By John D. Stoll, Christina Rogers and Joann S. Lubin
Looking to combat Silicon Valley's push into the car business,
Ford Motor Co. Chief Executive Mark Fields hired industry outsider
Jim Hackett to help tackle the issue in early 2016. Now Mr. Hackett
is taking over the corner office.
Ford named Mr. Hackett, a former head of Steelcase Inc. who has
been leading Ford's "Smart Mobility" innovation unit, as its new
CEO Monday morning. The shuffle ends Mr. Fields's three-year tenure
at the helm of the Dearborn, Mich., auto maker and ends a 28-year
career at the company during which he developed a reputation as a
hard-charging leader.
Ford Chairman Bill Ford Jr. said Monday the car company his
great-grandfather started in 1903 needs a fresh set of eyes.
Speaking in an interview, Mr. Ford said the auto maker expects the
62-year-old Mr. Hackett to reinvent and re-energize the
business.
"We need speed [in] decision making," Mr. Ford said. He said Mr.
Hackett needs to take "hard actions" to address underperforming
parts of the business and he needs to "really invest in the
performing parts of the business."
He didn't address specific departments or regions, but said Mr.
Hackett is expected to "be in this job for a good long period --
he's got the energy for it."
Mr. Ford noted "part of the job will be to teach and groom the
next generation." Himself a former chief executive of Ford, Mr.
Ford said the auto maker faces challenges as the industry pivots
from conventional cars and trucks to new forms of manufacturing,
including parts made with 3-D printers, and new types of
transportation, including autonomous vehicles.
Mr. Ford, long a supporter of Mr. Fields, didn't directly
comment on the departing CEO's performance, but acknowledged the
company has room for improvement in communicating with Wall Street
and other constituents. Ford's share price is down nearly 40% from
when Mr. Fields succeeded Alan Mulally in 2014.
The board began discussing the move earlier in 2017, a year
during which the company stock price slipped behind that of Tesla
Inc., the electric-vehicle startup. The Tesla development, along
with tension amid the management ranks, shook directors' confidence
in the strategy and direction, according to people familiar with
the deliberations.
Shares of the company rose 2.2% in premarket trading following
the news.
Mr. Hackett is known for clear communication and taking bold
action. He made waves in the Detroit area in 2014 when, as interim
athletic director for the University of Michigan, he recruited NFL
coach Jim Harbaugh to lead Michigan's vaunted football program. He
most recently oversaw the formation of Ford Smart Mobility, a unit
responsible for experimenting with car-sharing programs,
self-driving ventures and other programs aimed to help the
114-year-old auto maker better compete with Uber Technologies Inc.,
Alphabet Inc. and other tech giants looking to edge in on the auto
industry.
The Wall Street Journal reported the board's deliberations on a
management shake-up Sunday evening. Mr. Fields couldn't immediately
be reached.
Jim Farley, recruited by Ford from Toyota Motor Corp. and
credited with turning around European operations, will also be
given a new prominent role. Mr. Farley, 54, will work directly
under the 62-year-old Mr. Hackett as a potential successor,
according to multiple people briefed on Ford's plans.
A group of other executives will be reassigned.
Mr. Hackett is a one-time Ford board member known for an easy
and straightforward style reminiscent of Alan Mulally, a longtime
Boeing Co. executive recruited to run Ford in 2006. Mr. Mulally
addressed the turmoil that permeated Ford's management ranks at the
time, sold off business units and shored up the balance sheet.
Mr. Mulally left Ford in 2014 as the company was on a winning
streak. He benefited from a revamped product line that was built
while avoiding the bankruptcies that hit Detroit rivals General
Motors Co. and Fiat Chrysler Automobiles NV's Chrysler unit in
2009.
Mr. Fields, a turnaround artist known for overseeing revivals in
Ford's operations on several continents and within various business
units, was a top lieutenant under Mr. Mulally and Bill Ford's pick
as the successor.
The company's board and Mr. Ford, however, began discussing
changes to the leadership team recently as the share price hovered
around $11 a share -- nearly 40% lower than when Mr. Fields took
over. When the market capitalizations of Ford and GM were
individually surpassed by Tesla Inc.'s earlier in this year, it
underscored how far behind Detroit is perceived to be in the race
to develop new technology.
One of several auto-industry outsiders recruited by Mr. Fields,
Mr. Hackett was installed to be instrumental in helping Ford's
moves into transportation-related services. Auto executives are
confronting changing attitudes toward car ownership. Uber, Google,
Tesla and others are racing ahead with programs aimed at overtaking
Detroit at the top of the U.S. car industry.
Those programs include electric vehicles, ride-hailing services
and programs aimed at putting vehicles on the road entirely capable
of driving without human intervention. Mr. Fields has been planning
to launch driverless cars early next decade, but it has been far
behind Tesla and GM on electric-car development. Executives have
struggled to explain how Ford will make money on services other
than developing, producing and selling automobiles.
Ford has posted a series of solid profits under Mr. Fields,
aided by renewed demand for pickups and sport utilities that
deliver higher margins and do well in an era of cheaper gasoline.
Mr. Farley, meanwhile, helped deliver more than $1 billion in
profit in Europe last year, with the favorable result coming as GM
exited that region due to persistent losses and a lack of
confidence in its German Opel unit.
Mr. Fields, however, has struggled with Wall Street. Analysts
and investors have routinely questioned the company's ability to
weather the next industry downturn. Criticism has increased as U.S.
auto sales plateau and Ford's market share slides.
Over 30 years at Steelcase, Mr. Hackett reshaped the company's
workplace offerings, dispensing with cubicles and embracing open
offices.
In an interview with The Journal last year, Mr. Hackett said he
wasn't interested in being a chief executive again but was
interested in helping Mr. Fields think through tough
challenges.
During the interview, Mr. Hackett explained that traditional
car-building consumes substantial capital and returns relatively
slim margins. In so-called mobility services, he said Ford could
eventually earn far more attractive margins if it hired the right
software engineers and designers.
The auto maker has been projecting 20% margins in the mobility
services business, but hasn't outlined when that would be achieved.
Ford's North American unit is the most profitable it currently
runs. It returns about 10% operating margins under the best
conditions.
Ford's Smart Mobility unit has made some initial moves under Mr.
Hackett's direction, hiring van-shuttle service Chariot and joining
with a bike-sharing firm.
Write to John D. Stoll at john.stoll@wsj.com and Christina
Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
May 22, 2017 11:07 ET (15:07 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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