Ford's forgotten man

May 25, 2011: 11:24 AM ET

By Doron Levin, contributor

Everyone knows how Ford hocked the Blue Oval to survive the downturn. No one remembers the CFO who did it was a holdover from the prior regime.

Former Ford CFO Don Leclair

Former Ford CFO Don Leclair

FORTUNE -- Amid the adulation that has engulfed CEO Alan Mulally for leading the remarkable turnaround at Ford Motor Co., the feat of one key Ford (F) finance executive recedes into history's footnotes. The underappreciated episode was critical to Ford's rebound and allowed the Ford family to keep control it otherwise would have lost.

Don Leclair, then Ford's chief financial officer, led a team that raised almost $24 billion in cash in 2006 by mortgaging the automaker's key assets, a strategy that would eventually protect Ford from bankruptcy while its two major U.S. competitors were forced into government-ordered reorganization.

After 32 years at Ford, his last five as chief financial officer, Leclair retired in November 2008 at the age of 56. He now lives in Plymouth, Michigan. He told me in a short phone conversation that he declined to discuss Ford and doesn't follow the industry anymore.

"He is the stereotypical bean counter, and pretty damn good at what he's trained to do," said Jason Vines, a Fleishman Hillard public relations executive and former Ford vice president. "He saved Ford."

Absent Leclair's bold plan, which was initiated several months before Mulally was hired from Boeing (BA), the Dearborn, Michigan-based automaker likely would have run short of cash in the credit crunch of the fall of 2008 like its Detroit-based brethren, General Motors (GM) and Chrysler. Instead, the company now is profitable, gaining financial strength without supervision from the U.S. Treasury Department and getting closer to investment-grade credit rating.

"A big plus for Ford is that it doesn't have the stigma of bankruptcy or nationalization," said Vines. "With the money Leclair and the team raised, Mulally was able to put great products on the road.  Their brand is challenging Toyota's."

Among the assets that Ford mortgaged -- and remain encumbered until debt can be reduced further -- are its foreign subsidiaries, factories, office buildings and trademarks such as the blue oval and the Mustang insignia.

Had Ford been forced to file for bankruptcy, its shareholders, like those at GM and Chrysler, would have been wiped out. Ford family heirs of founder Henry Ford would have watched their super-voting class of stock, which gives them control of the company, turn worthless.  Today, Ford's super-voting class of stock -- now worth more than $1 billion -- represents about 2% of the company's equity, while controlling 40% of the votes.

"We're a pretty conservative company, I don't know that back then we thought that things were going to get worse," said Neil Schloss, Ford treasurer and a member of Leclair's team in 2006.

"This is a cyclical business, so you have to commit capital years ahead of time if you want to have the right products," said Schloss.  "Another key back then was that capital markets were very hot in 2006.  By 2007 this deal wouldn't have gotten done."

By the fall of 2006 Bill Ford Jr. had relinquished his position as chief executive to Mulally. Two years later, after the crisis that struck credit markets following the failure of Lehman Brothers, Ford benefited from enough financial depth that it didn't need a government bailout.

To this day, Ford's vehicles are attracting some shoppers who withhold consideration from GM and Chrysler because they were recipients of a government bailout. And Don Leclair keeps his silence in retirement, surely cognizant that without mortgaging Ford's key assets, much of the automaker's current hot streak might never have happened.

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