Can Mulally keep Ford trucking?

As the other two Detroit automakers stand on the brink of bankruptcy after taking government aid, Ford Motor Co. (F), also struggling, seems in much better shape. CEO Alan Mulally, who took over the company over two years ago, is in no small way responsible for that.

Ousted General Motors Corp. (GM) CEO Rick Wagoner had overseen the company's decline over the past decade all the way to requiring Washington's help. GM now has 60 days to come up with a better plan or it may be forced into Chapter 11 bankruptcy protection. Chrysler has been deemed not viable by the administration unless it partners with Fiat. Meanwhile, Mulally has improved Ford, once considered the worst of the Big Three, to such an industry success story that it refused government aid (despite recording $30 billion in losses the past three years, half of them recorded in 2008). All that during the worse downturn in decades for the car industry, a downturn that has yet to hit bottom.

What has Mulally done to get the company where it is today, believing so firmly it could weather the crisis on its own and be ready to pounce on opportunities when the economy improves?

For starters, he raised $23.4 billion in fresh capital, by mortgaging much of the company's assets in late 2006, and has declared intentions to reduce Ford's unsecured debt by two-thirds and its overall debt by about 30 percent, through a cash-for-debt swap to bondholders.

Ford's cars have also improved in quality, certainly when compared to its Detroit rivals. It is working relentlessly on creating profitable small cars by bringing models from Europe, and reviving the Taurus name with an all-new version. Finally, when it comes to hybrids, Ford is the largest domestic maker (although not seller) of hybrids.

While it seems Ford is on the right track, many obstacles are still expected. For one, the economy. Ford's U.S. sales fell 41 percent in March, but were better than the 45 percent that analysts had feared. Also, Ford announced it would idle production of the F-150 truck -- its best selling model -- for three weeks due to slow demand.

Ford is also working actively to boost sales. On Tuesday, both GM and Ford announced they would offer payment protection plans to help reassure consumers who may be putting off buying a new car because of worries about losing their job. The car industry has also been offering other incentives such as zero percent financing, and there might also be a bill that would offer rebates on new car purchases when replacing old cars. All these could certainly drive sales, but if they don't improve enough, Standard & Poor's warns that even with the progress Ford has made "there is a risk they would have to seek government funding."

Another problem could be bankruptcies at its rivals. While the common view would be that this would increase sales at Ford, which is already happening to an extent according to Ford, other problems could arise such as damaging the "networks of suppliers and dealers shared by Detroit's three auto makers, throwing uncertainty into Ford's parts deliveries and its retail operation." GM and Chrysler could even get better concessions from investors and unions, which could give them a competitive edge. Mulally has previously warned about a scenario such as this.

Mulally, who wants to reshape Ford after Toyota Motor Corp.'s (TM) model by having a long-term view of decades rather than months down the road, has taken several steps from day one to that end, improving the company's financial position and product focus. But Ford is not there yet. It still carries a heavy debt load analysts warn about, and lacks those profitable small cars in its product arsenal.

Ford is still a family legacy and is headed by a CEO who seems able to make things happen. Hopefully it could come out of this stronger. If nothing else, Americans likely root its efforts to remain just strong enough not to need taxpayer money.