Howes: Hackett's Ford eyes exit from the ol' barrel
Hackett haters beware: Ford Motor Co.’s turn in Detroit’s proverbial barrel may be coming to an end.
Credit strong core auto results expected to improve as new pickups and SUVs arrive in showrooms, fetch higher prices and drive North American profit margins to 10%. Credit the effects of a global restructuring starting to be reflected in quarterly numbers. And credit a patient approach to partners in the electric- and autonomous-vehicle spaces — see Rivian Automotive LLC and Argo AI — whose expertise the Blue Oval is leveraging without outright acquiring.
This is the convergence Executive Chairman Bill Ford and CEO Jim Hackett have been touting ever since the automaker’s directors elevated him to chief executive two years ago this month. Hackett's tortoise-like approach to redesigning the Blue Oval for the cut-throat present and the hyper-competitive future attracted more than a little criticism from the usual suspects inside Ford, among its rivals and on Wall Street.
Especially so when contrasted to the metaphorical hare of CEO Mary Barra’s General Motors Co., now a decade removed from its federally induced bankruptcy. GM's leaders carry large chips on their shoulders because they have something to prove, respectability to retain and an uncertain future to chart.
But if decades of competitive cycles in this town teach anything, it's that few things stay the same — and that includes the subjects of water-cooler debates about who's up, who's down and who's coming back. In that sense, Ford's surprisingly strong first-quarter financials for now earn the Blue Oval the benefit of the doubt, a relief in Dearborn.
This week's note from Morgan Stanley, at times a harsh critic of Hackett and the pace of Ford's turnaround, said Ford "is demonstrating it can be a nimble and flexible collaborator" with start-up partners; that its restructuring in Europe is "off to a better than expected start"; that it's "already benefiting" from its "all-in-on trucks strategy," aligning the Ford segments "where it has great customer appreciation and authenticity."
Victory? Not even close. Points scored? No question. Success in this business is a product of consistent execution, honest appraisals of strengths and weaknesses, and the humility to acknowledge you don't own the market on wisdom. That's why, how and with whom Ford is partnering on electrification and self-driving vehicles could prove critical to its place in the coming age of autonomy.
A former office furniture CEO with an intellect skewing decidedly toward Silicon Valley, Hackett has proven an easy target for the hardcore autos crowd. He has his head "in the clouds," goes the common riff. He talks like a professor. He's not sufficiently schooled in the hard points of auto engineering, design and manufacturing.
Maybe so. But with each new move on electrification (Rivian) and autonomy (Argo), I wonder if Hackett's wonky side marinated in the Bay Area business culture of innovation and risk-taking isn't a better fit for the times — provided he's got the right operating executives running the core auto business that generates the revenue and delivers profits to the bottom line. In general, he does.
Ford's restructuring is far from complete. And a "beat," as the street says, for a single quarter is not proof that it is. Consistent improvement, however, is another question: new trucks and SUVs that increase average transaction prices and swell margins; leaner operations in Europe and South America that turn perennial money losers into the profit contributors; restructured operations in India and China that transform parallel legacies of missed calls into the right vehicles for the right times.
Which brings me back to the ol' barrel. Ever since the legendary Alan Mulally bolted Dearborn five years ago this summer, the Blue Oval has been in search of a credible strategy to leverage its core strength for today and exploit opportunities for tomorrow — before someone beats 'em to it.
What should be abundantly clear by now is that navigating the path forward demands a different kind of mental acuity and cultural sensibility. It would respect more than a century of accumulated automotive know-how even as it outlines a strategy that is as visionary and collaborative as it is unapologetic about the stakes involved.
Hackett might not quite be there, but he's a lot further down that diverging road than the last two guys who occupied his office.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him at 3 p.m. and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.