After summer evaluating the auto maker, new boss Hackett
prepares to lay out path forward
By Christina Rogers
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 2, 2017).
DETROIT -- Ford Motor Co.'s new boss spent the summer touring
the auto maker's global operations, brainstorming with his
executives on new business concepts and even paying a visit to an
electric car maker in Silicon Valley that his predecessor had
considered buying.
Now, he is ready to start tinkering under the hood.
Jim Hackett was promoted in May to chief executive after the
board ousted then-CEO Mark Fields, amid concern about the company's
strategy. After spending several months asking questions and
strategizing, the 62-year-old former office-furniture executive is
set to provide an update on Ford's progress at an investor meeting
Oct. 3.
Mr. Hackett is expected to show how Ford is streamlining its
core business while pursuing futuristic ideas. The 114-year-old
company survived the recession last decade far better than its
Detroit competitors, but now feels growing pressure from tech
companies and traditional rivals in the emerging era of
self-driving cars and ride-sharing services.
Wall Street has yet to fully embrace Ford's leadership change at
a time when U.S. car sales are softening. Ford's stock has risen
10% since Mr. Hackett took charge but investors are still looking
for a firmer strategic road map.
Under Mr. Hackett, the company's leadership team set up several
mini war rooms in conference spaces at Ford's Dearborn, Mich.,
headquarters, according to people familiar with the matter.
Executives have huddled there to sketch out new concepts -- often
on sticky notes and sheets of paper stuck to the wall -- in an
effort to shake up the company's thinking on everything from its
culture to branding.
"We expect Ford's next strategy to be more open to partnerships,
new structures, new entities, and far greater emphasis on
all-electric" vehicles, a Morgan Stanley auto analyst, Adam Jonas,
wrote in a recent research note. "We are not convinced investors
are prepared for the required sacrifice to near-term profit."
Other analysts say Mr. Hackett needs to rekindle Ford's
competitiveness with certain peers and boost its profit margin.
General Motors Co., for instance, has shown a greater willingness
to make bold cost-cutting moves, including exiting its money-losing
European operations, while at the same time focusing more sharply
on future technologies.
Barclays analyst Brian Johnson said Mr. Hackett needs to take a
"bold course of action" to revive interest on Wall Street. "In the
past few years, Ford simply hasn't had a compelling narrative that
investors could latch onto," Mr. Johnson wrote in a research
note.
Mr. Hackett's hiring came after Ford's board grew concerned
about how the company would maintain high profits while competing
with tech firms such as Google parent Alphabet Inc. that are edging
in on the car industry.
Associates say Mr. Hackett, a former longtime CEO of
Michigan-based Steelcase Inc., is likely to place big bets and push
for quick action.
This past week, Ford announced a deal with ride-hailing service
Lyft Inc. to test its self-driving cars on Lyft's network and
co-develop software to connect Ford vehicles with the San
Francisco-based company's app.
Ford also is studying a partnership with India's Mahindra &
Mahindra Ltd. that could cover a swath of ideas, from electric
vehicles to connected-car services and is pursuing a joint venture
with China's Anhui Zotye Automobile Co. , to form a new
electric-car brand in the world's largest vehicle market.
Separately, in June, Mr. Hackett dropped by Lucid Motors Inc., a
Silicon Valley electric-car startup, for a presentation, according
to people familiar with the visit. Ford considered buying the
company under Mr. Fields, but talks have been put on the back
burner as Mr. Hackett works to firm up Ford's strategy.
Mr. Hackett is concerned about the company's ability to make
money as regulations and the race to make electric and self-driving
cars pressure the bottom line. He often talks about evaluating
Ford's "fitness," a term he uses for efficiency.
Mr. Hackett also needs to address concerns dealers have had
about the company shifting too much attention away from its current
product portfolio. The issue arose during Mr. Fields's tenure when
he emphasized future projects such as car-sharing services with no
near-term profit potential for dealers or the company.
Among Mr. Hackett's other stops: Ford's operations in Turkey and
Russia, and a transmission plant in suburban Detroit. In September,
he met with union leaders from Ford's U.S. factories and paid a
visit to Microsoft Corp.'s headquarters in Redmond, Wash.,
following an appearance by the software giant's CEO, Satya Nadella,
at a Ford leadership meeting in August.
Mr. Hackett said his travels to Silicon Valley, a place he
frequented when running Steelcase for two decades, affect his
approach to business. "I did learn and understand the culture out
there," he said during a recent conference call with analysts and
investors. "It's steeped into my thinking, optimism, innovation and
questioning the status quo."
Before being named CEO, Mr. Hackett was recruited by Ford
Chairman Bill Ford to run the company's fledgling Smart Mobility
unit, a Silicon Valley operation charged with pursuing future
transportation ideas. Since taking the company's helm, Mr. Hackett
has hired IDEO, a design firm once majority owned by Steelcase, to
consult on how to inject more "design thinking" into Ford's
corporate activities, people familiar with the move said.
After taking over at Steelcase, Mr. Hackett took aim at the
product that was considered the company's bedrock offering:
cubicles.
At one point he walked into a planning meeting and declared that
any furniture the company made that stood "below the belt line" --
low filing cabinets, desks, etc. -- should be put on wheels, said
David Kelley, the founder of IDEO and a longtime friend of Mr.
Hackett's. That would allow office workers with laptops and
cellphones, who no longer are tied to desks, to reconfigure their
workspaces.
"This was huge," Mr. Kelley said. "Everyone was thinking, 'How
are we going to do this?'" But Steelcase figured a way, increasing
its focus as a purveyor of open-plan workplaces.
Write to Christina Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
October 02, 2017 02:47 ET (06:47 GMT)
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