Ford CEO to employees: Bury 2018 'in a deep grave'
Ford Motor Co. CEO Jim Hackett wants his employees to "bury" 2018 "in a deep grave" and focus on driving company profit margins to double those reported last year, according to an internal company-wide email obtained by The Detroit News.
"I made a comment saying 'I’m not happy with 2018.' I’m not," Hackett wrote in a Thursday email to employees. "That doesn’t mean I’m unhappy with you or your colleagues, but we can’t become who we need to be if we accept mediocre results. And 2018 was mediocre by any standard."
Ford reported its full-year profits fell more than 50 percent last year compared to 2017. Using the company's adjusted financial results, Ford's global business pulled in a $7 billion profit, operating at a 4.4 percent margin. Hackett in his email to employees said the automaker should be targeting double that, or a $14 billion profit, if the company is to hit the 8 percent margin target.
A Ford spokesman said Friday that Hackett used the $14 billion figure to illustrate to employees how profitable Ford could be if it was operating at the 8 percent global margin target the automaker has set as a post-restructuring goal. Details about the letter were first reported by Reuters.
Ford officials, including Hackett, told investors this week that 2019 should bring better financial results than last year as pieces of the company's ongoing global reorganization begin to take hold. The automaker plans to cut $25.5 billion in costs by 2023 and spend $11 billion to reorganize the global business model. In North America, Ford is currently going through its white-collar ranks to potentially eliminate positions there.
Hackett told employees in the email that he becomes mad "for a short time" when he realizes the company is not operating to its potential.
"I know that our competition hasn't been better than us by magic," he wrote. "I hate shallow or mediocre outcomes. I don't want to be there again."
Ford last year lost millions in every market around the globe, except North America. The automaker has announced moves in Europe and India to boost profits there, and has appointed new leadership in China to restructure the business there, which was responsible for the $1.1 billion loss the company took in its Asia Pacific market last year.
Only Ford's North American business posted a profit last year. Ford made $7.6 billion in North America, operating at a 7.9 percent margin in the region. Leadership in North America is targeting a 10 percent margin.
Meantime, Ford officials point to plans to launch several new vehicles in 2019, including a redesigned Explorer and Escape, two of the company's strongest sellers, as one of the reasons 2019 should bring better financial results from the Dearborn automaker. It is introducing the Lincoln Aviator, the Ford Ranger launched in January, and Ford plans to update its Super Duty pickup this year.
Ford also recently announced plans to cut costs and re-examine markets in Europe. Jim Farley, president of global markets, said this week that Ford could exit countries in Europe where it wasn't selling many vehicles and focus on countries there where it has better market share.
Adam Jonas, equity analyst with Morgan Stanley, said in a Friday note that though Ford leadership seemed more "bullish" on the year-end earnings call this week, he's cautious. Ford's bottom line will take hits from the global restructuring before financials improve, he said.
Ford stock closed trading Friday up 3 percent to $8.86 per share. The stock is down more than 20 percent since Hackett was appointed CEO in May 2017.
Hackett told employees in his Thursday email, issue no. 24 of a series called "The Huddle," that Ford this year would plan the "implementation" of the moves Hackett and his team have decided need to be made.
"I’m seeing those plans to get the products in shape, the markets restructured and the alliances up and running," he wrote. "I have more to do in my own reflection of what should change to ensure that we win."