Dearborn - Ford Motor Co. Executive Chairman Bill Ford Jr. wants the company his great-grandfather started to be a more collaborative workplace that can quickly adapt to the rapidly morphing auto-and-mobility sector. And he sees the new CEO, Jim Hackett, as a "change agent" to drive the automaker there.
"We need to modernize our business. We have to continue to develop and also invent the new businesses," Bill Ford said Monday at a press conference announcing his management shakeup. "Any one of those is a big task, we have to do all three, and I'm very confident that we can and that we will under Jim's leadership. I've never felt more confident in our future."
The automaker's ousting of CEO Mark Fields and reassignment of three senior executives creates a new structure for the company founded more than a century ago. Hackett, a former CEO of Steelcase Inc. and one-time Ford director who now serves as president of Ford Smart Mobility LLC, will become president and CEO of the Dearborn-based automaker, effective June 1.
“We need to re-energize our business and sharpen our execution,” Bill Ford said in an interview with The Detroit News. “The good news is we have the financial resources and the talent to get it done. But what we needed is a transformative leader who has done it before. And who not only has the vision, but also knows how to get the organization to move toward that vision.
“Jim has done this before. And he’s done it at an industrial company. And he’s done it at a company where he redefined it from what it was to what it could become. Jim will bring speed of decision-making. The world in which we are operating in today is very different from even three years ago.”
Hackett plans to borrow elements of CEO Alan Mulally's "One Ford" approach to guiding the Blue Oval through the Great Recession. But the new CEO and his team are likely to depart from core elements of that framework because the Silicon Valley-led mobility revolution is transforming the traditional auto industry at accelerating speed.
"He did this really special thing to get the company to be a community again," he said Monday. "It worked really well, and in fact we're going to use parts of it in the way that we monitor our success. But what it doesn't do as well, is it doesn't handle when there's lots of complex strategy questions. If you thought of strategy like a Rubik's Cube, it's not just solving one side, there's lots of sides to the problem. I'm trying to design a team that's a little closer to Bill and I that allows us to make decisions very clearly for the organization."
The uncharacteristically swift move for Ford comes as large Wall Street investors and small shareholders raise increasing pressure on the automaker. Ford shares have slipped roughly 40 percent since Fields replaced superstar CEO Alan Mulally in July 2014. Ten percent of that slide came in the first five months of this year as the blistering U.S. market shows signs of cooling, weakening Ford’s financial results and raising doubts about its management direction.
Evidence continues to mount, Ford executives say, that the automaker under Fields failed to move quickly enough to realign its business to maximize growth, to boost return on invested capital and to reassure investors that Ford is effectively managing its transition from a century-old automaker to what it calls an “auto-and-mobility company.”
As rival General Motors Co. under CEO Mary Barra aggressively moves to reshape its global market and manufacturing footprint — leaving Russia and India, ending production in Australia and Indonesia, selling its European operations to PSA Groupe SA of France — Ford’s directors found Fields moving too slowly on such things as the Blue Oval presence in India and whether it should withdraw from the small-car segment in the United States, among other things.
“Those things are front and center on the agenda — very quickly,” Hackett, 62, said in an interview with The News, referring to Ford’s presence in India and the future of small cars in the SUV-crazy U.S. market. “There’s a long list of them like that. They were kind of in process. We will address all those.”
The new senior management structure developed by Hackett, Bill Ford and the company’s directors is designed to emphasize quicker decision-making and crisper execution. Jim Farley, 54, head of Ford Europe, Middle East and Africa since January 2015, will become executive vice president and president of global markets. He will oversee Ford’s regions, global marketing and sales and Lincoln Motor Co.
Joe Hinrichs, 50, head of the Americas since December 2012, will become executive vice president and president of global operations. He will manage global product development, manufacturing and labor affairs, purchasing, and sustainability, environmental and safety engineering.
Marcy Klevorn, 57, vice president of information technology and chief technology officer since January, will become executive vice president and president of mobility. She will oversee Hackett’s Ford Smart Mobility unit, as well as information technology, global data and the work of Paul Ballew, 52, as newly appointed global chief data and analytics officer.
And Mark Truby, 47, head of communications for Ford Europe and, more recently, in the Asia Pacific region, returns to Dearborn to become vice president of communications, effectively immediately. A former auto writer and business editor for The Detroit News, he replaces Ray Day, who will retire at year’s end.
Hackett said that there will be more announcements coming later in the week on rounding out his team, which he called a "powerful group of people."
The decision to oust Fields as CEO and replace him with Hackett was finalized in a board meeting Friday, after which Bill Ford told the incumbent CEO he would be replaced by the former Steelcase CEO and the former interim athletic director of the University of Michigan.
Hackett’s biggest accomplishment on his brief return to his alma mater: wooing Jim Harbaugh, fresh from the NFL, back to the sidelines in Michigan Stadium. Bill Ford, who’s known Hackett for some 20 years, said Hackett’s success at Michigan in a relatively short tenure — re-engaging disaffected students and volunteers, hiring Harbaugh and the new athletic director Warde Manuel — demonstrates an “ability to lead in all kinds of circumstances.”
Sense of urgency
Ford’s move against Fields, in the job less than three years, betrays a sense of urgency the company historically has taken longer to muster. But time, Bill Ford signaled, is racing ahead in the global auto industry, and Ford cannot afford to address leadership problem unlikely to get better with time.
A whole new set of Silicon Valley competitors with names like Apple and Google, Intel and Qualcomm is vying for leadership in the next-generation industry that threatens to change fundamentally the auto industry as Detroit knows it. It’s unfamiliar territory for all automakers, not just Ford.
Mulally, a former Boeing Co. executive wooed to Ford in 2006 to rescue the struggling Blue Oval, engineered the rebuild of Ford’s core car and truck business, producing what turned out to be an earnings machine at the top of the auto cycle. Job One: save the company.
Fields, a Ford veteran, was charged with maintaining that momentum amid a downshifting market cycle while simultaneously pushing the automaker into unknown territory labeled autonomy, electrification and mobility. That turned out to be easier said than done, especially when a hot U.S. truck market, an inept communications strategy and bad timing further muddied the company strategy with key interest groups.
“Alan did a really fantastic job — unheralded as you know — to bring One Ford about during this crisis,” Hackett told The News. “The matrix structure that he had to put together so they could understand what was going on together is not the best structure as the edges of this are being disrupted.”
Worse, the Mulally magic is showing unmistakable signs of dissipating. Quality declined and warranty costs rose. Rivals moved more quickly than Ford, and lost a smaller percentage of cars in an SUV-weighted market than the Blue Oval. Profits declined despite a record U.S. market and a robust turnaround for Ford of Europe.
Executive back-biting and corporate intrigue, enduring staples of an Old Ford that Bill Ford once likened to czarist Russia, re-emerged as the gulf between expectations and financial results widened. Speculation of who might be in, or out, generally failed to capture the sweeping changes Ford’s directors were determined to take from a position of relative strength, not the weakness of 2006.
And, amid expectations that the automaker is on track to book some $9 billion in profits for this year, Ford announced plans to offer 1,400 buyouts to salaried employees in North America and Asia — euphemistically described in a company statement as “people efficiencies” — even as it confirmed retention bonuses for four executives.
The guy with his name on this building sounds like a scion who expects the new CEO to alter that course. Hackett will be the second outsider to head Ford since Mulally arrived 11 years ago, and he’s expected to clarify the vision of Ford’s direction in uncertain times, coalesce its many constituencies around it, and make decisions.
Melissa Burden of The Detroit News contributed.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN