DEARBORN, Mich. -

Calling this an “historic day,” Ford Executive Chairman  William Clay Ford Jr. announced that Ford COO Mark Fields will replace Alan Mulally as Ford’s chief executive officer.

Mulally will retire as president and CEO, as well as from Ford’s board of directors, effective July 1, 2014.

Smooth transition was the operative phrase of the day as Ford, Mulally, and Fields jointly announced the move this morning at Ford’s headquarters in Dearborn.

“They do a great job and then they go kicking and screaming,” Ford said. “Chaos ensues because there isn’t a smooth transition, so in many ways Alan’s last act was his greatest act.”

Ford acknowledged Mulally’s status as a “hall of fame CEO,” but noted that top executives often have a hard time letting go of the reins. A problem, he says, Ford Motor didn’t have with Mulally.

Mulally came to Ford from Boeing in 2006 when the company was on the brink. He engineered a massive financing package that required, among other things, using the automaker’s iconic blue oval logo as collateral, allowed the automaker to ride out the 2008 economic meltdown.

Ford's recovery was marked by $7.2 billion in earnings in 2013. Profits were healthy enough to pay all the hourly factory workers a record profit-sharing bonus of about $8,800 each.

The company recaptured its position as the No. 2 automaker in terms of U.S. sales from Toyota, behind only GM.

During his tenure at Ford, Mulally received a total compensation package of $44.2 million through 2013, including base salary of $13.5 million, and cash bonuses of $30.8 million.

Mulally had been expected to retire by the end of 2014, but he said the timeline was expedited because of their confidence in the transition plan.

“The reason I have move this up is that we are absolutely fully confident that the team is ready do it,” he said. “And it’s fun to get ahead of all the rumors and speculation.”

Fields, a 25-year Ford veteran, praised Mulally as a great teacher who developed a “culture of transparency and positive leadership” at Ford. He promised to carry on Mulally’s vision.

“Our One Ford plan has served so well and it is going to continue to serve us well,” he said. “I am personally committed to maintaining it as we move forward.”

Bill Ford said they did look outside the company for a replacement for Mulally but he called Fields “not only the best candidate, but an exceptionally talented candidate.”

Fields, who previously served as head of Ford's North American operation, will be the 11th boss in the the automaker's 111-year history.