In 2001, Ford axed CEO Jacques Nasser for pushing Ford too quickly into the future of connected cars. This week, Ford dismissed CEO Mark Fields for not delivering on the future, which includes connected cars, autonomous vehicles, EVs, and shared mobility.
There’s more to Fields’ departure than just that, though: Ford’s stock price is down 36 percent under his tenure. Ford-Lincoln sales are down 5 percent through April, and Ford passenger car sales this year are down 25 percent. But still: The future that Ford was in no hurry to pursue under Jacques Nasser, it wants right now. And Ford wants more of it: not just connected cars, but self-driving cars and longer-range EVs.
Big Three All Trying to Adapt to Changing Market
Automakers everywhere are trying to figure out what parts of the future matter and that buyers will pay for. The focus right now is on Detroit’s Big Three generally and Ford in particular. That’s because of the departure of Fields and his replacement, Jim Hackett. Hackett spent most of his life as an executive at office furniture maker Steelcase, before moving to Ford (with a quick stop rebuilding University of Michigan athletics). At first glance, Hackett seems an unlikely fit at a car company. But then Fields was preceded by Alan Mulally, who came from Boeing. And of the two outsider CEOs bookending Fields, Mulally and Hackett, the new CEO is the one from a company that knows how to build comfortable seats.
In the previous week, Fields moved to cut costs by cutting 1,400 salaried jobs at Ford (out of a global workforce of 202,000). In April, Ford said it was on track achieve $3 billion in “efficiencies” in 2017 that would mostly offset the cost of “emerging opportunities investments,” meaning EVs, autonomous vehicles, and ride-hailing services. Ford already has RD facilities in Silicon Valley, as well as in Michigan. They were opened or expanded under Fields. Ford says it will have a self-driving car by 2021, the same as other automakers are promising. It made a big gamble building its F-150 pickup out of aluminum, but the F-150 remains the best selling vehicle in the US. So Fields was pushing many of the right buttons on tech.
Ford has pushed into new realms. With Sync (2008), it was first in the US with an infotainment interface that blended onboard music with smartphones, although it wasn’t very good. With Sync 3.0, Ford finally has a usable infotainment system interface.
In fact, Ford was so caught up in smartphones providing free rudimentary telematics features via Sync and smartphones (such as emergency crash notification) that it was slow to get into real telematics. Lincoln has been gradually adding OnStar-like systems, and Ford has as well beginning in the past year with Sync Connect on the 2017 Ford Escape. GM, in comparison, has offered OnStar since 1996.
All of this predates Fields’ tenure. Fields had the misfortune to be the CEO of the company that Donald Trump criticized for siting a plant in Mexico, when all car companies are doing it. And Fields was the CEO that knuckled under / appeased / made the fewest waves (pick one) by pulling back that Mexico plant.
Ironically, Jacques Nasser, the CEO from 1999 to 2001, was criticized for pushing too hard on telematics, and also for buying upscale brands — Aston Martin, Jaguar, Land Rover and Volvo — at a time when the Lincoln brand was moribund and only now is recovering. Nasser was perhaps a man ahead of his times.
Ford has had several future-looking successes: development of a new generation of EVs and hybrids, as well as making Sync compatible with Amazon Alexa. The number of apps available for Sync is huge, dwarfing what’s available on Apple CarPlay or Android Auto. Mulally started and Fields continued a push to make Lincoln a competitive luxury brand. The MKZ midsize crossover is world-class; the MKX midsize sedan is competitive.
But the overall reliability of Ford and Lincoln is only average on the JD Power Vehicle Dependability Study that rates cars at three years of life. For better or worse, the current CEO owns that, too.
And there’s the soft stock price, which is what shareholders and boards of directors care so much about. While Ford is huge in terms of plants and people (as is GM), startup Tesla has surpassed both in terms of total market value (market cap). In other words, investors have done far better with the TSLA ticker symbol than F or GM.
GM jettisons businesses that aren’t growing
Since emerging from bankruptcy in 2011, GM in comparison has been aggressive in getting out of businesses it couldn’t make money in. This year it said it would sell off its European brands, Opel/Vauxhall. Earlier, it said it would get out of the Russian market, sell operations in South Africa and eastern Africa, and stop selling vehicles in India. That’s counter to the (current) industry wisdom that you have to sell in BRIC — Brazil, Russia, India, China — to grow.
In China, GM is doing surprisingly well. Buick is treated as a premium brand, selling five times as many cars there as in the US. GM’s passenger cars, particularly sedans, have been world-class, especially Chevrolet’s large-to-small lineup of the Impala, Malibu and Cruze. The 240-mile Chevrolet Bolt EV is a match for the Tesla Model 3, and it’s out almost a year ahead of Tesla. Ford is still on 100-mile EVs. In addition, GM’s compact and midsize SUVs are now being updated and they’re solid.
Chrysler remains the most challenged Big Three automaker. Its only profitable components are the Ram (pickup) and Jeep brands. Chrysler got some traction with its Pacifica minivans, but it only has one sedan left, the Chrysler 300. Chrysler is owned by Fiat. Its chief, Sergio Marchionne, makes no secret in wanting to partner, or sell, Fiat-Chrysler to another automaker, or spin off the profitable segments, meaning Ram and Jeep.
That brings us back to Ford. For all its successes, including in tech, it wasn’t enough to keep the board from pulling the plug on Ford’s CEO. Some say it takes a decade to turn around a foundering car business — which Ford, to be fair, was not — and the board got cold feet three years in to the Fields era.
If Mark Fields was fired for not moving Ford aggressively into the new era, rather than the more mundane crime of letting Ford sales slip under his tenure, then he’s laid the groundwork for Ford products to improve, and sales to move up, over the next couple years.