Analysts react to Ford leadership changes

Ford Motor Co., aiming to counter Silicon Valley’s unrelenting drive into the auto industry, hired industry outsider Jim Hackett to help the automaker navigate the disruption in early 2016. Hackett is now taking over the Ford CEO post from Mark Fields.

Ford Executive Chairman Bill Ford Jr. says the company — one of the auto industry’s pioneers more than 100 years ago — needs a fresh set of eyes.
What analysts and others are saying about the management changes:
“In many ways, Mr. Hackett’s job may be more challenging than Mr. Mulally’s.
“Expect other departures or reappointments to follow as Hackett pushes for cultural change. While Alan Mulally executed his turnaround of Ford using established and emerging Ford leadership talent on hand, we expect Mr. Hackett to potentially take a different approach to lead cultural change through the infusion of more outside talent with expertise and experience in consumer electronics, software and data analytics.
“Look for Ford to present itself as an AI Machine Learning Big Data Tech Firm. Some investors may be skeptical. It all comes down to the execution and time … Bulls will say this is a decisive move that can help expand the multiple for the struggling company. Bears may say this is a sign of problems and earnings risk that have yet to fully emerge…
“We are encouraged by today’s move and interpret this as a healthy sign that Ford’s board understands the gravity of the industry challenge and is trying everything in its power to help improve the odds that Ford has a relevant long-term place in the auto/transportation industry.”
— Adam Jonas, Morgan Stanley
“It looked as though Fields left manufacturing and day-to-day product development decisions on cruise control. Recalls and quality issues dragged down earnings while spending increased on new business ventures. Passenger car sales began to slip. Ford needed a true multitasker and from the outside looking in, Fields seemed to be enamored with trying to grab some of that Tesla cool factor while the manufacturing side of the business started to unwind. 
“Hackett has gotten his feet wet with a unique opportunity to see Ford from the inside without drinking the Kool-aid. Hackett brings that outside perspective that gave everyone a warm fuzzy feeling about Mulally. With auto sales already having hit their peak, it is time to focus back on the core business and making it efficient and profitable at all levels and across all vehicle lines. Hackett will be able to manage both sides of the business. He is the right guy at the right time for Ford.”
— Dave Sullivan, AutoPacific

Ford CEO Jim Hackett, left, and Ford Executive Chairman Bill Ford on Monday at the company’s Dearborn, Mich., headquarters.Photo credit: BLOOMBERG

“First, we’d suspect that new CEO Jim Hackett will likely be a medium-term CEO, with a successor to be groomed over the coming years (perhaps in 3-4 yrs). On one hand, Hackett won’t be a ‘placeholder’ CEO. Hackett is in his early 60s, a similar age to when Alan Mulally took over as CEO, and will be tasked with a bit of a transformation — sharpening the execution, combined with driving forward the strategy on emerging technologies.
“Second, we expect a greater focus on cost-cutting and optimization than we saw under Mark Fields’ tenure. If there was one area where Ford was admittedly soft in more recent years, it was around exceeding expectations of profitability.”
— Brian Johnson, Barclays Capital
Since taking the helm at Ford three years ago, Mark Fields has overseen the strongest financial performance since the recession. He’s launched the most advanced light- and heavy-duty pickups on the market, and he’s invested in future technology to ensure Ford’s survival as the business model for traditional automakers faces drastic upheaval.
“But over this same period Mary Barra and GM have produced even more impressive financial results by focusing on where GM can be profitable while removing business units showing little short- or long-term promise. Add in the rise of Tesla, an upstart automaker that has eclipsed Ford and GM’s value by promising to change the world through advanced technology, and the impressive results Fields delivered simply weren’t enough to satisfy Ford’s stockholders.”
 — Karl Brauer, executive publisher for Autotrader and Kelley Blue Book
“Mark Fields was given the nearly impossible task of making the utterly conventional auto manufacturer, Ford Motor Company, into a high-tech information-style company with share values to match. Despite turning in credible profits, Fields was unable to turn Ford into a stock market darling, and that may well prove elusive going forward.”
— Jack Nerad, executive editor, Kelley Blue Book
“Ford exemplifies the challenge facing auto manufacturers; having great ambitions for smart mobility services, but still being heavily reliant on a profitable series of pickup trucks. However, if traditional manufacturers don’t properly take advantage of automotive technology trends – electrification, connectivity, automation – they’ll soon be overtaken by newcomers who will.
“Given Ford’s poor share performance in recent months, it’s not very surprising that they should look for fresh leadership. What’s really interesting is the fact that they should opt for the man who has spent over a year heading up their smart mobility efforts.”
— James Hodgson, ABI Research
“We generally view the news as concerning, especially because a stable management team, with a clear and consistent strategy for achieving short- and long-term goals and a cooperative relationship with its board of directors, is critical, given the late stages of the US cycle and a downturn that could be imminent, in our view. Frustration with the stock is understandable
“In our view, the exit of Mark Fields likely had much to do with the company’s stock performance since he assumed the role of CEO in 2014 (down roughly 40%). This was driven, in part, by the elevated investments the company is making in a race with peers on electrification and autonomous technology, but also the deceleration of the US cycle (and a cyclical bullish trade on autos that is ending, in our view)…
“But not an opportune time for changes in strategy.”
— John Murphy, Merrill Lynch


“Given how rapidly the transportation sector is expected to transform in the next decade, Ford can’t afford to be behind the eight ball when it comes to emerging technology. If we’ve learned anything from the phenomenon of Elon Musk, it’s that Wall Street likes a tech/innovation guy. Putting the head of their mobility division at the helm indicates Ford is trying to send a strong message to stockholders that the company intends to be a dominant player in the future of mobility. With the market plateauing, this new team is going to be challenged to create some very creative new marketing and communications strategies to make a near-term difference in the company’s bottom line.”
— Jessica Caldwell, Edmunds
“The board has been frustrated with Ford’s stock declining about 40 percent since Fields took over from Alan Mulally in July 2014. We think Ford’s stock is undervalued, but given that the U.S. auto industry in our view peaked last year, we are not sure what moves Hackett can make in the short term that will boost the stock price, beyond the CEO change itself giving the market hope for something new. We expect Hackett to try to be more specific on timelines around Ford’s mobility services, which Fields said is a 20 percent operating margin opportunity, but we think large amounts of revenue from mobility services is still a ways off.”
— David Whiston, Morningstar
Source: AutomotiveNews