DEARBORN, Mich. (AP) – Bill Ford, who struggled for five years to steer Ford Motor Co. toward financial stability, has stepped down as chief executive of the company founded by his great grandfather and is being replaced by top Boeing executive Alan Mulally. Ford will remain as executive chairman, the company said Tuesday in a surprise announcement.

The change comes more than seven months into a restructuring, which is the second under Bill Ford’s watch and has so far failed to revive the nation’s No. 2 automaker. Under the first plan, Ford closed five plants and cut 35,000 jobs, but its North American operations failed to turn around. The latest plan, announced in January, would cut up to 30,000 jobs and close 14 facilities by 2012.

Bill Ford said it was time for someone with experience in turning around a troubled company, tacitly acknowledging his own efforts were falling short.

Mulally, 61, was widely praised for being a key architect of the resurgence of Boeing’s commercial airplanes unit over the past couple of years. He was a top candidate for the Boeing CEO job last year, but the company went outside instead to select aerospace veteran Jim McNerney, then the 3M Co. chief executive.

Bill Ford said he began talking with Mulally in July, which suggested the change was something he had some time to plan instead of it being abruptly forced on him. Ford is the great-grandson of company founder Henry Ford, and his family still owns a 40 percent voting stake in the company. Any leadership plan would require its assent. Ford, 49, has served as CEO since October 2001 and been chairman since 1999. He owns more than 10 million shares that have a market value of more than $70 million.

“We needed somebody who had extensive turnaround experience, who was a leader and a real team builder,” Bill Ford said during an afternoon news conference.

He called Mulally “ideally suited” for the job.

“He understands how tough a turnaround can be before the results start to flow, and the necessity of keeping the team together and in focus,” Ford said.

Mulally, who has spent 37 years at Boeing, said he looked forward to applying lessons learned at Boeing to Ford.

Mulally said that although he’s not an auto person, “I’m certainly a product designer and I care deeply about having a viable business,” he said.

He said that some people believe the U.S. can’t compete with the rest of the world in manufacturing, adding: “I personally think we absolutely can if we pull together.”

Dearborn-based Ford, which lost $1.4 billion in the first half of 2006, pledged in July to speed up the restructuring. At the time, Bill Ford said the company had been caught off guard by the speed of the consumer shift away from pickups and SUVs to more fuel-efficient vehicles – a shift that has largely benefited Asian automakers at the expense of domestic companies.

Bruce Clark, lead auto analyst at Moody’s Investors Service, said Mulally faces a “daunting task in attempting to reshape Ford’s operating model” as demand shifts rapidly away from trucks.

“However, he comes to the company with a strong background in engineering, manufacturing and product development,” Clark said in a statement. “We think that this will be a valuable skill set as he fills the CEO position at Ford.”

“It just shows you how tough things have gotten at Ford,” said George Magliano, an auto analyst at consulting company Global Insight. He said the biggest task facing Ford is to reshape its product strategy to cope with high gas prices and said Mulally should bring in a new product guru.

“I think the feeling was they needed to show the financial community and the rest of the industry that they’re ready to make sweeping changes,” Magliano said.

Bill Ford said he would continue to be highly involved in the company as executive chairman.

“I’m not going anywhere,” the Ford said. “I was born with the Ford Motor Company and I’ll die with the Ford Motor Company.

In a September 2004 interview with The Associated Press, Bill Ford said the automaker was poised to sustain a financial turnaround by increasing its retail sales in the crucial American market. Instead, market share has continued to erode.

Ford shares rose 12 cents to close at $8.39 in trading on the New York Stock Exchange before the announcement. Its shares rose another 39 cents to $8.78 in after-hours trading.

Boeing on Tuesday named Scott Carson to replace Mulally as president of its commercial airplanes unit. Carson, 60, had been vice president of sales for the Seattle-based division and is a 34-year veteran of the company.