Ford Promotes One President, Loses the Other
(Bloomberg) -- Ford Motor Co. promoted one of the two presidents seen as leading candidates to become the next chief executive officer while the other leaves the automaker in the midst of a years-long slump.
Jim Farley, 57, will become chief operating officer as Joe Hinrichs, 53, retires after 19 years with the company. Ford announced the moves days after projecting 2020 profit that was well below Wall Street’s expectations, sending its shares plunging the most in nine years.
The surprise shake-up adds to the alarm over how poorly Ford has been performing. Chief Executive Officer Jim Hackett, who took over in 2017, pointed to the new Explorer sport utility vehicle last year as the model that would prove his team was fixing things. But Ford ended up botching the launch, further testing the patience of investors.
“Clearly, if you look at last year’s scoreboard, we under-performed and we know where it happened,” Hackett said on a call with reporters. “There’s no room for that type of miss in terms of the launch of a product. So we’ve taken steps to make sure that all the new product that we’re having come out, that we really have our arms around that.”
Ford shares fell as much as 2.8% to $8.02 in intraday trading. The stock is down about 53% since July 2014, when former CEO Alan Mulally retired and made way for Hackett’s predecessor, Mark Fields.
Hackett, 64, has been placing big bets on electric vehicles and autonomous-driving technology, all while also trying to spruce up an aging lineup and engineer an $11 billion restructuring. But extreme moves including an early 2018 decision to abandon sedans in the U.S. haven’t done enough to convince analysts and credit-ratings companies that its prospects are improving fast enough.
“Ford has struggled with execution -- potentially explaining this move,” Dan Levy, an analyst for Credit Suisse who cut the stock to the equivalent of a hold rating earlier Friday, said in a note to clients. “Farley’s promotion to COO positions him as a successor for CEO role.”
As president of automotive operations, Hinrichs oversaw the launch of the Explorer that hampered earnings in the second half of last year. The flubbed introduction blemished his impressive resume. He was lauded years ago for pulling off the high-wire act of transitioning the F-150 pickup, Ford’s most profitable product, to aluminum bodies. Two years ago, he limited the damage after a supplier plant blew up and temporarily disrupted truck output.
Hackett said the departure of Hinrichs is not tied to the issues Ford had rolling out one of its most important SUVs.
“The launch of the Explorer is a company issue that involved a lot of aspects, including Joe’s job, and others -- we share that together,” Hackett said. “We are all accountable for that performance. Joe and I would both stand up and say that.”
Hau Thai-Tang, Ford’s 53-year-old chief product development and purchasing officer, will take on an expanded role as part of the latest executive shakeup. He’ll add responsibility for enterprise product line management and connectivity, which Hackett described as bringing together vehicle architectures and software stacks used for connected services.
Hackett has had two presidents reporting to him since May 1, with Hinrichs focusing on auto operations and Farley taking charge of new businesses, technology and strategy.
The moves announced Friday suggest Ford management believes they may have “fallen further behind” since that leadership structure was put in place, Joe Spak, an analyst at RBC Capital Markets, said in a note to clients.
In breaking the news of its shakeup, Ford said in a statement that it’s moving with urgency and transforming into a faster-growing, higher-margin business.
“That message sounds great,” Spak wrote, “but also sounds very similar to the message from day one of Jim Hackett’s CEO tenure back in 2017.”
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