Ford replaces CEO with head of ‘mobility’ and appoints new exec for electric vehicles

Ford had a massive leadership shakeup today that saw CEO and longtime executive Mark Field ousted and replaced by Jim Hackett, the head of the automaker’s ‘Smart Mobility’ division.

The company also appointed a new executive in charge of “strategy and business model development for electrified vehicles and autonomous vehicles.”

In a press release, Ford gave some bullet points on the leadership changes:

• Jim Hackett named as Ford Motor Company president and CEO, succeeding Mark Fields, who is retiring. Hackett, who will report to Executive Chairman Bill Ford, is recognized as a transformational business leader
• Hackett led Steelcase Inc.’s turnaround to become the world’s No. 1 office furniture maker, served as interim Athletic Director at University of Michigan and has led Ford Smart Mobility LLC since March 2016. He served on Ford’s board from 2013 to 2016
• Hackett, together with Bill Ford, will focus on three priorities: Sharpening operational execution, modernizing Ford’s present business and transforming the company to meet tomorrow’s challenges
• Ford also named leaders to three new roles under Hackett. Jim Farley is appointed executive vice president and president, Global Markets, Joe Hinrichs is appointed executive vice president and president, Global Operations, and Marcy Klevorn is appointed executive vice president and president, Mobility
• Mark Truby is appointed vice president, Communications, and elected a company officer.  He succeeds Ray Day, who plans to retire from the company next year and will provide consulting services until then
• Paul Ballew is appointed vice president and Chief Data and Analytics Officer

In his new role as executive vice president and president of Global Markets, Jim Farley will be the executive in charge of Ford’s electric vehicle plans.

Farley is coming from a marketing background. He worked at Toyota for almost two decades before joining Ford in 2007.

We recently reported on Ford’s electric vehicle plans being in need of a shakeup. They still don’t have an all-electric vehicle built from the ground up to be electric and the first one, a CUV with 300 miles of range, is not planned until 2020. The company has instead been focusing on hybrid and plug-in hybrid powertrains.

It is still too early to say if the leadership change will lead to accelerated plans when it comes to EVs.

Morgan Stanley’s Adam Jonas was out this morning with 7 key high level thoughts:

1. Ford is no stranger to looking outside of the house of Dearborn for someone to affect radical change. Alan Mulally was brought in from Boeing over a decade ago to reengineer the core business to improve efficiency and scale and for technological rigor. This time Ford is looking for the former CEO of Steelcase and current head of Ford Smart Mobility LLC to reposition the company in a world of EVs, shared mobility and autonomous driving. In many ways, Mr. Hackett’s job may be more challenging than Mr. Mulally’s.
2. 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.
3. In our opinion, Ford’s current and forward year earnings guidance should not be relied upon – we believe the earnings situation may need to get materially worse before it gets better. It is not unusual for new management to have significantly different priorities on how to pursue revenue and the associated costs and timing of such costs. In Ford’s case, we believe the company must absorb substantial up-front cash and non-cash expenditures for the purpose of long-term strategic repositioning that may weigh substantially on near-term results.
4. 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. During his stint heading the University of Michigan Athletic Department, Jim Hackett proved to be highly effective in bringing talent from Silicon Valley to Southeast Michigan (Jim Harbaugh). Time will tell if he can pull off a similar feat as the head of Ford Motor Company.
5. 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.
6. Ford believes it is in a transformative period. We believe Ford’s fundamental and financial outcome may take time – perhaps far longer than what is left in the current cycle.
7. While we remain UW on the shares and reiterate our $10 price target, 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.

Featured Image: FLAT ROCK, Mich., January 3, 2017 — Mark Fields, former president and CEO, Ford Motor Company, today detailed seven of 13 new global electrified vehicles and shared the company’€™s plans to invest $700 million to expand its Flat Rock Assembly Plant in Michigan, creating 700 direct new jobs in addition to Ford’s $4.5 billion investment in electrified vehicles by 2020.