At 8 a.m. on Thursday, the first day of Jim Farley’s entry into his new CEO role at Ford Motor, the company announced “operational and leadership changes” designed to do what Farley has publicly promised: boost growth and accelerate the transformation of 117 years. old car manufacturer.
The plan, Ford said, is “to turn around auto operations, allocate capital to Ford’s strongest franchises and high growth opportunities, and to produce compelling electric vehicles unique to Ford on a large scale.”
First, Farley replaced the relatively new CFO Tim stone with Ford veteran John Lawler, 54, effective immediately. Lawler will oversee financial operations and Ford Motor Credit. Stone accepted a job with ASAPP Inc., an artificial intelligence software company.
“Stone will remain with Ford until October 15 to ensure a smooth transition,” said Ford.
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 former employer where he allegedly bypassed the CEO to demand a raise of salary that was denied to him.
Ford retained former CFO Bob Shanks on the payroll while also paying Stone. Ford explained at the time that it was to help with the transition; Stone was hired in April 2019 and took on the role two months later. The company ended up paying the CFO and the former CFO more than $ 8 million each year, according to its regulatory documents. The company confirmed on Thursday that Shanks’ role of “employee advisor” ended in late 2019.
On February 4, reporting that annual profits had fallen by $ 3.7 billion a year earlier, Tim Stone called the company’s financial performance “not OK”.
In 2019, the cumulative compensation of six senior executives at Ford Motor Co. – $ 70 million – exceeded the automaker’s annual net income by $ 47 million, a year that included pension payments, global restructuring costs. , a Ford Explorer failed launch and billion warranty costs.
This year began with disruptions and plant closures caused by COVID-19. But Ford has resumed full production and is now focused on launching its 2021 Ford Bronco, the all-new Ford F-150 and the all-electric Mustang Mach-E.
Cash is the key to survival in these uncertain times for any carmaker, especially automakers. The company’s credit rating was downgraded in March, which has the same negative effect on a business as it does on someone with bad credit: Getting capital can be difficult. Ford executives said the company has the cash to operate at the moment.
New Seasoned CFO
Meanwhile, Lawler had served as CEO of Ford Autonomous Vehicles and vice president, mobility partnerships, and spent much of his 30 years at Ford leading finance and general management, Ford said in a statement from. hurry. He had a successful career as President of Ford China and served as Corporate Controller and CFO, Global Markets and Head of Global Strategy.
“John knows our business inside and out, has a clear vision and high ambition for what Ford can be, and expresses what is needed to make it happen,” Farley said in a statement. “As Chief Financial Officer, he will help ensure that we have the means to fund these ambitions.”
Farley acknowledged Stone’s contribution in his prepared remarks.
“Tim has been a powerful voice within the company, pushing us all to constantly focus on our customers and what they want and need,” said Farley. “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.
“Over the past three years, under the leadership of Jim Hackett, we have made significant progress and opened the door to becoming a dynamic and profitable growing company,” said Farley. “Now is the time to charge through this door.”
Farley’s shares were immediately praised by industry analysts.
“Holy shit,” said John McElroy, host of “Autoline After Hours” and longtime industry observer. “This is a stunning and completely unexpected announcement. Jim Farley shows that he is absolutely responsible for Ford Motor Co. and that he is wasting no time. His mission is to turn this company around as quickly as possible.”
The change brings relief to those who want to see Ford succeed, McElroy said. “Jim Farley is putting his stamp on and saying, ‘I’m running the show.’ This fits with everything everyone has been saying about Jim Hackett for the past three years. This guy wasn’t a boss. He never really gathered the troops to follow him. He communicated in a very ambiguous and fuzzy way, which left people wondering where the business was really headed. “
The only positive legacy for Hackett, who took the helm in May 2017, said McElroy, has been the introduction of “customer-centric design,” of vehicles, which draws on the intuitive needs of consumers and integrating them into vehicles.
“Other than that it was a disaster,” McElroy said. “From 2014 to 2019, the American auto industry experienced its golden years. We have never seen so many years of consecutive increasing sales and incredible profits and Ford has performed absolutely poorly. Jim Hackett never took control of the business because he never understood what was going on there. “
While Hackett came from the furniture industry as the retired CEO of Steelcase, Farley built a career in the auto industry, moving to Ford from Toyota.
Hackett, 65, remains Ford’s “special advisor” until March 2021.
Market analyst Jon Gabrielsen, a longtime critic of Hackett’s approach to managing Ford, initially questioned the idea of bringing a Silicon Valley finance manager to an iconic automaker with unprecedented market challenges. He praised the pivot.
“Jim Farley started his changes with exactly the right priority. At times like this, the CFO position can be the most critical role in an entire business,” Gabrielsen said.
“The auto industry and Ford itself are incredibly complex and have issues that need to be understood and mastered. The experience of other industries does not translate into the automotive industry, and even Ford-specific issues are different from those of other automakers, ”he said. “In these times of crisis, it is absolutely mission critical that Ford have a CFO who fully and completely understands the auto industry and the company itself.”
Lawler’s specific choice was noted by Joe McCabe, CEO of AutoForecast Solutions based in Chester Springs, PA.
“Lawler brings his experience in autonomous vehicles, China and Ford’s comprehensive global strategy,” said McCabe. “Companies have to design things that are accepted in every market. He knows the game for the long haul, not just North America. He knows how to move electrification forward.”
Ford said the changes announced Thursday were the first in a series of expected announcements. These were noted, in addition to Stone’s departure:
- Ford Chief Information Officer Jeff Lemmer will retire Jan. 1 after 33 years at Ford. A successor, who will lead the technology and software platform, will be announced shortly.
- Joy Falotico, 53, who was president of Lincoln and chief marketing officer of Ford for nearly three years, “will be solely focused on growing Ford’s luxury brand once a new chief marketing officer is appointed. ” She will report to Kumar Galhotra, President, Americas and International Markets.
- Dale Wishnousky, 57, vice president, manufacturing, Ford Europe, will retire at the end of the year. He started at Ford in 1987. Kieran Cahill, 53, previously Director, Manufacturing and Strategic Projects, Ford of Europe, immediately succeeds Wishnousky.
Ford hosted a virtual public meeting with about 20,000 employees around the world on Thursday morning. Bill Ford, executive chairman of the company, introduced the new CEO and gave a 25-minute speech that was described as motivational. Lawler, Galhotra and Hau Thai-Tang, director of product development and purchasing at Ford, also spoke. Stone said goodbye to the team.
Farley told the team he plans to act “urgently to turn around its automotive business – improve quality, reduce costs and accelerate the restructuring of underperforming businesses,” the company said in a statement.
Key growth priorities include expanding business activities with software services “that drive loyalty and recurring revenue streams” and adding more affordable vehicles to its global lineup, including in North America, said the society.