DETROIT (AP/WOOD) — Ford is replacing its CEO with the former leader of an iconic West Michigan company as the automaker struggles to keep its traditional business running smoothly while remaking itself as a nimble, high-tech provider of new mobility services.
The 114-year-old automaker said CEO Mark Fields is retiring at age 56 after 28 years at the company. Fields will be replaced by Jim Hackett, who joined Ford’s board in 2013. Hackett has led Ford’s mobility unit since March of last year.
In three years as CEO, Fields began Ford’s transition from a traditional automaker into a “mobility” company, laying out plans to build autonomous vehicles and explore new services such as ride-hailing and car-sharing. Under Fields, Ford achieved a record pretax profit of $10.8 billion in 2015 as SUV and truck sales soared in the U.S.
But there were rumblings that Fields wasn’t focused enough on Ford’s core business, as popular products like the Fusion sedan grew dated and Ford lagged behind rivals in bringing long-range electric cars to the market. The stock price sagged, and electric car maker Tesla Inc. even passed Ford in market value. Ford’s stock price has fallen almost 40 percent since Fields became CEO in July 2014.
HACKETT STEERED STEELCASE THROUGH RECESSION
Hackett is the former CEO of Grand Rapids-based Steelcase Inc., one of the world’s largest office furniture companies.
“It caught me by surprise. When I read the news, I was thrilled for Jim,” said Todd Custer, president of Custer office furniture, one of the nation’s top Steelcase dealers.
Custer knows Hackett well, having worked for Steelcase in the early 2000s.
“Always had the open door. Transparent to the people at Steelcase. Always felt very comfortable talking with Jim. Just a great, great people person,” Custer said. “He is that visionary. He is that strategic thinker. He’s thinking five years, 10 years, 15 years down the line — which is exactly what he did at Steelcase.”
Hackett is credited with transforming the company before he retired in 2014, in part by predicting the shift away from cubicles and into open office plans and focusing on technology integration.
“Whether it’s corporate space or health care space or higher education of K through 12, you’re seeing so much more integration of technology into the space and how that’s used,” Custer said.
But as the recession hit the furniture industry hard and early, Hackett had to cut thousands of jobs and moved production from the U.S. to Mexico to stem massive losses.
Ford leaders have made it clear that they think the industry is going far beyond selling you a new car. There’s a big push in Dearborn to develop autonomous vehicles and create mobility systems. Car companies are facing increasing competition from Google, Uber and others as they try to plot their next moves.
Henry Ford’s great-grandson, Ford Motor Co. Executive Chairman Bill Ford, said Hackett is the right person to steer the company into the future and expand into new business areas, saying in an interview that Hackett is a “visionary” who knows how to remake a business.
“Time of great change, in my mind, requires a transformational leader. Thankfully we have that in Jim,” Bill Ford said during the Monday announcement.
Of course, there’s a big difference between a $3 billion office furniture company and a $151 billion auto company.
“It’s definitely more of a challenge than where he came from,” Custer said. “But I think he’s up to that challenge.”
Hackett also served as the interim athletic director at the University of Michigan from 2014 to 2016. In that role, he lured star football coach Jim Harbaugh.
FIELDS AND FORD ‘DECIDED THIS WAS THE RIGHT TIME TO GO’
Bill Ford insisted that Fields wasn’t fired. He called Fields “an outstanding leader” who orchestrated the company’s turnaround a decade ago when he was head of Ford’s Americas division.
“He and I sat down Friday and really decided this was the right time for him to go and for us to have new leadership,” Bill Ford said. “People can speculate all they want about that. But the fact is, he is (retiring), and I feel we’ve got a great leader in Jim.”
Fields resurrected Ford’s luxury Lincoln brand and grew sales in China. His bet on using aluminum for Ford’s trucks paid off in terms of better fuel economy and strong sales. Fields opened an office in Silicon Valley to hire talented young researchers and scout out promising startups.
But investors worried about Ford’s sliding U.S. market share and product decisions. Ford’s U.S. sales are down this year in part because it doesn’t have offerings in popular segments like subcompact SUVs and midsize pickups. Ford continues to make small cars even though they’re unprofitable and not in demand as buyers around the world gravitate to SUVs. And Ford hasn’t kept up with rivals in the electric car market. General Motors’ Chevrolet Bolt electric car, with 238 miles of range, went on sale last year; Ford is working on an electric SUV with 300 miles of range, but it’s not due out until 2020.
Meanwhile, Mary Barra — who became GM’s CEO about six months before Fields became Ford’s — has made a series of headline-grabbing moves, such as forming a partnership with the ride-hailing company Lyft and pulling GM out of unprofitable markets, including Europe, India and South Africa. Still, GM faces unhappy investors of its own with its stock slightly below the $33 initial public offering price from November 2010.
Ford also made investments in new mobility companies and announced it would have a self-driving shuttle on the road by 2021, but its efforts haven’t swayed investors.
HACKETT’S VISION FOR FORD MOVING FORWARD
Hackett is confident he can placate Wall Street.
“The way that that gets fixed is the nature of the innovation and the ideas making their way into the market,” Hackett said. “It even sounds a little corny but the stock price is a consequence of the actions we’re going to take to make the company more fit, more profitable and a more fun place to work.”
Fields also had the tough job of following CEO Alan Mulally, another auto industry outsider who was hired away from Boeing to lead Ford. Mulally, who joined Ford in 2006 when it was near bankruptcy, was widely credited with ending internal bickering at Ford and streamlining manufacturing.
Hackett said he wants Ford to make decisions faster, and will put a smaller group of top executives at the table to make sure that can happen.
“That frees teams of people that are below the top executives to really fly,” Hackett said.
As part of the shake-up, several Ford executives are taking on new roles as of June 1. Jim Farley, who led the company’s European division back to profitability in recent years, will become vice president of global markets and will oversee Lincoln, sales and marketing. Joe Hinrichs, president of Ford’s Americas division, will oversee global product development, manufacturing and quality. Marcy Klevorn, Ford’s chief technical officer, will replace Hackett as the head of Ford Smart Mobility LLC, Ford’s future mobility unit.
Hackett and Bill Ford said they also want to modernize Ford’s business processes by taking advantage of things like 3D printing, big data and artificial intelligence. Ford recently invested $1 billion over five years in artificial intelligence startup Argo AI.
Monday, Steelcase President and CEO Jim Keane issued the following statement about Hackett’s departure:
“This is an incredible opportunity for Jim to lead Ford into its next chapter. He made significant contributions while at Steelcase and we are excited to see how he’ll bring his energy and strategic thinking to Ford in this important role.”