Ford Names New CEO to Head Troubled Car Company
Ford Executive Chairman Bill Ford, unhappy with the auto-maker’s slipping market share and declining share prices, has named James Hackett, 62, to replace current CEO Mark Fields, 56, as part of of a company-wide shakeup designed to streamline decision making and improve operating efficiency.
The move reflects growing unhappiness with the company’s financial performance among shareholders, including the members of the Ford family who own a controlling interest in the voting shares that control the company. The leadership change follows last week’s announcement of a company wide layoff that will terminate ten percent of Ford’s 200,000 employees, mostly by reducing the number of salaried middle management positions.
In the aftermath of the stock market crash of 2008, Ford refused bailout offers from the federal government. In the year following the crash, Ford’s stock recovered from its $1.43 share price on November 21, 2008 to its post crash high of $18.35 on January 14, 2011, which was widely considered a remarkable comeback, spearheaded by former CEO Alan Mulally, who took over from Bill Ford himself in 2006.
Since then, however, Ford shares have been on a downward spiral. The company’s profits are trailing those of larger rival General Motors (GM.N), whose shares fell 13 percent over the same period. To make matters worse, GM’s electric vehicle offerings are doing better in the showrooms than Ford’s versions, to the point where Ford’s market capitalization has fallen behind electric car maker Tesla Inc.
At Friday’s close, Ford’s shares had fallen 37 percent since Fields took over three years ago at the peak of the U.S. auto industry’s recovery. Fields followed Alan Mulally, formerly executive vice president of Boeing Commercial Airplanes, who was recruited by Bill Ford in 2006 to replace himself as CEO to fix what Ford described as the long-time obsession with hierarchy in the auto-maker’s management systems, calling Mulally “a cultural change agent.” As Ford’s CEO, Alan Mulally had “really captured the hearts and minds of our employees.” Ford’s board is now hoping that Hackett can pick up where Mulally left off when he retired in 2014.
The move to replace Fields with Hackett reflects the board of directors’ concerns about making good on the company’s big bets on self-driving and electric vehicles. Hackett, the former CEO of Steelcase Inc, an furniture manufacturer, was originally hired to serve as chairman of the Ford Smart Mobility LLC subsidiary in 2016. That job put him in charge of electric and autonomous vehicles and Ford’s ridesharing projects. Putting Hackett into the top spot reinforced Ford’s commitment to innovation.
Today’s announcement triggered a 1.6 percent improvement to $11.02. The Ford family owns only two percent of the common stock, but also owns more than 40 percent of the voting stock, giving the Fords effective control over the company.