Bill Ford and his board needed an answer, and they needed it now: How was Mark Fields going to turn around Ford Motor Co.?
The answer: he wasn’t.
That was the sobering conclusion after a series of extraordinary meetings this month culminated Monday with an abrupt exit by Fields, whose nearly three-year tenure as chief executive left Ford struggling to keep pace with new technologies like self-driving cars and the relentless pressure from Wall Street to deliver profits now amid a slowing U.S. auto market.
It’s a stunning turnabout for Fields, a Ford insider who rose to the top only to lose the confidence of the board and investors over what has become one of the most pressing issues in the auto industry: how to navigate a new era of electrified, connected and self-driving cars. Even praising tweets from President Donald Trump over Ford’s plans to keep jobs at home weren’t enough to deflect mounting criticism.
Replacing the embattled CEO will be Jim Hackett, a turnaround specialist who’s been leading Ford’s moves related to self-driving cars and ride sharing. His ascendancy was swift: Ford’s board huddled Friday, with Fields agreeing to resign in a meeting with Bill Ford afterward.
“We need to speed up our decision-making, we need to invest our capital where we can create value, and we have to move decisively to address underperforming areas,” Bill Ford told reporters during a press conference Monday.
Fields’s demise had been brewing for about six weeks, as the CEO oversaw a company drifting with regards to operational issues like quality, morale and profits, all while lavishing ever more attention on the high-tech needs of tomorrow, said a person familiar with the internal deliberations.
Fields and Bill Ford also grew apart as the CEO encroached on what was once the executive chairman’s domain: mapping out the future of mobility in a changing world, said the person, who asked not to be identified without the authorization to speak publicly. Ultimately, failing to take care of business today cost Fields his future at Ford.
Hackett, 62, made an impact on the great grandson of founder Henry Ford during a visit to Silicon Valley last February. Bill Ford says executives there greeted Hackett, the former CEO of office-furniture maker Steelcase Inc., with hugs.
“A number of them said to me, my gosh, he’s one of the real original thinkers that we know and you guys are really lucky to have him,” Bill Ford told reporters. “To see Jim not only navigate that so well, but to be held in such high regard, it made an impression on me.”
Ford shares climbed 1.7% to $11.06 as of 1:07 p.m. in New York and rose earlier as much as 2.4%, the biggest intraday jump in a month. The stock had dropped 10% through the close Friday, trailing the gain for the benchmark S&P 500 Index.
Hackett joined Ford’s board in 2013 and in March of last year was appointed chairman of Ford Smart Mobility, the unit formed to accelerate the company’s foray into emerging mobility services. He was CEO of Steelcase from 1994 to 2014.
There are a number of holes in Ford’s U.S. lineup that are indicative of the second-largest U.S. automaker’s need to make faster moves. With sport utility vehicles and truck models in greater demand in the U.S., the company didn’t announce until January that it would revive the Ranger mid-size pickup and Bronco SUV models. Dealers will have to wait until 2020 for both to be in the lineup.
Ford’s profits have been suffering relative to GM’s because the company hasn’t invested as much in larger SUVs, said Eric Noble, president of the CarLab, a consulting firm in Orange, California. GM dominates the market with models including the Cadillac Escalade, Chevrolet Tahoe and Suburban.
“They have given up tremendous market share almost exclusively to GM,” said Noble, who estimates GM makes about $20,000 apiece in profit on its big SUVs. Ford’s “neglect” of the Expedition and Navigator is “almost unforgivable at a time when SUVs are selling so well.”
Ford’s target for putting fully autonomous cars on the road also are a ways out. The company is targeting 2021 for when it’ll deploy a fully self-driving vehicle lacking steering wheels, gas or brake pedals into a ride-hailing or sharing service.
“They are throwing a lot of things at the wall,” Joe Spak, an analyst at RBC Capital Markets, wrote of Ford in a report Monday. “They are doing a lot. Some of it may be smart. But the overall communication hasn’t been great. A simpler message may be needed.”
Mark Truby, who’s been overseeing Ford’s communications in Asia, will take over the department and succeed Ray Day, who plans to retire from the company next year.
Fields came under pressure from Ford’s board this month ahead of an annual shareholder meeting, where investors excoriated management for a poorly performing stock price. Ford shares fell 37% during Fields’s almost three-year tenure, dropping the company’s market capitalization to below Tesla Inc. The automaker announced a salaried-worker buyout program last week to show it was moving to cut costs.
In addition to changing CEOs, Ford also will shuffle the direct reports beneath Hackett. Europe chief Jim Farley is adding responsibility for the Americas and Asia Pacific regions and overseeing the Lincoln luxury brand.
Joe Hinrichs, who had been leading the Americas, has been appointed president of global operations and will oversee areas including product development, manufacturing, labor, quality, purchasing and sustainability. Marcy Klevorn will take over Ford Smart Mobility after serving as chief information officer since January.
At Grand Rapids, Michigan-based office furniture maker Steelcase, Hackett was recognized for predicting the office landscape would shift away from cubicles to an open-space environment and transformed the traditional manufacturer of office furniture.
He led a major reorganization that involved deep cuts in Steelcase’s workforce, including personally dismissing the best man from his wedding, according to Automotive News. After Steelcase, Hackett served as interim athletic director of the University of Michigan at a time of turmoil and hired head coach Jim Harbaugh to return the football team to its winning ways.
While leading an overhaul of Ford’s business model to take on self-driving cars from the likes of Alphabet Inc.’s Waymo and Uber Technologies Inc, Fields warned the cost of investing in new technologies would reduce profits last year and this year before rebounding in 2018.
Ford’s first-quarter adjusted earnings fell 42%, while GM appears on pace for another record annual profit. Net income at Ford plunged 38% last year.
“While it may be too late this cycle to stop the slide in Ford’s earnings, we don’t think it’s too late to recast strategy and reposition the firm for the next decade,” Adam Jonas, an analyst at Morgan Stanley, wrote in a report Monday.