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Turnaround Specialist Jim Hackett Takes the Helm at Ford

Sejuti Banerjea

In a move that came as something of a surprise, Mark Fields, Ford’s CEO of the last three years was replaced by Jim Hackett, the chief of its mobility business, including its autonomous car and ride-sharing unit. Hackett isn’t a Ford F veteran, he’s been at the company for just around a year, before which he did the CEO role at Steelcase. So it does appear that the executive change has been in the works for at least a year and has only just been announced publicly.  

Hackett will earn $1.8 million in annual salary, $7 million in stock-based compensation and a million more as bonus for becoming CEO. An annual bonus of up to $3.6 million is also payable.

The other major executive change involved North America Chief Joe Hinrichs and Europe Chief Jim Farley who will now operate as heads of Global Operations and Global Markets, respectively.

So What Did Fields Do Wrong?

Ford has been kind of tight-lipped about the reason for the change, but it’s a little bit about cost realignment with new company priorities that will likely revolve around innovation of the self-driving and EV kind. Note that Ford recently announced a headcount reduction of around 1,400 in North America and Asia after similar actions in Europe and South America.

The fact that Ford’s share price has lagged in response to the absence of new products during his tenure also may have had something to do with it.

But not all of this is Fields’ fault. After all it takes three to four years for a new car to get from the drawing board to mass production, and he hasn’t held the top job that long.

But Fields didn’t do anything to shake things up, continuing with the same corporate culture he’s been familiar with for 28 odd years. If anything, it’s that culture that Ford wants to change because new market opportunities like EV and self-driving will require investment and discipline with no guarantees of success. So Ford needs a lean and mean operating model that a turnaround expert can probably handle better.

To make matters worse, most other automakers have made some headway with their EV plans, especially archrival General Motors GM, which has beaten Ford to the market with its Chevrolet Bolt EV. Ford’s own Ford Focus Electric won’t hit the market before 2018, although the company maintains, “We're bullish on our strong pipeline of all-new cars, trucks and SUVs coming in the next five years…What's more, the vehicles that we are launching...will continue to deliver high transaction prices and good business.”

Has Ford Missed the Boat Already?

Ford may have fallen a little behind companies like GM, BMW and of course Tesla TSLA, but many others, including Toyota TM and Fiat Chrysler FCA aren’t expected to have fully electric long-range cars in mass production until 2020. Even Tesla’s long-range Model Y won’t make it to the market before then.

So while Ford may have fallen a little behind the others in the short range segment, it is by no means out of the running. This definitely seems like a good time for a new CEO, especially one with ties to Silicon Valley.

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