Ford to lay out product plans for next two years
Ford Motor Co. has a chance Thursday to change a few things — or not so much.
Nearly a year after Ford’s board of directors ousted their CEO and promoted Jim Hackett to energize the culture and speed decision-making at the Blue Oval, the Dearborn-based automaker will try to show how it plans to compete over the next 24 months.
The stakes are high. The auto industry is hitting a sales plateau after record years, and companies are pushing to prove to Wall Street investors, industry analysts and the news media that they can be a winner in an uncertain future. That future just became more clouded by a looming trade war already promising higher prices for steel and aluminum.
Ford calls the briefing “Ford Uncovered.” It’s the first of two occasions Ford leadership is using to provide clear evidence that the company has a credible plan to drive near-term profits to fund investments in electrified and autonomous vehicles.
The company will use its Product Development Center showroom in Dearborn to outline plans to grow its share of the pickup and SUV markets, according to a source familiar with the situation, as well as its push into electrification and new technology. The second event will be anchored to Ford’s first-quarter earnings next month.
Both could be pivotal. Ford’s leadership team feels the company has a solid plan and strong product in the pipeline. Yet, Ford has lagged its competition on Wall Street since before Hackett became CEO, and in January it forecast lower 2018 profits just before reporting disappointing 2017 profits.
All of this while J.P. Morgan is predicting shares in crosstown rival General Motors Co. could reach $55 by the end of this year; the stock currently trades at around $38. GM shares have climbed 15.4 percent since May 22, the day of Hackett’s promotion. Fiat Chrysler Automobile NV shares are up 97.3 percent in that same time period.
Meantime, Ford has created more questions about the future than it has answered. It started with a keynote speech at the CES technology show in January at which Hackett outlined plans for a cloud-based infrastructure to manage urban transportation networks.
On Jan. 24, Ford announced disappointing 2017 earnings and confirmed lower guidance for this year. The next day, the company announced it would acquire two technology companies and would shuffle the ranks and segments within Ford Smart Mobility to speed development of the infrastructure cloud.
That day, Ford shares slumped 3.9 percent to close at $11.57. After a small uptick the next day, Ford stock dove another 4.5 percent to $11.12 per share by Jan. 29. And they haven’t recovered: Ford shares have ranged below $11 per share since the beginning of February — roughly what Blue Oval shares fetched last May 22, the day Hackett was made CEO.
A cloudy future isn’t unique to Ford. But analysts say the combination of leadership changes over the last year, coupled with an apparent lack of strategic vision from former CEO Mark Fields, left Ford bucking a stiffer headwind than many of its competitors.
The company has wrestled in recent months with just how much information it should share with the public. Executive Chairman Bill Ford Jr. said as much at a late 2017 Detroit Economic Club luncheon.
“There’s a very delicate balance between what you want to telegraph publicly, and I think in the past maybe we said too much,” Bill Ford said then. “You want to give Wall Street enough information, but you also don’t want to telegraph where you’re going. ...
“It’s not like we’re not going to say anything. We’re saying a lot. It’s just that we’re not going to say everything. I think the key is providing clarity when we’re ready so that investors can make an informed decision.”
Wall Street is growing impatient. Adam Jonas, an influential Morgan Stanley analyst, told Hackett during the year-end earnings call in January that time is running out to show investors and other key constituents a plan.
“This is the time,” Jonas said then, his tone suggesting impatience. “When are we going to be very clear and transparent about this so that investors and your associates at Ford can kind of rally around the mission? How long do we have to wait?”
Thursday’s event is an effort by Ford to bring people “under the tent,” as Hackett put it during a January conference call: “I get how important this year is to prove this management team’s ability to convert.”
Ford spokespeople declined to comment specifically about Thursday. The briefing is expected to answer questions about which nameplates Ford plans to retire or re-imagine; which ones it plans to launch; what kind of technology will be rolled out with those products in the near term; and how Ford will be compete over the next couple of years.
The briefing will show whether Ford’s new leadership is changing its communications strategy to better fit market expectations that reward transparency around future plans, said Jessica Caldwell, executive director of industry analysis for Edmunds, an automotive analysis company.
“It makes me wonder if they’ve taken some of the criticism of people not understanding what their vision is,” she said. “People need more concrete facts. They need to just clarify things.”
The 114-year-old company increasingly has little room for error.
“Ford’s made a lot of noise that they’ve kind of presented as being beyond just (making) autonomous vehicles,” said Karl Brauer, executive publisher of Autotrader and Kelley Blue Book. “They say ‘We’re into the whole picture,’ and it hasn’t changed their stock price. You still have to be successful in a world where individuals buy internal combustion cars and drive them around themselves.
“Ford stands at a critical point in being able to commit to being a major player in the transformative cycle we’re starting to enter in automobiles and personal transportation.”