Zetsche of DaimlerChrysler. (Bill Ford says "the list was half that long.")
The reality is that Wall Street had lost confidence in him. Ford's stock has rallied in recent weeks, rising more than 35% on speculation that Bill Ford might step aside and that his family, which controls 40% of the voting shares, may take the company private. Yet the stock, trading at around $8.50 a share, still indicates that Wall Street takes a dim view of Ford's prospects; the company's market capitalization is just $16 billion, well below the cash value of the firm. (Toyota's market cap, by contrast, is $174 billion.) Ford's debt was cut below investment grade by the major credit-ratings agencies last year. Some analysts say it's only a matter of time before the company goes hat in hand to Wall Street for "bridge financing" to survive the next few years.
Does all this rattle Mulally? "I think it's a tough situation," he says, adding that he thinks the company has a strong lineup of cars and trucks in the pipeline. But he also downplays any suggestions that he'll be Motown's Chainsaw Al a guy who'll try and slash and burn his way into the black. "A momentum shift is how I'd characterize it," he says. Whether he'll shift Ford into a profitable gear remains to be seen.
With reporting by Joseph R. Szczesny/Detroit