Ford Fires Its CEO, and the Blue Oval Turns Its Hopeful Eyes To... Jim Hackett
The dismissal of a CEO of a company as important to Michigan as Ford is a pretty big deal anyway. So a post about Ford firing Mark Fields amidst declining stock price and market share, after a mere three years at the helm, would probably warrant an OT post here.
But, hey, look who putting his cape back on and moving into the office: Jim Hackett.
A college football program might seem like peanuts to a multi-billion dollar corp, and the article only mentions his role here in passing, but let's face it: Hard to believe Hackett's exemplary performance revitalizing Michigan athletics wasn't something that helped show the board that he may be a guy that "gets it."
I've owned F for about 3 years and am sick of the stock going down while they make record earnings.
Wall Street is pretty ridiculous sometimes. Tesla stock is through the roof on the futuristic hopes that they might one day make profit comparable to what Ford makes right now in a year so bad they fired the CEO.
Wall Street is forward-looking and Ford's earnings are projected to remain flat. Autos are very competitive right now and Ford hasn't done much to differentiate itself.
While Ford is (perhaps) the best run of the Big 3, to my subjective opinion, they have the most boring product portfolio. FCA is tops (via Jeep), and will run away with it soon.
If gas prices stay low, FCA (which has caught up to Ford in EBIT profit % as of this last quarater) has an onslaught of new SUV/truck product that is going to truck Ford/GM - New Wrangler later this year, new Wrangler pickup in '19, new Wagoneer/Grand Wagoneer BoF SUVs to compete with Tahoe/Escalade in 2020, Dodge performance SUV replacement based off of Giorgio platform in 2020, Chrysler 7 passenger Journey-like vehicle with hybrid option based off stretched Cherokee platform in 2020, Cherokee refresh early next year...New Charger/Challenger in 2021.
ps - if you are the head of Jeep Product Planning in North America (ME from Michigan & Masters in Manufacturing from Northwestern) that I LinkedIn stalked a few weeks ago, hit me up! I think I'd make a great addition to your team : ) karpodiem at gmail dot com
and yet all of the vehicles you cited have been posting gains for YoY for quite some time now; more so than the other Big 3 over the last four years (FCA has increased marketshare from 6-7% to almost 11%) - check the charts. Grand Cherokee gained ESS in '16/new aluminum parts.
L car got some nice upgrades in the '15 MY with a new transmission, and is near the top for fuel efficiency for a vehicle with that geometry.
"Oh yeah they cant build a economy car or small sedan if they life depended on it, and they still dont have a DI engine and its 2017."
Who cares? No one makes money on cars. You can just as easily offer a mild hybrid across your platforms; Wrangler is getting a hybrid, Pacifica has a hybrid, and all of the platform revisions I cited above will have a hybrid option to hedge against higher gas prices. Consumers will continue to prefer CUV/SUVs, and that just so happens to be where the fatter margins are. The hybrid investment wasn't there in the last downturn across an entire portfolio for any of the Big 3 - this won't be true for FCA the next time around.
Whether or not GM has caught up, Barra has done a very good job. She was dropped into a tough situation has continued to make good moves. GM's best CEO in a long time.
I bet you drive a wrangler
absolutely love it, best vehicle I've ever owned.
Love my Challenger and Durango especially. They blow away the competition at much better prices.
Seems appropriate that Mark Fields, a Rutgers ('83) man, is being replaced by Jim Hackett, a Michigan ('77) man.
Just walked into work this morning and saw a corporate email.
Bill Ford making an "official" announcement in a 9 am townhall. This caught me by surprise, thought it might happen by the end of the year, but I guess they said let's do it now.
I have faith in Jim Hackett.
I heard this on the radio this morning and my first thought was "I need to buy some Ford stock, and fast!"
Best of luck to you, Jim.
In the company announcement, it was labeled as a "retirement".
I think he'll probably relax for a few months, enjoy his summer in Florida and then maybe get on a Board of Directors somewhere.
my company (Fortune 100) had its CEO ousted a few years back and that person just lives off speaking engagements and being on the board of directors for various companies now. It's a good life being a former CEO
Much less stress. Still making money, a lot more free time.
Of all the places a multi-millionaire might enjoy their summer, I don't think Florida is one of them...
was $59 million, which is insane relative to how the stock has done over the same period (pretty terrible, way underperformed vs S&P 500).
For those of you praising Barra - you're nuts. GM is just as dysfunctional now as it was before bankruptcy. I speak from having a family member at the Tech Center for almost 43 years (he works in the one division that consistently makes money - truck.) This whole autonomous vehicle/Maven thing is total nonsense. The make more profit in a month selling Silverados than Maven/Bolt & Volt makes in revenue for a year.
The new Acadia/Equinox are stylistically boring/weak powertrain offerings. Again, FCA will be the one to beat in the years to come.
Ol Sergio is a wiley one.
If Sergio had his way, there probably would not be an FCA. I really hope for their success, but if his merger crusade comes true, it will probably be without either the F or the C. Fiat is not a healthy brand even in Europe and nobody would be stupid enough to buy Fiat's American operation. Chrysler is a shadow of its former self, and redundant in any conceivable merger. Dodge is sort of a niche performance brand these days. Alfa Romeo is just now getting off the ground, two years late. All of which I find disappointing, but the cold fact is none of those brands would survive a merger. FCA is stretched thin, much as Ford was when trying to operate Volvo, Jaguar, Land Rover, Aston Martin, Mazda, etc.
FCA is Jeep, Jeep, and Jeep. If some other automaker decides to finally be a dance partner with Sergio and his merger aspirations, it wouldn't be a merger - it would be a purchase of the Jeep brand and a dissolution or selloff of everything else faster than you can blink.
since then they've green lighted the Portal concept for some sort of production vehicle...a while from now, like 2022 or 2023.
Chrysler is going to have a new mild hybrid CUV based on the stretched Cherokee platform that's also going to be sold in China as the Jeep 'K8' (Jeepers would have a fit calling such a non-performing offroad vehicle so it will be sold as a Chrysler and leverage the same EV option that the Jeep K8 will offer, since that will be a big thing going forward in China).
The 300 will live on at Brampton and will also be a hybrid in its new architecture.
Sergio's thesis, which I believe is the correct one - when this autonomous thing does kick into gear, which will be 10-20 years from now; it's going to eat the low end for the vehicle segments. Toyota is going to feel this more than FCA. If you view your vehicle as a A to B play, this is where electrification and autonomy hit a sweet spot.
I'm in the supply chain and am absolutely geeked to see Chrysler come back from the dead. By the way, check out 'The Art of Design' documentary on Netflix, with Ralph Gilles (head of design at FCA). Probably the best documentary I've seen in years.
I see Tesla (which I'm very skeptical of, but would love to be wrong about) taking a chunk out of Toyota, not FCA. Look at the reservations/lines for the Model 3 - were they most prevalent? Out on the West Coast. Where does Toyota sell the most vehicles? Out on the West coast.
I think the notion of where autonomous cars are the biggest threat is spot-on. A little bit of an epiphany I had myself not long ago. Ford may be the most up-front and hard-charging of the traditional OEMs on AVs. And when you think about it, it makes sense. AVs will take the biggest bite out of small cars. Pickups and SUVs will be more immune, at least early on. Ford barely makes a dime on small cars, so trying to shove the market towards something more profitable to replace a much less profitable line is just common sense.
We'll see what happens with Tesla, but I'm a huge skeptic. Reason is: Tesla doesn't actually know how to make cars. They make basic quality errors doing things that OEMs do in their sleep. This doesn't show up in quality reports, because OEMs are trying to keep pace in the infotainment areas with proprietary user interface systems, which isn't their expertise at all, and so quality problems abound. But a wonky phone sync is treated the same in quality studies as a door that won't shut. They're both one TGW. But one will be tolerated a lot less in the marketplace.
Tesla has basic build issues. Really basic issues. That's OK when you're selling a novelty, not when you're selling a family its primary mode of transportation. It's OK when you have so few of them on the road you can deliver personalized service at a bespoke Tesla store - not so much when you multiply by ten the number of cars you have out there. I've heard that they aren't doing any prototype tooling at the Model 3 plant - a shortcut that will help them meet their stated production goals on time, but man - look out, when those initial quality reports come out.
Wow, you have a family member at GM...just like everybody else in the Detroit area. The vast majority of people in the industry think Barra has done a good job with the hand she was dealt. Thats people within GM and the supply base.
I work with all the auto OEMs and have been in the industry for a long time, and I think she's a big improvement over many of the previous CEOs at GM.
Since the beginning of 2013, S&P500 is up ~30% (if you remove Facebook/Apple/Netflix/Google + Amazon/Microsoft= FANG + AM), FCA is up 18%, GM is up 10%, and Ford is down 20%.
Not exaclty world beating, but a hell a lot better than Rick Wagoner and Akerson.
Nobody was going to step in and make GM's stock price soar. A CEO can only do so much and GM has significant challenges in their path. What's commendable is the progress and changes Barra has implemented. Things could be much worse at GM if many of their previous CEOs were still at the helm.
I'm also rooting for Barra, like I did Mulally. I've met both and know one of them quite well, and both are really good people and they don't have big egos like many top executives. I like rooting for quality people and I think Hackett is another.
One might argue that "I've been here 43 years working on the profitable side of the business and those new investments that earn no revenue are just bunk" is part of the glory-days mentality that harms the perception of the industry in the first place.
Companies that deliver products eventually disappear. Companies that deliver services stick around. Those services may come in the form of manufactured products, but the company has to be willing to change those products, or else perish. Prime examples are Blockbuster and Kodak. Blockbuster thought it was in the business of renting videos. They should've seen themselves in the business of providing entertainment. Netflix ate them for lunch and shat them out the other end, first by doing what Blockbuster did only better, and then by understanding they were in the entertainment business and working on ways to provide entertainment, not just mail-order movies. On the other side, you have Xerox, which realized just in time that they were in the business of "business solutions" instead of the making-copiers business.
Likewise, car companies that think they make cars are going to disappear. Car companies that see themselves as providing mobility, whatever that means, are going to be in it for the long haul. That means some investments that provide no return in the short-term. GM's Maven thing, Ford's Smart Mobility and Chariot, etc. But then we go back to Tesla - it's fucking brain-dead to penalize the OEMs for investments without a return while sending Tesla's stock into the stratosphere. I mean, you know, speaking of investments with nothing to show for it in the short-term.
Totally agree. I do applaud Elon Musk on his marketing skills. It's just a matter of time, however, until valuations come into alignment with earnings. They key question is how long?
The stock market is forward looking, but eventually some punches need to land.
IBM pivoted to services and they've had 20 consecutive quarters of declining revenue. GE is another company trying to 'reinvent' itself with software and has so far come up flat. Zip Car has been doing car sharing for awhile, and there's also Toro...Why is Maven different?
Look I'm not saying that growing new lines of business isn't important, it's just that I think if they'e serious about competing with Toyota in A/B/C segment sedans, then need to be getting better (more profitable) faster.
Maven's probably not all that different, but it doesn't have to be, any more than there's a big difference between the business models of the dozen or so car rental companies. That was supposed to be a pretty mature, saturated market with mergers taking place, and even then Sixt saw fit to try and break into it.
One theoretical AV model of ownership is the one in which a company like Uber just operates a huge fleet of AVs to taxi people everywhere. But no one company has the capital to own that many cars, and the revenue potential for the moving-people-around market (the portion that doesn't involve people owning a car) is tremendous, and likely to grow. And few companies have the capital like car companies.
So we'll end up with a situation where there are numerous entities that build statues to Jim Hackett up and down the I-94 corridor through Washtenaw and Wayne County at the end of all this. Perhaps we're going to name the portion between about State Street and, oh, Oakwood Boulevard the Jim Hackett Freeway at some point in the far future?
I guess after Hackett is done grinding Tesla into the dirt, he could take over the airport and really nail down the I-94 title.
Probably not a surprise to any UM fan who has read John U Bacon's book or knows how the Athletic Department was run during the DB administration.
Can you imagine Jim Hackett leading a stunt like this?
http://nypost.com/2016/12/26/toys-r-us-pushes-credit-cards-on-workers-for-sales-boost/
History, good and bad, is the best indicator of the future and Ford likley hit a home run with Jim Hackett.
and creating a "customer experience" (lol that sounds familiar) but the main objective should be to figure out how to battle Amazon with increased on-line sales. Agree that this is a tough business but DB is not the guy to lead them out of their troubles (and they are paying him a ton).
Dave Brandon wants to be Jim Hackett when he grows up.
Dave does not want to grow up, because he is a Toys R Us Kid.
Right the ship.
Sea changes are underway in the U.S. auto industry. The sedan faces near-extinction by SUVs and by feature-laden pickup trucks doubling as family autos. But more important is the threat posed by Silicon Valley and Tesla: more computerized driver assists eventually morphing into autonomous vehicles and all-electric propulsion, not to mention ride-sharing and other ways in which people will revise the way they view their automobiles.
As others have pointed out here, the Ford family will collectively commit hari-kari before they give up their controlling interest in the company. And despite (given the company's free cash flow) the $.15 quarterly dividend remaining relatively safe, the stock price has eroded to the point that the directors (no doubt prodded by the family) had to make a change at the top. Mark has had his chance --- he's done some good things ---- but Ford has to find ways to become once again attractive to investors.
Enter Jim Hackett, a man with a proven track record in diverse arenas (and Big Houses) for motiviating people to pursue common goals --- he'll do all right. And to put a little money where my mouth is, I picked up a few more Ford shares today. Go Blue.
Buy Buy Buy!
as part of your new executive team!
I'd be lying if I said there were no jokes to that effect during the "employee town hall" meeting this morning.