JetBlue creator to Ford CEO: “We all thought you were insane”

April 17, 2012, 7:38 AM UTC

By Shelley DuBois, writer-reporter

Ford's Alan Mulally

FORTUNE — Ford’s F-150 truck conjures up images of mudding and hauling huge loads. The car still makes up much of the American economy’s backbone, Ford CEO Alan Mulally will tell you. But to fit into his greater plan for the company, even Ford’s most rugged, testosterone-laden vehicle will have to get greener.

“Everything about the Ford plan is based on what you might call sustainability,” Mulally told Fortune’s “Brainstorm Green” conference attendees on Tuesday during a town-hall style presentation.

That goes even for the big cars, he says. The F-150 will be one of the biggest trucks the company will produce, Mulally says. Ford (F) will continue to shift its focus to become a manufacturer with a global presence that primarily makes smaller cars.

“You can imagine the transformation of Ford to go, not only from U.S. to global, but also to move from a truck company to one that’s dominated by smaller vehicles.” The idea is to provide a leaner profile of cars, all of which will become increasingly energy efficient.

MORE: Full transcript of Mulally’s appearance

This is a major identity shift, and it has played a part in one of the most dramatic turnarounds in the auto industry of late – Ford was the only one of the big three to avoid taking a government bailout during the crisis.

But so far, Mulally’s plan has shown promise. In 2006, when Mulally became the CEO at Ford, the company’s stock price was right around $7. Now it’s over $12 per-share and the company is profitable again.

It’s a turnaround that even leadership in other industries didn’t see coming. “When you took the job, we all thought you were insane,” David Neeleman, creator of JetBlue and current CEO of Azul Brazilian Airlines, admitted at the conference.

Over the past five years, Mulally has sliced the number of different vehicles, or nameplates, it makes from over 90 to about 20 to focus on a smaller set of cars. He has also overseen an increase in manufacturing smaller cars, largely to reach overseas markets, expanding the reach of the U.S.-based company.

Manufacturing smaller cars in other countries seems like a big change from Ford’s home-grown, big-truck, get-er-done roots. But the demands of the customer are changing with the times, Mulally says; everybody wants greater fuel efficiency, even the American truck driver.

At first, he says, the company didn’t know that. Ford assumed that fuel efficiency wouldn’t have much pull for buyers of big trucks, which generally burn more gasoline than smaller cars. “We fell behind the competition by one mile-per-gallon, and I have never seen so many angry comments from truck drivers,” Mulally says. “They want absolutely the best fuel economy and lowest COemissions.”

And Mulally is banking on the continued interest in efficiency from all future Ford customers. Many of the nameplates he helped cut from Ford’s portfolio were larger vehicles. Going forward, Mulally says, the F-150 will be the largest automobile it produces, and they will get greener, simply because fuel-efficient trucks appeal to costumers.

If you talked to a truck owner decades ago, that might have seemed insane too.