Ford Motor Co.'s Jim Farley will replace Jim Hackett as CEO on Oct. 1, capping a leadership transition that was telegraphed in February by Farley's promotion to chief operating officer amid chronic dissatisfaction with performance of Ford shares.
The 58-year-old Farley — an auto industry veteran with a background in marketing and an eye on the technological innovations reshaping the future of the industry — will be tasked with growing a business that Hackett was tapped three years ago to fix.
"I wasn't interviewing for this job," Hackett, 65, told The Detroit News Tuesday. "I came in to work on these underpinnings (of the business), so the next person now gets to deal with the growth of the company."
The transition was not unexpected. Still, it delivers the third CEO to a Ford corner office in less than four years even as the automaker is pushing to quicken a transformation in propulsion and manufacturing driven by high-tech innovations from Silicon Valley and technology hubs from China to Israel than evocative of founder Henry Ford.
In an interview, Farley said he intends to follow the path charted by Hackett, who led an $11 billion global restructuring of the business, the launch of several key new products and the retirement of Ford's North American sedan lineup. Farley aims to improve fundamentals of the business even while focusing on such growth areas as Ford's global commercial vehicle business and development of electric and autonomous vehicles.
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"Our plan, it hasn't changed," Farley told The News. "We will accelerate and fix the areas that need to be fixed."
Hackett's mission: modernize company
The move comes as the Blue Oval is gutting through a historic economic slowdown caused by the coronavirus pandemic that is straining the Dearborn automaker's financial heft. And it appears to signal a turning point in the company's years-long restructuring under Hackett, a former Ford director, University of Michigan interim athletic director and longtime Steelcase Inc. CEO.
Hackett was tasked with modernizing the 117-year-old company and with preparing a new generation of leaders, Executive Chairman Bill Ford said Tuesday: "He took on a huge challenge, and I'm so glad that he did. We have lots of work ahead of us to complete our mission, but thanks to Jim we are a very different company than we were three years ago."
During Hackett's tenure, Ford unveiled plans for a truck- and SUV-heavy lineup of vehicles that lean on the automaker's most iconic products, including the electric Mustang Mach-E, a new Bronco family of vehicles that will launch a quarter-century after Ford discontinued the off-road SUV, and an all-new generation of the best-selling, profit-rich F-150 truck.
The Blue Oval under Hackett committed to spending $11 billion on electric-vehicle development by 2022, and devised what Bill Ford characterized as a "compelling" EV plan. "We're really well-positioned in the AV space," he said, noting alliances Hackett struck with Volkswagen AG, electric-truck maker Rivian and the Mahindra Group of India.
But Hackett's three-plus year tenure leading Ford also produced frustration — among employees who struggled to understand the meaning buried in his professorial method, among investors impatient with the pace of restructuring, among dealers who watched cars disappear from their showrooms amid a product portfolio revamping biased to pickups and SUVs. And Ford shares have languished, down more than 35% during the Hackett era.
On a Tuesday call, Hackett noted some of the significant changes he's made, including the controversial decision to scrap sedans from Ford's North American lineup.
"I aimed for moving ahead versus just moving fast. Could we aim for a longer-arc kind of reward," he said. "In this case, for the three years it takes to get products to market, you're starting to see the fruits of our labor."
He said he decided this spring that it was the right time to hand over the reins to Farley, now that he can "feel confident" that the initiatives he helmed are "starting to take root."
Farley, preceded by Mark Fields and Hackett, will be the third CEO to lead the Blue Oval since superstar chief executive Alan Mulally, an industry outsider, departed in 2014 and returned to the Pacific Northwest.
Farley's appointment in February as COO coincided with the abrupt retirement of Joe Hinrichs as Ford's president of automotive; Farley and Hinrichs had both been considered contenders to replace Hackett. Some industry analysts see the comparatively frequent executive shakeups as signs of instability.
"Between Hinrichs' unceremonious departure in February to Hackett's unexpected early retirement, the upper echelon of Ford leadership has struggled to find stable footing for some time," said Jessica Caldwell, executive director of insights for Edmunds.com Inc. "Wall Street has shown its lack of confidence as the stock has languished for years under Hackett's leadership."
Ford shares rose slightly Tuesday, closing the day up 2.5% to $6.86 per share. Some analysts see the selection of an industry veteran to the top job as one that will make Wall Street happy.
"Since Ford is about to enter a new execution phase, the company likely decided it was time for a more experienced auto executive who knows the ins and outs of the industry to lead the charge, as opposed to an outsider trying to create change," said Caldwell. "Farley's specialty is marketing, which will play a critical role as Ford gears up for significant product launches that are intended to revive and refresh Ford's image."
The announcement was welcomed off Wall Street, as well: "Jim is not only a veteran of the industry, but he has a passion for Ford's signature performance vehicles and vision that will serve the people and products of Ford well," said Glenn Stevens, executive director of MICHAuto and vice president of automotive and mobility initiatives for the Detroit Regional Chamber.
Said Rory Gamble, president of the United Auto Workers: "Having worked with Jim Farley through the many challenges of the COVID-19 pandemic, I know that Ford Motor Co. is in steady hands that will continue the long Ford family tradition of leadership that respects its workforce and keeps communications open in a challenging industry."
Farley joined the Blue Oval in 2007 after a long career with Toyota Motor Corp., during which he helped launch the Japanese automaker's Scion brand, led the luxury Lexus brand and played a part in Toyota establishing itself as a formidable foreign-owned rival.
At Ford, Farley oversaw the automaker's global markets and is credited with transforming the company's European business. He at one time led the Lincoln brand, and played a key role in developing Ford's electric-vehicle strategy and business model.
Before becoming COO, Farley, as president of new business, technology and strategy, dove into the Autos 2.0 spaces of mobility, connectivity, autonomy and electrification that are widely considered to be the future of the industry.
He said his immediate focus as CEO will be to strengthen business fundamentals and build on areas where the automaker is already strong. He outlined goals of achieving a 10% profit margin in North America; reducing material costs and the high warranty costs that have plagued the automaker; maximizing the commercial vehicle business that Farley has repeatedly highlighted as a growth area; and executing the upcoming North America product launches.
Bill Ford described Farley as an "intensely competitive" person and a "car guy through and through," with a passion for racing vintage vehicles and for the company to which his family has deep ties. He also noted Farley's understanding of the integration of technology and vehicles, key to the automaker's vision for the future.
As for the timing and process leading up to the changeover, Bill Ford said the company's leadership did not seriously consider any outside candidates. Leadership decided that, coming off better-than-expected second-quarter earnings and with key product launches coming up, this was the right time, he said.
Don't expect any major management shakeups under Farley, Bill Ford said: "In terms of other management changes, that will largely be up to Jim Farley. But (Farley) and (Hackett) have together helped form this management team, so from where I sit, I don't expect any big changes."
In April, seven weeks after becoming COO, Farley shook up his leadership team as part of a strategy aimed at leveraging what he sees as key growth areas: connectivity, commercial vehicles, and data analytics.
"Our commercial business is a powerhouse. And we have the opportunity to go from selling these powerhouse products to building a whole digital business of services and data that these customers are ready for," Farley said at the time.
Hackett will retire from his current role effective Oct. 1, but will continue as a special advisor to Farley through March. Farley does not plan to fill the COO role he will vacate.
Farley, whose new role also includes the title of president and a position on Ford's board of directors, will earn an annual base salary of $1.7 million as CEO, up from $1.4 million, according to a federal regulatory filing. In addition, his compensation will come from an incentive pack and a stock option grant valued at $4 million.