Ford Motor Company shook up its top management Monday, ousting its CEO amid declining sales in major markets, pressure to ramp up technology and a flagging share price.
The company named Jim Hackett, who launched and led the high-tech division developing Ford’s self-driving cars, to replace Mark Fields as president and CEO.
It also named three new executive vice presidents to oversee global markets, global operations and mobility as part of the shakeup. The appointments are effective June 1.
Executive chairman Bill Ford, great-grandson of the company’s founder, said the move had been “in discussion for some time.”
The decision was not made “hastily” but after some consideration “we decided it was the right time for him to resign,” after 28 years with the company.
“This is a time of unprecedented change,” Ford said during a press conference. “And time of great change in my mind requires a transformational leader.”
He praised Hackett as a “proven transformational leader” and “visionary thinker.”
Hackett, 62, has led Ford’s “smart mobility” unit, which includes autonomous vehicles and connectivity features, since March 2016. He previously led a turnaround at office furniture company Steelcase.
Noting the new trends in artificial intelligence, deep learning and robotics, Ford said there is a need to modernize the business, speed up decision-making, and “move decisively to address underperforming areas.”
– Under pressure –
The changes — which one analyst called “a coup from an outsider” — come at a time when Ford is under increasing pressure. Like its US competitors, Ford faces its first downturn since 2009, after several years of record sales.
The share price has lost more than a third of its value in three years and it was overtaken in April by upstart electric carmaker Tesla in terms of market capitalization.
The group’s profits plunged by 38 percent in 2016, a trend that was confirmed in the first quarter, while costs exploded. The company recently announced it was cutting 1,400 salaried jobs in North America and Asia.
“This is a radical move we think, for two main reasons: the incumbent is being usurped by a relative outsider; and the outsider comes from the Smart Mobility division at Ford,” said Paul Moran of Northern Trust Securities.
He said such a “coup” by a turnaround specialist could be followed by similar moves by other large manufacturers.
Fields had led Ford for just three years and wanted to turn the company into a mobility services group in the hope of containing the Silicon Valley offensive in the automobile industry.
Indeed, there is a race against time pitting old-school carmakers against Alphabet (Waymo), Apple, Uber and Tesla to develop and market the autonomous car by 2020.
Despite the many investments made by Fields, and plans for an autonomous vehicle by 2021, investors prefer to bet for example on Tesla, which has technology in its DNA.
– Few details –
Hackett and Ford provided few specifics on their plans in the new era. The press release announcing the appointment said priorities include modernizing Ford’s business “to unleash innovation, speed decision-making and improve efficiency,” including through the use of big data, artificial intelligence, advanced robotics and 3D printing.
While they both praised Fields for laying a solid foundation in his three years at the helm, Hackett said the systems he put in place were not adept at handling “complex strategy questions.”
“If you thought of strategy like a Rubik’s cube, it’s not just solving one side. There’s lots of sides to the problem,” Hackett told the assembled analysts and reporters.
He said he has asked Ford to take some responsibilities off his plate so he can build a lean leadership team to move quickly.
Jim Farley, a former Toyota CEO who has helped Ford to return to profitability in Europe as General Motors recedes, was named executive vice president and president of global markets.
Joe Hinrichs, 50, will become executive vice president and president of global operations; and Marcy Kevorn, 57, will replace Hackett as executive vice president and president of mobility.
The ousted Fields previously led the group’s operations in North America and was credited with restructuring the European operations as well as Mazda, in which Ford had a significant stake.