Ford announces new CEO as it eyes bigger electric push
Aug 05, 2020 - 03:48 AM
NEW YORK — Ford announced Tuesday that Jim Hackett would resign as chief executive and be replaced by auto veteran Jim Farley as the car giant pushes further into digital and electric investment.
The move follows a bumpy period for Ford after some manufacturing stumbles and a major corporate restructuring that has yet to boost profitability.
Hackett, 65, will retire and hand over the job to Farley, 58, on October 1, but stay on as a special advisor through March 2021. Farley came to Ford in 2007 after a long tenure at Toyota and currently serves as chief operating officer.
Hackett, who had no auto industry experience prior to Ford, joined in 2017 after a career at furniture company Steelcase and was known for his skills in turning around struggling organizations. He also had a stint in the athletics department at the University of Michigan.
Hackett has unveiled an $11 billion cost-savings programs that has involved closing plants in Europe and Latin America
He has overseen major shifts at the 117-year-old Detroit firm, including phasing out most sedan models in the US market and launching the Mustang Mach-E, an all-electric sport utility vehicle built on one of the auto industry’s most iconic brands.
Both moves drew criticism, with some analysts pointing out that ending sedan-building in the truck-centered US market alienated some customers, and design mavens decrying the Mustang’s makeover into a suburban-oriented mainstay.
The company also botched the 2019 rollout of the Explorer SUV due to manufacturing fumbles that the company blamed on an overly-ambitious plan.
Ford’s share price has fallen during Hackett’s tenure amid doubts over long-term direction as it has lagged rival General Motors.
Chairman Bill Ford credited Hackett with “taking on the tough issues and slaying the sacred cows.”
Ford, the great-grandson of company founder Henry Ford, said during a briefing with reporters that Hackett’s mission at the outset of his appointment included preparing the company for a successor.
Ford characterized Farley as a true car person, noting he enjoys racing vintage cars as a hobby.
Farley said during the briefing that there were no major strategic differences between him and Hackett and that he was “all in” on the outgoing CEO’s emphasis on refashioning car design around digital capacities.
Bill Ford said the board had talked casually about looking at outside candidates, but that momentum built for Farley as he helped lead the response to the coronavirus pandemic, which involved shutting plants for several weeks and then reopening them.
Analysts said Ford faces challenges ahead.
“Hackett was an unorthodox CEO pick to begin with, as an external candidate with no prior auto industry experience, and his tenure was marred by a deteriorating bottom line,” said CFRA Research analyst Garrett Nelson.
“While Ford’s new vehicle lineup has shown some promise with the Mustang Mach-E and Bronco, we think Farley will have his work cut out to ‘right the ship,’ as Ford remains in the middle of a multi-year restructuring and we don’t see its vehicle sales returning to pre-COVID levels anytime soon.”
Cox Automotive analyst Michelle Krebs recalled an early public appearance by Farley in which he invoked his grandfather’s experience at Ford and talked about how coming to the company was like coming home. Farley again mentioned his grandfather on Tuesday.
The remarks suggest that Farley understood what “makes vehicle products something more than a commodity,” Krebs said.
“The road ahead for Farley and Ford will be anything but easy as the industry struggles to adopt new technologies, new global regulations and high customer expectations. In times of transformation, leaders that dream big and lead with emotions often rise to the top,” Krebs said. “And that certainly seems to be the case right now with Jim Farley.”
Shares of Ford rose 2.5 percent to $6.86.