Ford replaces CEO Mark Fields with Jim Hackett to take on Silicon Valley, rival carmakers
Ford replaced CEO Mark Fields with Jim Hackett as it struggles to keep its traditional auto-manufacturing business running smoothly while remaking itself as a nimble, high-tech provider of new mobility services.autos Updated: May 23, 2017 13:40 IST
Ford Motor Co abruptly replaced chief executive Mark Fields with James Hackett on Monday, responding to investors’ growing unease about the US automaker’s slumping stock price and its ability to counter threats from long-time rivals and Silicon Valley.
Hackett, 62, a turnaround expert who for the past year has led the Ford unit developing self-driving cars and related projects, replaces Mark Fields, 56, who spent less than three years as CEO.
Ford chairman Bill Ford Jr said he wanted Hackett to speed up decision-making and cut costs, but did not offer specifics on how the new CEO should change operations at the US No. 2 automaker.
“The clock speed at which our competitors are working …requires us to make decisions at a faster pace,” Ford said.
Ford, once the most financially secure of the ‘Big Three’ Detroit automakers, and the only one not to take US government money in the US auto industry bailout a decade ago, reported record profit in 2015, but now finds itself under pressure on all sides as overall US auto sales fall.
Rival General Motors Co is aggressively targeting Ford’s share of the lucrative North American truck and sport utility business, the source of 90% of Ford’s profit.
Meanwhile, investors see Ford as a laggard in the shift toward electric vehicles, self-driving technology and ride-sharing. Ford’s $44 billion market value is less than electric car pioneer Tesla Inc’s $51 billion.
Bill Ford and other descendants of company founder Henry Ford effectively control the automaker through a special class of shares, but many investors share his concern that the company is running out of time.
Ford shares were up 2% at $11.09 in afternoon trading. At Friday’s close, they had fallen 37% since Fields took over three years ago at the peak of the US auto industry’s recovery from the crisis last decade.
No smoking gun
Overall US auto sales are slipping after a long boom. But GM has moved faster than Ford to slash unprofitable operations, and Tesla has been quicker to deploy new technology.
Bill Ford indicated the company would take more aggressive action to cut costs. “We have to modernise the business” and move “decisively to address underperforming areas,” he said.
Hackett, who overhauled furniture maker Steelcase Inc and then turned around the ailing University of Michigan football program, becomes the latest in a line of non-family CEOs brought in with a mandate to change the management culture at one of the auto industry’s oldest institutions.
That task has frustrated many of his predecessors, including Bill Ford, who had been CEO before replacing himself in 2006 with Boeing Co executive Alan Mulally.
The decision to replace Fields did not result from a single event, Bill Ford told Reuters.
“There is no smoking gun here,” he said. “It’s more the way we are organised, the way Jim is going to streamline the organisation.”
As CEO of Steelcase, based in Grand Rapids, Michigan, Hackett slashed thousands of jobs and then refocused the company on innovation.
A former Ford director and interim athletic director at the University of Michigan, Hackett was tapped in March 2016 to run Ford Smart Mobility, a unit established to oversee and coordinate forays into autonomous driving, ride sharing and other ventures.
In that role, he helped oversee Ford’s acquisition of San Francisco ride-sharing company Chariot and its $1 billion investment in Argo AI, a self-driving startup focused on robotics and artificial intelligence.
Pressure in Detroit
The upheaval at Ford underlines pressure on all three major Detroit automakers to prove they can avoid losses as the US market begins to slow from last year’s record sales.
GM CEO Mary Barra is fending off attacks from hedge fund Greenlight Capital, which wants to install new directors and split the company’s stock. In March, GM sold its money-losing Opel division to France’s PSA Group, effectively exiting Europe in a move Barra promised would free cash for share buybacks.
The shake-up at Ford may bring scrutiny to its own plans in the region. The company posted a record $1.2 billion profit in Europe last year but warned that the impact of Britain’s vote to leave the European Union would put a dent in 2017 earnings.
Under a broader shake-up announced on Monday, former Ford of Europe chief Jim Farley will become president of a new “Global Markets” group that will include Ford’s regional sales and marketing operations around the world as well as its Lincoln luxury brand.
The company is also putting government relations and corporate communications under Ford Jr., and Hackett said the great-grandson of Henry Ford would have a higher public profile.
The automaker has tangled with US President Donald Trump, who spent more than a year criticising it on the campaign trail for expanding operations in Mexico.
But Trump praised Ford in January for scrapping a planned Mexican car factory and announcing plans to add 700 jobs in Michigan. Fields, who made several trips to the White House this year, said Ford would have made the decision regardless of who was president.
Fields, who earned $22.1 million in 2016 and had a 28-year-career at Ford, also faced a clamour for share repurchases at the company’s annual meeting earlier this month.
He did not respond to repeated messages seeking comment.
Ford said last week it would cut 1,400 staff positions in North America and Asia, a small fraction of the 20,000 job reductions some news outlets had reported were imminent.
The company reported a record $10.4 billion in pretax earnings in 2016, but investors were concerned by a weak first quarter and lower profit forecast for 2017, as well as higher costs for investments in “emerging opportunities.”