Ford replaces CEO in push to transform business

Robyn Ryan
May 22, 2017

Ford announced plans last month to cut costs by $3 billion a year to free up money for that new product development.

Ford's stock price has fallen almost 40 percent since Fields took the reins of the company three years ago. Forbes says that James P. Hackett, the head of Ford's Smart Mobility LLC subsidiary, will take Fields' place.

Formerly a member of the Ford board, as well as an accomplished director elsewhere, Hackett faces the challenge of righting a capsized ship when he takes the helm of the group. Ford's board and Chairman Bill Ford Jr. have been unhappy with the company's performance and sought reassurance that investments in self-driving cars, electric vehicles and ride services would pay off.

Ford posted a record $1.2 billion European profit a year ago but warned the impact of Britain's vote to leave the European union would put a dent in 2017 earnings. And Ford hasn't kept up with rivals in the electric vehicle market.

Fields has been under scrutiny by Ford's board, which scheduled extra meeting time to drill him on his plans for reversing the company's fortunes, according to a person familiar with the discussions.

Net income for Ford was $4.6 billion in 2016, with an adjusted pre-tax company profit of $10.4 billion.

He is credited with transforming that company, in part by predicting the shift away from cubicles to open office plans.

Like General Motors and Fiat Chrysler, Ford Motor Company has continually failed to convince Wall Street analysts and investors of the worthiness of its stock price over the last few years.

Is now the time for new leadership at Ford?

Joseph Hinrichs, head of Ford's critical Americas division, will expand his role to become executive vice-president for global operations. Mr. Fields has been planning to launch driverless cars early next decade, but it has been far behind Tesla and GM on electric-car development and executives have struggled to explain how Ford will make money on services other than developing, producing and selling automobiles.

But investors anxious about Ford's sliding USA market share and product decisions. Jim Farley, who led the company's European division back to profitability in recent years, will become vice president of global markets and will oversee Lincoln, sales and marketing. Ford's North American unit is the most profitable it now runs, and it returns about 10% operating margins under the best conditions.

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