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Schulz did not seem to think he had to. He had forgotten more than Mulally knew about the automobile industry. Moreover, he was one of Bill Ford’s closest friends at the company. They were fishing buddies who had worked together for years. Schulz was confident he could deal with the Mulally situation the next time he was alone with Bill Ford on a trout stream. Until then, he remained evasive and bureaucratic.

Mulally never lost his temper with Schulz. He continued to invite him to “join the team,” but Schulz refused to play by Mulally’s rules. When his new boss put a limit on how many slides each executive could show each week, Schulz brought twice that number. The next week, he went to China and did not call in for the Thursday meeting at all. When Schulz returned to Dearborn, Joe Laymon took him aside and warned him not to test Mulally’s patience.

“You’re going to get your ass fired,” he cautioned Schulz. “Bill can’t save you on this one.”

“He’s still the chairman of the company,” Schulz shot back.

“Yes, but he hired a guy to run it for him—and if this guy says,
‘I need this team to run the company’ and it doesn’t include you, Bill’s going to give him his team,” Laymon said. “Don’t impose on Bill’s friendship. Don’t put Bill in a position where he has to make a decision.”

But Schulz was confident Ford would take his side. When they were alone on the company jet during a trip to China in late October, he pleaded his case. But Bill Ford told Schulz he would not help him this time; whatever problems he had needed to be worked out with Mulally. Schulz was devastated. The era of cronyism had come to an end at Ford.

A few days after he returned to the United States, Mulally called Schulz into his office to tell him that his position—president of international operations—was being eliminated. It was one more layer of bureaucracy that would not be needed in the new Ford. Mulally wanted the heads of Ford’s Asian and European operations to report to him directly. He asked Schulz if he would consider overseeing global product planning. It was a clear demotion, and Schulz left fuming.

“Maybe it’s for the better,” his wife told him.

Schulz was a third-generation Ford employee, and his grandfather and father had both died of heart attacks on the job—his grandfather at fifty-seven, his father at forty-seven. Schulz was fifty-three and did not want to end up the same way. It was a bitter pill to swallow, but he announced his retirement in December. He turned down the company’s offer of a farewell party.

Schulz had underestimated both Mulally and Bill Ford. He was unable to get past the new CEO’s amiable exterior, to see the relentless leader it concealed. Nor did he seem to grasp that Bill Ford had bet everything on Mulally; he was not about to second-guess him or undermine his authority.

F
ord Americas president Mark Fields had gotten over his initial anger at Mulally’s appointment, which had ended, at least for now, his own shot at the top job. He seemed to be getting with the new program. But Fields went out of his way to make it clear to Mulally
that he was in charge of the Americas group and did not need any help running it. Mulally was impressed with Fields’ work on the Way Forward acceleration plan, as well as by the courage he had shown in telling the truth in the BPR review about the troubled Edge launch. But Mulally also knew that a big part of why he had been hired to run Ford was that Fields had proven he could not do it alone.

Turf was not the only thing Fields was trying to protect. He was also fighting to keep his jet privileges. Fields’ weekly commute from Florida was being held up as a symbol of Ford’s hypocrisy as it demanded more and deeper sacrifices from its employees to cope with its mounting losses. Many already viewed Fields as arrogant and aloof; his use of the company plane only reinforced that—particularly when he called for “
sacrifices at every level.”

On a warm Saturday morning in November, Fields went out to grab a cup of coffee and a newspaper. He was ambling back to his Volvo, enjoying the Florida heat, when Detroit’s version of a
60 Minutes
hit squad—WXYZ investigative reporter Steve Wilson—jumped out of the palm trees and thrust a microphone into Fields’ face, demanding to know how the Ford executive had made the trip from Dearborn to Delray Beach.

“Listen, it’s Saturday morning,” Fields said wearily. “I’m here with my family.”

“Yeah, but you’re down here on the Gulfstream!” Wilson snarled at him. “You’re spending what? How much is that every weekend?”

According to Wilson, each of Fields’ weekly round-trips was costing the company approximately $50,000. Ford would later put the figure at $30,000. Either way, it added up to a sizable chunk of change for a company that was slashing thousands of jobs.

Mulally ordered Fields to stop using the Ford jet. It was a bit hypocritical, given that Mulally himself was commuting back and forth between Dearborn and Seattle on Ford’s friendly skies. But Mulally was not the one being ambushed by reporters. Fields’ use of the plane had become an embarrassment to the company. Even the
Wall Street Journal
, which did not usually traffic in such sensationalism, had picked up the story.

Fields tried to hold his ground. Use of the jet was in his contract, which was a legal document that could not be abrogated, except by mutual consent. He threatened to quit if Ford breached it. But Mulally was not about to let Fields go on generating negative publicity for the company. Laymon was asked to deal with the situation. He challenged Fields to make good on his threat.

“If you truly have alternatives, exercise them,” he dared Fields.

In the end, Fields reached a compromise with the company. Ford agreed to up his annual cash compensation and Fields agreed to fly commercial.
^*

O
utsiders saw Mark Schulz’s “retirement” as a sign that the bloodletting at Ford had finally begun. In fact, Mulally was remaining true to his word. Instead of figuring out whom to get rid of, he was trying to figure out where each of Ford’s executives could make the biggest contribution to the company’s turnaround effort. He was focused on filling in the blanks on his matrix organization chart.

Mulally tried to come up with two or three candidates for each position. He was prepared to look outside Ford if necessary, but he wanted people with deep knowledge of the company and its problems. Mulally looked at who was currently in charge of each function and then tried to identify the best people beneath him or her. That way, if his first choice did not work out, he would be able to quickly fill the position with other in-house talent. Mulally moved cautiously. He scheduled one-on-one interviews with executives, talking to them about what they had done at Ford, what they were doing now, and where they thought they could help. He looked not only at their qualifications and technical expertise but also at whether they worked well with others. Mulally also needed to know that they had
the stomach for the heavy lifting that lay ahead. Most important, they needed to be able to function in the midst of crisis.

Some of the choices, like Michael Bannister and Mark Fields, were obvious. Mulally decided to give the current heads of Ford’s European and Asian divisions a chance to prove themselves as well. With Schulz gone, the company’s Asia-Pacific and European operations were reconstituted as separate business units, coequal with Fields’ Americas group.

Asia-Pacific, which was also responsible for Ford’s operations in Africa, was led by John Parker—a short, soft-spoken South African who had been with the company since the 1960s. An engineer by training, Parker had been Ford’s chief technical officer in Taiwan, head of product development in Australia, president of Ford India, and Dearborn’s senior representative at Mazda before taking over the entire region just before Mulally arrived. He had good connections throughout Asia, which was vital to doing business in that region. But Mulally made it clear that he was not impressed with Ford’s performance there, particularly in the critical Chinese market. He expected Parker to turn things around, and fast.

Lewis Booth was the head of Ford of Europe and the Premier Automotive Group, which were now united in the European group. He was a tough but unassuming Liverpudlian who started his career in the automobile industry as an engineer for British Leyland. Booth also trained as an accountant and had joined Ford in 1978 as a financial analyst for Ford of Europe’s product development division. His rise through the ranks was far from meteoric. Booth was short and frumpy and therefore at a significant disadvantage in Jacques Nasser’s Ford, where good looks and urbane style were often valued more than leadership skills. He had spent the past several years following in Fields’ wake, succeeding him first as president of Mazda, then as the head of Ford of Europe and the Premier Automotive Group. But Booth was smart, had a good sense of humor, and cared about his employees. This made him an effective leader who was regarded by many as one of the company’s hidden gems.

Because he had reported to Schulz, Booth did not have an
opportunity to meet Mulally until a few weeks after he joined the company. When he did, Booth was wary. He could tell there was more to the man than his boyish grin and cheerful demeanor suggested. He thought many of his colleagues had been unwise in their early appraisals and he did not want to make the same mistake. It quickly became clear to Booth that Mulally was a man who sincerely wanted to change Ford for the better. Booth was prepared to follow anybody who made that his mission. He hated working for Schulz, whom he found far too easygoing. Booth was a better manager who had more experience running large organizations, and he knew it. But he was not a personal friend of Bill Ford. Booth had continued the European restructuring that Fields had begun, and Ford’s operations there were becoming stronger by the month. Its products were the envy of the rest of the company. Mulally told Booth to keep doing whatever it was he was doing and share as much as he could with the rest of the leadership team.

W
ith the business units in place, Mulally turned to the functional teams, starting with finance. Mulally had decided to keep Don Leclair around as long as possible. His department already operated globally, but its authority was somewhat limited outside the Americas. That was changing as the walls that divided the company were knocked down.

Joe Laymon would also be staying on as vice president in charge of human resources and labor affairs, at least for now. Though Laymon had proven a valuable ally, Mulally was beginning to see him more as part of the problem than the solution. His real value lay in his ability to do Bill Ford’s dirty work. But even Ford had begun to suspect that Laymon started as many fires as he put out. He had done more than his share of fighting in Ford’s internal turf wars, and he was a ruthless adversary who was not above leaking damaging information about other executives to the press. Like Leclair, he was never going to be a team player. That worried Mulally. But Laymon was a good friend of United Auto Workers president Ron
Gettelfinger, and Mulally needed him until the critical 2007 contract negotiations were concluded.