Ford Moves Quickly To Fill Vacancy -- WSJ
February 23 2018 - 03:02AM
Dow Jones News
By Mike Colias and Austen Hufford
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 (February 23, 2018).
Ford Motor Co. has named a new chief of North American
operations following the abrupt departure of Raj Nair due to
misconduct allegations, a move that is part of a wider reshuffling
of operations by a new chief executive trying to address investor
concern about the company's ability to keep up with Detroit
rivals.
The Dearborn, Mich., auto maker on Thursday appointed Kumar
Galhotra, 52, to head a unit that accounts for the bulk of Ford's
profits. Mr. Galbotra has been running marketing and the Lincoln
brand, a once-dominant U.S. luxury brand that has gained momentum
in China, and takes the helm of the Ford's core business unit as
profits are under increasing pressure.
Mr. Galhotra 's appointment leads a series of top personnel
changes being implemented by CEO Jim Hackett in the wake of
disclosures about Mr. Nair's alleged breach of company standards.
Mr. Hackett is less than a year into his tenure running Ford,
making a variety of management changes and ordering cost cuts.
Mr. Hackett is rushing to make Ford a more efficiently run
company while also hammering out a longer-term response to
driverless cars, ride-sharing services and electric vehicles. Even
though Ford still posts relatively strong profits, the company is
largely seen trailing its key rival General Motors Co., which has
made clearer bets on autonomous vehicles and slimmed down global
operations to focus on only the most profitable markets.
Ford is heavily dependent on sales of trucks and sport utilities
for most of its automotive profits. That strategy is threatened as
U.S.-market growth stalls and competitors, including GM, launch
revamped full-size pickup trucks.
The timing of the most recent moves is likely driven by Mr.
Nair's exit, which was announced late Wednesday. Mr. Nair, 53, was
ousted after an internal review based on an anonymous tip led to
findings of "inappropriate behavior," the company said.
The auto maker didn't detail the nature of the allegations
against Mr. Nair. Ford's one-time global product chief, who had
spent his career at the company, in a statement acknowledged
"regret" over his behavior.
The departure of Mr. Nair removes a rising star and respected
car-engineering expert from Mr. Hackett's management bench. A top
task Ford needs to accelerate is entering the electric-vehicle
market with a more compelling answer to Tesla Inc.'s products and
GM's Chevrolet Bolt.
Mr. Hackett took over for Mark Fields about nine months ago,
handing out new assignments to several lieutenants including Mr.
Nair. The company has seen a handful of high-profile exits,
however, including a former head of strategy and the sudden
departure of a key China executive. Mr. Hackett shuffled senior
ranks as recently as October.
"It's been a revolving door at the top of Ford for the last
year," Edmunds analyst Jessica Caldwell said. "The company really
needs consistent leadership in order to deliver the results Wall
Street is demanding."
Ford's share price, trading at $10.67, is virtually unchanged
since Mr. Hackett took over. The company has been losing ground to
both of its Detroit rivals -- GM and Fiat Chrysler Automobiles NV
-- in terms of operating profits, partially due to problems
managing currency exposure and material costs.
The promotion of Mr. Galhotra and other appointments are
designed to strengthen its automotive business, improve its
operations and boost focus on emerging opportunities.
Ford said that Stuart Rowley would be chief operating officer at
Ford North America; Joy Falotico will become Ford's chief marketing
officer; and David McClelland will become the new chief executive
of Ford Credit. John Lawler has been appointed vice president of
strategy, succeeding Mr. Rowley, and Cathy O'Callaghan was named
corporate controller for Ford and financial chief for global
markets.
Mr. Hackett, a former office-furniture executive installed by
Ford Chairman Bill Ford to sharpen the company's long-term
strategy, has been touted as a visionary leader capable of
navigating an industry undergoing rapid change, including pressure
from Silicon Valley tech giants. Analysts, however, have said they
want a clearer picture of how Mr. Hackett plans to revitalize a
company that is underperforming its peers.
Ford's global profit margin fell to 5% last year, from 6.7%, for
example, well behind GM's 8.8% margin.
During a conference call last month after Ford reported
disappointing fourth-quarter earnings and reiterated a downbeat
2018 outlook, Morgan Stanley analyst Adam Jonas pressed the CEO to
detail plans for cutting billions of dollars in costs. Mr. Hackett
demurred, saying the details hadn't been fleshed out internally
yet.
"That's a problem Jim," Mr. Jonas said on the call. "When are we
going to be very clear and transparent?"
Write to Mike Colias at Mike.Colias@wsj.com and Austen Hufford
at austen.hufford@wsj.com
(END) Dow Jones Newswires
February 23, 2018 02:47 ET (07:47 GMT)
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