UPDATE 3-Ford CEO has carte blanche to stay-chairman

* CEO Mulally can stay 'as long as he would like' - Ford

* Forecast for at least break-even in 2011 intact

* Recent U.S. sales encouraging, Ford says
(Recasts first sentence, adds details on Mulally tenure,
background)

By David Bailey

DETROIT, Sept 2 (Reuters) - Ford Motor Co (F.N) Chief
Executive Alan Mulally, credited with steering the automaker's
turnaround, won an endorsement for an indefinite tenure from
Ford's chairman and the founding family's senior representative
at the company.

"I want Alan to stay as long as he would like to stay and
hopefully that is quite a while," Ford Executive Chairman Bill
Ford Jr. told Reuters on the sidelines of a Detroit Economic
Club event on Wednesday.

Bill Ford's comments marked the first time he had addressed
Mulally's stewardship as chief executive since rivals General
Motors Co [GM.UL] and Chrysler Group LLC emerged from
U.S.-government sponsored bankruptcy protection with new
ownership and management.

Mulally, 64, joined Ford in September 2006 after being
recruited by Bill Ford Jr., who stepped aside as CEO to hire
him away from Boeing Co (BA.N) where he was head of its
commercial airplanes business.

The automaker was in a precarious position and widely seen
as the weakest of the three Detroit car companies when Ford
hired Mulally to revive a turnaround effort that had failed to
take hold.

An auto industry outsider then, Mulally is now the
longest-serving CEO among the U.S. automakers. GM's Rick
Wagoner, Chrysler's Bob Nardelli and Mulally all testified to
the U.S. Congress for an industry bailout less than a year
ago.

Wagoner and Nardelli are now gone, GM is majority
state-owned and Chrysler is under the management control of
Italy's Fiat SpA (FIA.MI).

Wagoner was forced out by the Obama administration.
Nardelli resigned from Chrysler in June.

Bill Ford said the automaker has had a succession plan
since the day Mulally was hired. He declined to provide
details.

"Any good corporate governance dictates that you always
have succession planning, and that is something we do on a
regular basis," Ford said. "As a chairman that is obviously
something that I spend a lot of time on."

ECONOMY IMPROVING SLOWLY

Mulally has been credited with speeding up decision-making
at the automaker by stripping away layers of management and
holding weekly meetings to pull together officers from across
regions, emphasizing a "One Ford" focus.

Analysts have credited that focus, and the borrowing of
about $23 billion in late 2006 to finance the turnaround plan,
as helping put the automaker in a better position than its U.S.
rivals to navigate the severe U.S. recession.

The automaker has said it expects to return to at least
break-even in 2011 on a yearly basis.

The U.S. economy has shown encouraging signs, but anyone's
ability to call a bottom would be "tenuous," Ford said on
Wednesday.

"For me unemployment is the big thing because it is hard to
say the economy is getting better until people are getting back
to work, and so that is something I look at very closely," Ford
said.

"We have seen over the last several months a small but
steady increase in customer traffic and purchases," he said.
"We feel encouraged, but we are certainly nowhere (near) yet
where we would like to be in terms of the economy."

Ford Motor on Tuesday reported a 17 percent U.S. sales
increase for August, the second consecutive month of increases
for the company, with support from the U.S. government's "cash
for clunkers" incentive program.
(Reporting by David Bailey, editing by Leslie Gevirtz, Gerald
E. McCormick and Matthew Lewis)