Ford Motor Co is expected to announce the departure of Chief Executive Mark Fields in a broad management shake-up, a company source said – a move that reflects growing investor unease over the company’s stock market performance and outlook.
Forbes and the New York Times reported that James Hackett, 62 and chairman of the Ford unit that works on autonomous vehicles, would take the helm. An announcement could come as early as Monday.
Ford shares are down nearly 40 percent since Fields, 56, took over three years ago, at the peak of the U.S. auto industry’s recovery. Now, U.S. auto sales are slipping, and Ford’s profit margins are trailing those of larger rival General Motors Co.
Ford’s board of directors and Chairman Bill Ford Jr. have been unhappy with the company’s performance, and sought more reassurance that investments in self-driving cars, electric vehicles and ride services would pay off. Details of further executive moves were not immediately clear. The Wall Street Journal reported on Sunday that the company was considering new assignments for some of Fields’ top lieutenants.
“We are staying focused on our plan for creating value and profitable growth,” a Ford spokesman in Europe said in response to the reports, declining to comment “on speculation or rumors”.
The turbulence at Ford comes as all three Detroit automakers are under pressure to prove they can avoid losses as the U.S.auto market, source of the bulk of their profits, is slowing down after last year’s record sales.
GM Chief Executive Mary Barra is fending off attacks from hedge fund Greenlight Capital and its leader, David Einhorn, who wants to install three new directors on the automaker’s board, and split GM’s stock into two classes. FiatChrysler Automobiles NV is fighting accusations by U.S. and California regulators that it used software to cheat on diesel emissions tests, and Chief Executive Sergio Marchionne has so far been unsuccessful in his effort to find a merger partner for the company.
Fields outlined a variety of initiatives to confront challenges from technology companies such as Alphabet Inc that want to control a future of autonomous, data intensive vehicles.
“You have to have one foot in today… but also one foot in the future,” Fields told reporters last month. “I think investors understand our strategy.”
Among Fields’ bets on technology is a plan to invest $1 billion over the next five years in tech startup Argo AI.
Ford has churned out strong profits under Fields, reporting a record $10.4 billion in pretax earnings in 2016. However, Ford dismayed investors earlier this year by forecasting lower profits for 2017 and higher costs for its investments in “emerging opportunities.”
On Friday, Silicon Valley electric car maker Tesla Inc was valued at $51 billion, more than Ford’s $43 billion. The contrast is a dramatic sign of how little confidence investors have that old-line automakers can transition to a future where software substitutes for pistons and transportation is sold by the mile or the minute.
At the same time, GM is turning up the pressure on Ford in the North American truck and sport utility business, the source of 90 percent of Ford’s profits.
GM is gearing up an “onslaught” of trucks for the North American market, the automaker’s President Dan Ammann told Reuters last week, including a new generation of the Chevrolet Silverado large pickup truck that competes with Ford’s primary profit machine, the F-series line of trucks.
Ford is moving to cut costs to offset declining U.S. sales. Last week, the automaker said it would cut 1,400 salaried jobs in North America and Asia through voluntary early retirement and other financial incentives.
Equities August 16, 2019