Howes: Ford’s next-gen mobility play targets disruption
Ford Motor Co. CEO Mark Fields says the automaker isn’t in any war with Silicon Valley.
The Blue Oval instead is in a battle with itself to leverage new business opportunities lest the likes of Apple and Google, or ride-sharers like Uber and Lyft, outmaneuver their Detroit rivals in competing bids to more successfully marry technology with the nuts-and-bolts car and truck industry.
How ’bout both?
“There’s lots of talk on how tech companies are going to disrupt the auto industry,” Fields told me Monday on NewsTalk 760-WJR, where I guest-hosted the Frank Beckmann Show. “We’re going to disrupt ourselves. We don’t view it as a race with Silicon Valley. We’ve set up a big operation out there.
“Our approach is to collaborate with and participate in that community, but clearly we want to be a leader in this area. The prognosticators who say this is the end of the auto industry, I don’t agree with one iota. This is a natural extension of our business.”
In theory, anyway. Last week the Dearborn automaker said Jim Hackett — a longtime Ford director and former athletic director at the University of Michigan who served nearly a generation as CEO of office-furniture maker Steelcase Inc. — would leave the Ford’s board of directors to head Ford Smart Mobility LLC.
Not so far-fetched, that. Forming a new unit with headquarters in Dearborn and Palo Alto, Calif., to “design, build, grow and invest” in what the company calls “emerging mobility services” is a strategic play for part of a larger transportation services sector that books an estimated $5.4 trillion in annual revenue.
Who wouldn’t want a piece of that, more than twice the annual revenue of the global auto industry? Answer: any automaker who sees longer societal trends turning slightly away from owning and driving to riding and sharing — but not abandoning them completely.
The bet looks like this, as Fields sees it: most of the world outside the densest, dirtiest urban areas will continue to buy and drive cars and trucks, while the rest increasingly seek alternatives that meld personalized technology with metal produced by the world’s automakers.
Ford’s mobility play is not a wager that customers will either continue to own and drive or seek access to share, ride and leave the owning to others. It’s a bet on both trends, and an explicit decision to turn Detroit’s reputation for missing trends into an industry that anticipates them.
How else to interpret Ford’s mobility moves? Or rival General Motors Co.’s stake in Lyft Inc., announced in January? Or the automaker’s decision last week to acquire Cruise Automation and operate it as a unit of GM’s Autonomous Vehicle Development Team?
These companies are, and will continue to be, on the muscle for movement and competitive advantage. The biggest reason: investors remain unpersuaded the industry that claimed the largest government bailout in American history is sufficiently restructured — and sufficiently reinvigorated — to parry aggressive moves by Silicon Valley players.
So far this year, GM has invested $500 million in Lyft and secured a board seat to be occupied by President Dan Ammann; formed an autonomous vehicle team and launched Maven, a personal mobility brand; touted its Chevrolet Bolt electric car, expected to be a backbone of ride-sharing companies; and acquired Cruise Automation to help with autonomous car development.
Long before Hackett wooed Jim Harbaugh back to Ann Arbor to become head football coach, the guy helped old-line furniture-maker Steelcase change the way people work. Can he begin to do the same for an old-line automaker’s global gambit to change the way people move?
He’d better. The industry that put America on wheels, almost lost it all, and now is delivering the kind of profitability it could only dream about a few years ago faces an inflection point. Its competitors aren’t just in Japan and Germany, South Korea and China.
They’re in Silicon Valley. They’re millennials more than happy to exchange their car keys for smartphone apps, a trend that can drain sales revenue unless the likes of Ford and GM, to name two, move to become parts of techy solutions.
Old stereotypes die hard. For years, smart money hammered Detroit for its inability to anticipate trends when quick money could be made selling trucks and SUVs into a hungry market greased by cheap gas. Now that Detroit is placing strategic bets on the future even as it makes quick money selling trucks and SUVs into a hungry market greased by cheap gas, it gets hammered, too.
Smart money can’t have it both ways. That’s why betting on the “core,” as Fields calls the traditional car and truck business, and the future of mobility are the ways to play the present.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.