Jim Farley to replace Jim Hackett as Ford CEO
Hackett is retiring after his three-year bid to turn Ford around failed to make inroads
Michigan, US — Ford says it will promote Jim Farley to CEO on October 1 to replace Jim Hackett, who has elected to retire after his three-year bid to turn around the carmaker failed to gain traction.
Farley became COO in March when his main internal rival was ousted after the botched launch of the Ford Explorer sport-utility vehicle. Ford’s stock was slumping under Hackett before the coronavirus pandemic worsened the second-largest US carmaker’s woes.
Ford shares climbed as much as 3.3% after the open of regular trading on Tuesday. The stock is still down about 27% in 2020.
Last week, Ford posted a second-quarter operating loss that was less than half the $5bn deficit it had predicted, due in part to demand for its SUVs and trucks holding up better than feared. But some of the company’s overperformance also could be chalked up to an on-paper gain from its investment in self-driving start-up Argo AI.
“The wind in our sails is really starting to pick up, and Jim had a big, big role in that,” Hackett said of Farley on a call with reporters. “I can feel confident that the things I was asked to do have actually started taking root.”
The economic crisis caused by the Covid-19 outbreak hit Ford two years into an $11bn restructuring that Hackett drew up to navigate the company out of a long slump. He saw the need to update a line-up that had become stale under his predecessor, Mark Fields, with greater connectivity features and electrified powertrains, and pulled Ford out of passenger-car segments in North America.
But the first of those major redesigns, the Explorer, went horribly awry. The Chicago plant that underwent a major overhaul to build the revised SUV was plagued by personnel problems and struggled to get the vehicle out the door. Thousands were shipped to a Michigan factory hundreds of miles away for rework.
In February, Ford announced the promotion of Farley, one of the two presidents seen as leading candidates to become the next CEO. The other, Joe Hinrichs, left the company.
Farley promised to “swing for the fences” as Ford’s leader. He vowed to return the automaker to 10% profit margin in North America — its long-standing goal — and to have flawless launches of crucial new models.
“We know our competition today is Amazon, Baidu, Tesla, Apple, Toyota, and others,” Farley said. They’re well-financed and voracious companies.”
Ford likely will seek to restore the dividend Hackett was forced to suspend in March when the coronavirus pandemic upended economies worldwide. Management had previously said the payout was sacrosanct, and cutting it off tested the faith of the founding family that had supported the CEO. Ford also lost its investment-grade credit ratings.
Farley will take over as Ford prepares to roll out three crucial new models aimed at reversing its fortunes: the electric Mustang Mach-E, the revived Bronco SUV and a redesigned version of its top-selling F-150 trucks, its most profitable model.
“Nothing makes me happier than having a smooth transition,” executive chair Bill Ford said during the call. “This is something that we’ve been planning for some time. And it seemed liked the right time coming out of the second quarter when we performed much better than the world thought we would.”
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