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Ford CEO surprises everybody by retiring after simply three years

by Y9gvFGIPMP
August 4, 2020
in Science
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Enlarge /. Jim Farley, left, and Jim Hackett at a Ford event in January 2019.

Ford changed CEO for the third time in six years, the company said on Tuesday. Current CEO Jim Hackett will step down in October and be replaced by his hand-picked deputy chief operating officer, Jim Farley.

Hackett made some significant changes to make Ford more profitable. The most dramatic was that Hackett canceled most of the Ford vehicle range in the U.S. so the company could focus on its more profitable trucks and SUVs. Ford then announced plans to invest $ 11 billion in new electric and hybrid vehicles – despite laying off nearly 20 percent of its European workforce.

"We made some important decisions in the earliest days that were pretty controversial," Hackett said in a conference call on Tuesday. "Getting out of the limousine business was a difficult question."

Some have argued that Hackett was pushed out of Ford due to the company's weak performance – Ford's stock price has dropped about 40 percent since Hackett's term in office. However, others argue that Hackett was simply not interested in being in the top job for a long time. The 65-year-old Hackett came to Ford towards the end of a long career. His plan may have always been to take a new course and identify a promising successor before handing over the torch.

"Hackett has always been a smaller place to fight the fires [former CEO Mark]. Fields lit," auto industry reporter Dan Carney wrote in a Tuesday tweet. "After these have largely been wiped out and Farley has proven himself, he understandably wants to return to the retirement from which Ford pulled him."

New products and technologies

The fruits of Hackett's switch to trucks and electrification showed up last year. In November, Ford announced a long-range battery-powered electric vehicle called the Mustang Mach-E. In June, Ford redesigned its F-150 truck line and added a hybrid option. The company also brought the Bronco back after a 24-year hiatus – though the Bronco stood out because it had no hybrid or battery-electric option.

Hackett took over Ford shortly after the car company placed a billion-dollar bet on self-driving startup Argo, and nothing has changed in Ford's self-driving strategy since then. Since 2016, Ford's goal has been to offer a self-driving car without a steering wheel by 2021. Ford later changed the goal of having Argo launch a self-driving taxi service in 2021 – a date that has now been postponed to 2022.

Hackett's self-driving strategy won a vote of confidence last year when Volkswagen agreed to buy half of Ford's stake in Argo, deepening an existing alliance between Ford and Volkswagen. It is also planned that Ford will build some of its vehicles on Volkswagen's electric vehicle platform.

So Hackett has made significant investments in electrification and self-driving technologies, but he hasn't put the company exactly on these shifts. Under Hackett, Ford continued to rely heavily on main supports such as the F-150.

Wall Street was not impressed. The company's stock has lost around 40 percent of its value since the Hackett acquisition in 2017. This was in addition to the price drops under Hackett's predecessor Mark Fields.

Farley spent 17 years at Toyota before 13 years at Ford

Farley's automotive career began at Toyota, where he helped launch the Lexus brand in the early 1990s. He worked there for almost 20 years before he was recruited to Ford in 2007, just as the Great Recession affected car sales. At that time, Toyota did better than Ford and other automakers in Detroit. The then CEO Alan Mulally recruited Farley specifically to bring an outsider perspective into Ford's management.

Farley has prevailed in the past 13 years. Before becoming COO in February, Farley had focused on Ford's mobility and autonomous vehicle efforts – just like Hackett had overseen a Ford carpool agency before being promoted to top job. At the time Farley was promoted to COO, Hackett declined to ask if he would make Farley his successor and insisted that "I intend to stay in this job".

Now Hackett says he changed his mind – he was so impressed with Farley's work that he decided it was a good time to retire. Hackett said Tuesday that he was thrilled with how Farley coped with the COVID crisis.

"A company like Ford has so many fixed costs that it's almost impossible to avoid the kind of losses we would likely suffer if you shut them down," said Hackett. "We were able to recover a lot of losses in a very short time, which is proof of his leadership skills and understanding of the business."

Hackett presented his retirement as his own decision.

"It probably hit me in the spring when you asked when was the right time to retire?" Hackett said. "I said you should do it now because the wind in our sails is really starting to grow."

Of course, it is also possible that the board pushed Hackett out of the door. At the same time, the board's decision to raise Farley instead of looking for an outsider suggests that it's not about rethinking Hackett's strategy. Chairman Bill Ford praised Hackett in the Tuesday conference call.

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