Ford CEO switch mostly about stock price, culture change

by Frankie Norman May 24, 2017, 5:20
Ford CEO switch mostly about stock price, culture change

At $51 billion, the market valuation of Tesla Motors is larger than both Ford and General Motors at a time when the company is not profitable, in large part due to expectations that it has greater growth potential than its more established rivals.

In three years as CEO, Fields began Ford's transition from a traditional automaker into a "mobility" company, laying out plans to build autonomous vehicles and explore new services such as ride-hailing and car-sharing.

"I am so excited to work with Bill Ford and the entire team to create an even more dynamic and vibrant Ford that improves people's lives around the world, and creates value for all of our stakeholders", said Hackett. Hackett said Ford Smart Mobility had just 12 employees when he arrived and will soon have 600.

After a weak annual shareholders' meeting, Ford fired their CEO, Mark Fields yesterday and immediately announced his successor - Michigander legend, Jim Hackett.

Fields' abrupt dismissal caught nearly all at Ford by surprise, but concerns about the company's direction have been brewing for some time.

Ford, once the most financially secure of the "Big Three" Detroit automakers, and the only one not to take US government money in the USA auto industry bailout a decade ago, reported record profit in 2015, but now finds itself under pressure on all sides as overall USA auto sales fall.

The S&P 500 index has jumped almost 17 percent over the same time, while shares of competitor General Motors Co (GM.N) are up about 8 percent and shares of electronic vehicle pioneer Tesla Inc (TSLA.O) are up almost 41 percent. Farley will also oversee the strategy and business model development for electrified vehicles and autonomous vehicles. And it must decide whether the people that do buy cars will want an electric vehicle, or whether low oil prices mean they'll stick with the internal combustion engines pioneered by Henry Ford a century ago.

Ford shares climbed 1.7 per cent to US$11.06 as of 1:07 p.m. Monday in NY and rose earlier as much as 2.4 per cent, the biggest intraday jump in a month. Shares are down 37% since Fields succeeded Alan Mulally in 2014, and down 10% so far this year.

Joe Hinrichs, 50, is appointed executive vice president and president, Global Operations. A Ford spokeswoman said Trump was not a factor in Fields' departure. But GM has moved faster than Ford to slash unprofitable operations, and Tesla has been quicker to deploy new technology. To free up the cash to do that, the company said earlier this year that it's cutting $3 billion in costs and as many as 1,400 white collar jobs.

Hackett, Ford said, "Will continue to transform the culture of Ford Motor Co".

Hackett served on Ford's board from 2013 to 2016.

"There is no smoking gun here", he said.

Before that, as CEO of Grand Rapids, Michigan-based Steelcase from 1994 to 2014, Hackett slashed thousands of jobs.

Hackett led Steelcase Inc.'s turnaround to become the world's No. 1 office furniture maker, served as interim Athletic Director at University of MI and has led Ford Smart Mobility LLC since March 2016.

Ford has been struggling for the past few years as the automaker's shares have dropped drastically and the company was blamed for the being slow in adopting new technologies. GM, by comparison, has fended off calls from well known hedge funds like David Einhorn's Greenlight Capital, which has pressed the company to split the company's stock.

Ford confirmed earlier reports that he was to be replaced by Jim Hackett, 62, now head of the Ford unit developing self-driving cars.

Fields, 56, could not be reached for comment.

While Fields was CEO, he said repeatedly that Ford didn't want to be the first company to offer self-driving cars.

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