Monday Musings: Ford Makes a Driver Change

By Author: Harvey Briggs, Date: May 22, 2017
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We live in interesting times. Last year Ford sold over 6.6 million cars globally, generating $4.6 billion in earnings and had its second best pre-tax profit year ever. Yes, sales and margin were down slightly from 2015, but Ford is in great shape from a financial standpoint. In addition to solid sales, revenue, and an operating margin nearing 10%, they’re sitting on a 6.4 billion dollar pile of cash.

And yet, this morning comes the news that they fired CEO Mark Fields and replaced him with Jim Hackett, former Steelcase CEO and the man who’s been heading up Ford’s advanced mobility efforts.

To be sure, despite numbers that look good, there are troubling signs below the surface. Truck and SUV sales figures remain solid, but the Focus and Fusion are starting to languish on dealer lots. More importantly, after doing a masterful job of restructuring without having to declare bankruptcy as GM did, Ford is lagging behind their cross-town rival in some key product areas, which has Wall Street nervous.

Ford’s stock price has fallen about 40% since Fields took the reins of the company. It’s interesting, because it’s not like Ford has been resting on its well-earned success of the previous few years. They introduced 11 new vehicles last year, have significant electrification plans for the next four years, have made a concerted effort around autonomous driving, been leaders in mobility infrastructure research and development, and increased their performance profile with cars like the new GT and Shelby GT350.

What Ford doesn’t have is tangible, demonstrable, success of those innovation efforts in a couple of key areas. Chevy unveiled the Bolt this year to considerable fanfare, giving the driving public an affordable electric car with useful range. Ford continues to limp along with just an electric version of the Focus. In autonomy, their work is groundbreaking, but not resulting in on-road products like Tesla’s autopilot.

Wall Street is notoriously impatient, so Ford is bringing in a change agent in Hackett whose role is to speed the pace of change and focus the direction, and most importantly for the bankers, get the stock price moving in the right direction.

The good news is, this isn’t about short term sales issues, it’s about the company vision and the pace their moving to achieve it. As Chairman, Bill Ford said to the Detroit News this yesterday, “We need to re-energize our business and sharpen our execution. What we needed is a transformative leader who has done it before. And who not only has the vision, but also knows how to get the organization to move toward that vision.”

It seems that Ford has learned its lessons from the ’80s and ’90s and is not waiting for disaster to strike before making changes. It bodes well for the company and for the auto industry in the United States.

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Harvey Briggs

Harvey Briggs is the Founder, Editor, and Publisher of Rides & Drives. He has also written for Car and Driver, Winding Road, and the luxury lifestyle blog, Pursuitist.com. His passions run from fast cars, small planes, boats and motorcycles to music, travel, and sports. When he's not on the road testing the latest cars, he been known to turn up on stage playing rock and blues guitar at clubs around his hometown of Madison, Wisconsin. Follow Harvey's adventures on Instagram and Twitter @harvey_drives and find him on Facebook. Though keeping up could be a problem. As Harvey says, "If I don't slow down, time can't catch me."

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