Bill Ford, as CEO of Ford Motor Co., failed to get consumers to part with their cash, and so earnings dropped and profits disappeared. Ford has now stepped down, and his replacement arrives from a company whose preferred source of revenue is the unwitting taxpayer.
Alan Mulally comes to Ford from Boeing, where he was CEO of the commercial aircraft division. The 61-year-old executiveenters an ailing company that drastically needs a turnaround. The choice seems a bit odd on some scores. Mulally made and sold aircraft in an industry with exactly two participants — Boeing and Airbus — and in which he was selling to airlines, not consumers. A different skill set would seem to be in order for running a carmaker.
In his favor, Mulally presided over two key turnarounds at Boeing. A closer look at those turnarounds — and at Boeing’s modus operandi — raises suspicions that Ford might soon become another beggar at the federal trough of handouts.
Boeing is perhaps the greatest recipient of corporate welfare in America. Boeing is the number two Pentagon contractor, and notoriously convinced the Air Force into a lease deal about which one Air Force official wrote “we all know this is a bailout for Boeing.” At the time, Boeing was illegally offering a job to the Air Force procurement officer.
Sen. Patty Murray, D-Wash., like her predecessor Scoop Jackson, has earned the title, “The senator from Boeing.” In Washington state, where Mulally lives, the state legislature held a special “Boeing Session” in 2004, in which they handed out billions of dollars in favors to the company to keep some manufacturing there after Boeing headquarters went to Chicago in exchange for $63 million in handouts from the Windy City and the Illinois government.
Of course there is “Boeing’s Bank.” The Export-Import Bank of the United States is a federal export-subsidy agency that over the past nine years has dedicated a majority of its loan and loan-guarantee subsidies to Boeing. In Fiscal 1999, 68 percent of Ex-Im’s subsidies went to Boeing.
What about Mulally himself? Stationed across the country from Capitol Hill, Mulally has at times portrayed himself as above the political fray. Certainly, though, he is more tied in with politicians than Bill Ford.
Mulally has traveled to Asia with Commerce Secretary BillDaley, has come the Capitol Hill to meet with high-ranking House appropriator Norm Dicks, D-Wash., and has appeared at official ceremonies with former Washington Gov. Gary Locke, among his other dalliances with power.
At Boeing, Mulally once presided over the division handling defense systems. He also served as vice president “responsible for all airplane development activities, flight test operations, certification and government technical liaison,” according to Ford’s Web site.
Most importantly, the two “turnarounds” for which Mulally wins praise also show Uncle Sam’s fingerprints. In 1998, when Mulally came to the commercial airplanes division, he fixed things largely through layoffs. Getting the unions to acquiesce to these layoffs would have been tougher — an angrier union could have torpedoed the whole restructuring — without the help of the Clinton administration.
When Mulally announced the layoffs in early December that year, President Clinton immediately pledged to send federal money and “rapid response teams” to help get taxpayer funded training and benefits for the canned Boeing workers. A Labor Department official pledged to use “whatever we have within our disposal” to make the layoffs go smoother, promising “special funds made available to the states.” All of this government help kept the unions mollified in the layoffs.
Mulally also won universal praise for keeping the company profitable after Sept. 11. Part of Boeing’s success in this case included downsizing, but an important part of the jetmaker’s strategy involved Capitol Hill. Records for the second half of 2001 show the company dispatched lobbyists on bills such as “A bill to preserve the continued viability of the U.S. air transportation system,” the “Air Transportation Safety and System Stabilization Act,” “Emergency Aviation Security Act of 2001,” and others. In other words, Boeing lobbied successfully for federal bailouts for its customers.
One of Boeing’s lobbyists at this time on these issues was Linda Daschle, whose husband was the Senate majority leader.
While Mulally tends to keep his views to himself, he and Bill Ford have this much in common: Both have publicly called for increased gasoline taxes. Mulally, in fact, was a chief campaigner for ballot initiatives to raise the gas tax in Washington.
What changes will Mulally bring to Ford? The carmaker spends half as much on both lobbying and campaign contributions as does Boeing, a smaller company. Will Mulally “fix” that? Will he make Ford the new Boeing? Can taxpayers afford another Boeing?
Timothy P. Carney is author of “The Big Ripoff: How Big Business and Big Government steal your money.”
