Ford is replacing Jim Hackett as chief executive after three years of lacklustre share price performance, as the carmaker grapples with the development of new technologies and economic fallout from the coronavirus pandemic.
The company said that Jim Farley, its chief operating officer, would take the top job, putting a 13-year veteran at the helm midway through a $11bn restructuring designed to improve profitability and speed its push into electric cars.
Bill Ford, executive chairman, said it was an opportune moment to make the transition, “coming out of the second quarter where we performed much better than I think the world thought we would”.
Investors have not always been happy with Mr Hackett, an outsider Mr Ford brought in from the office furniture maker Steelcase. He is the second chief executive in a row who has overseen a sharp decline in the company’s stock price, which has fallen 40 per cent since he took the job. The S&P 500 was up almost 40 per cent over the same period.
“When Bill asked me to take on the CEO role, I asked him to think about the question [whether I was] really the right fit, because I was going to come at the business differently than others had,” Mr Hackett said on Tuesday. “He said, ‘That’s what we need’.”
He added: “I knew that it would test the patience of our stakeholders, and I was OK with this, because I’d done this once before, and I saw how the narrative plays out.”
Mr Farley told the Financial Times that when it came to Ford’s stock price, he expected investors to hold the company accountable for plans to reach profit margins of 10 per cent in North America, restructure underperforming businesses, grow its commercial vehicle business and successfully manage the upcoming launches of the F-150, Bronco and Mustang Mach-E.
“My perspective is stick to our guns, execute well [and] the numbers will speak for themselves,” he said. “As far as handicapping how all that will be received, I’ll leave that to the experts.”
The company embarked on an $11bn restructuring as part of an effort to accelerate the development of new vehicles, including electric cars, but its progress had been uneven, even before the pandemic caused widespread disruption and factory shutdowns.
Mr Farley said the pandemic had not delayed the restructuring effort, which he planned to continue. “We are running as fast as we ever intended to run,” he said.
Losses in the second quarter were less severe than Wall Street had expected, although the company said it would still be in the red for the full year.
Mr Farley’s move to the top job comes shortly after he was promoted to chief operating officer in March. He became heir apparent at that point. A potential rival, Joe Hinrichs, Ford’s president of automotive, left the company at the same time.
Mr Farley spent the first part of his career at Toyota, including Lexus, before joining Ford in 2007. He has run the carmaker’s Europe, Middle East and Africa business — achieving record profit margins in Europe under his watch. Before becoming chief operating officer he ran Ford’s mobility and technology divisions.
He identified Ford’s competitors today as mostly tech companies, citing “Amazon, Baidu, Tesla, Apple, Toyota and others”.
David Whiston, a Morningstar analyst, said Mr Farley’s communication style — more direct than Mr Hackett’s — would appeal to company watchers, “but he’s still got a huge global redesign restructuring to go through for a number of years, and they need to reduce their debt significantly from the over $30bn it is now”.
Shares in Ford rose 1.3 per cent to $6.78 at lunchtime in New York.