Jim Farley, of Ford Motor Co., talks about the future of the automobile and how Ford will innovate and change demand like they did with the Model T.
Detroit Free Press
At 8 a.m. Thursday on the first day of Jim Farley stepping into his new CEO role at Ford Motor, the company announced “operational and leadership changes” designed to do what Farley has promised publicly: drive growth and speed transformation of the 117-year-old automaker.
The plan, Ford said, is to “turn around automotive operations; allocate capital to Ford’s strongest franchises and high-growth opportunities, and produce compelling, uniquely Ford electric vehicles at scale.”
First of all, Farley replaced the relatively new Chief Financial Officer Tim Stone with Ford veteran John Lawler, 54, effective immediately. Lawler will oversee the finance and Ford Motor Credit operations. Stone accepted a job at ASAPP Inc., an artificial intelligence software company.
“Stone will remain with Ford through Oct. 15 to ensure a smooth transition,” Ford said.
Former CEO Jim Hackett announced the hiring of Stone, 53, who had no automotive experience, in March 2019, despite Stone’s controversial departure from his previous employer where he reportedly went around the CEO to seek a pay raise that was denied.
Ford retained former CFO Bob Shanks on the payroll while also paying Stone. Ford explained at the time that it was to assist with transition; Stone was hired in April 2019 and assumed the job two months later. The company ended up paying the CFO and former CFO more than $8 million each that year, according to its regulatory filings. The company confirmed Thursday that the “employee adviser” role ended for Shanks at the end of 2019.
On Feb. 4, when reporting that annual profits plunged from $3.7 billion one year earlier, Tim Stone characterized the company’s financial performance as “not OK.”
In 2019, the cumulative compensation for the six top executives at Ford Motor Co. — $70 million — exceeded the automaker’s annual net income of $47 million, a year that included pension payments, global restructuring costs, a botched Ford Explorer launch and billions in warranty costs.
This year began with disruption and factory shutdowns caused by COVID-19. But Ford has resumed full production and is focused now on launching its 2021 Ford Bronco, all-new Ford F-150 and all-electric Mustang Mach-E.
Cash is the key to survival during these uncertain times for any manufacturer, especially automakers. The company’s credit rating was downgraded in March, which has the same negative effect on a business as it does on an individual with bad credit: Getting capital can be hard. Ford executives have said the company has the cash it needs to operate at this time.
New CFO seasoned
Meanwhile, Lawler had been CEO of Ford Autonomous Vehicles and vice president, mobility partnerships, and spent much of his 30 years at Ford in finance leadership and general management, Ford said in a news release. He had a successful run as president of Ford China and served as corporate controller and CFO, global markets and head of worldwide strategy.
“John knows our company inside-out, has a clear view and great ambition for what Ford can be, and articulates what’s needed to get there,” Farley said in a statement. “As CFO, he will help assure we have the means to fund those ambitions.”
Farley acknowledged Stone’s contribution in prepared remarks.
“Tim has been a powerful voice inside the company pushing us all to persistently focus on our customers and what they want and need,” Farley said. “He also played a critical leadership role in guiding the company through the COVID-19 crisis. We thank Tim for his contribution and wish him the best.”
The company noted that Farley is the 11th CEO in Ford history.
“During the past three years, under Jim Hackett’s leadership, we have made meaningful progress and opened the door to becoming a vibrant, profitably growing company,” Farley said. “Now it’s time to charge through that door.”
Farley’s actions won immediate praise from industry analysts.
“Holy crap,” said John McElroy, host of “Autoline After Hours” and a longtime industry observer. “This is a stunning announcement and completely unexpected. Jim Farley is showing he is absolutely in charge of Ford Motor Co. and he’s not wasting any time. He’s on a mission to get this company turned around as fast as he possibly can.”
Change brings relief to those who want to see Ford succeed, McElroy said. “Jim Farley is putting his stamp down and saying, ‘I’m running the show.’ This fits with everything everyone has been saying about Jim Hackett for the last three years. The guy was not a leader. He never really marshaled the troops to follow behind him. He communicated in very ambiguous and gauzy ways that left people wondering where the company was really headed.”
The one positive legacy for Hackett, who took the helm in May 2017, McElroy said, was the introduction of “customer focused design,” of vehicles, which leans on intuitive consumer needs and building those into vehicles.
“Other than that, he has been a disaster,” McElroy said. “From 2014 to 2019, the U.S. auto industry enjoyed the golden age. We have never seen so many years of back-to-back rising sales and unbelievable profits and Ford turned in an absolutely mediocre performance. Jim Hackett never got control of the company because he never understood what was going on there.”
While Hackett came from the furniture industry as a retired CEO of Steelcase, Farley has built a career in the automotive industry, going to Ford from Toyota.
Hackett, 65, continues as “special adviser” to Ford until March 2021.
Market analyst Jon Gabrielsen, a longtime critic of Hackett’s approach to running Ford, initially questioned the idea of bringing a Silicon Valley finance executive to an iconic automaker with unprecedented market challenges. He praised the pivot.
“Jim Farley began his changes with the exact right priority. In times like this, the CFO position may be the most critical role in an entire company,” Gabrielsen said.
“The auto industry and Ford itself are incredibly complex and have issues that must be understood and mastered. Experience in other industries does not translate to automotive, and even Ford-specific issues are different from other automakers,” he said. “In these crisis times, it is absolutely mission critical that Ford has a CFO that totally and completely understands the auto industry and the company itself.”
The specific choice of Lawler was noted by Joe McCabe, CEO of AutoForecast Solutions based in Chester Springs, Pennsylvania.
“Lawler brings experience in autonomous vehicles, China and Ford’s complete global strategy,” McCabe said. “Companies have to design things that are accepted in every single market. He knows the long game, not just North America. He knows how to take electrification forward.”
Ford said the changes announced on Thursday were the first in a series of expected announcements. These were noted, in addition to the departure of Stone:
- Jeff Lemmer, Ford’s chief information officer, will retire Jan. 1 after 33 years at Ford. A successor, who will lead the technology and software platform, will be announced soon.
- Joy Falotico, 53, who has been president of Lincoln and Ford’s chief marketing officer for nearly three years, “will be dedicated solely to further growing Ford’s luxury brand once a new chief marketing officer is named.” She will report to Kumar Galhotra, president, the Americas and international markets.
- Dale Wishnousky, 57, vice president, manufacturing, Ford of Europe, will retire at the end of the year. He began with Ford in 1987. Kieran Cahill, 53, previously director, manufacturing and strategic projects, Ford of Europe, succeeds Wishnousky effectively immediately.
Ford hosted a virtual town hall meeting with an estimated 20,000 employees globally Thursday morning. Bill Ford, executive chairman of the company, introduced the new CEO and he delivered a 25-minute speech that has been described as motivational. Lawler, Galhotra and Hau Thai-Tang, Ford chief product development and purchasing officer, also spoke. Stone said goodbye to the team.
Farley told the team he plans to move with “urgency to turn around its automotive operations — improving quality, reducing costs and accelerating the restructuring of underperforming businesses,” the company said in a release.
Top priorities for growth include expanding commercial business with software services “that drive loyalty and recurring revenue streams” and adding more affordable vehicles to its global lineup, including North America, the company said.
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