Mark Fields ousted from Ford
forbes.com/sites/joannmuller/2017/05/21/ford-...Posted May 22, 2017, 4:29 AM UTC
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forbes.com
Since he took power; $18 a share down to less than $11. PE ratio of 11. Announcing cuts to the workforce.
I'd fire him as well. Investors have so very little trust in him right now and it's very clearly not going to be fixed anytime soon. What is the fix? Ford needs their Chevy Bolt equivalent. The Model 3 competitor. Basically everyone has had to come out and do something.
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The new guy Jim Hackett was the head of AI, I presume in the coming years that they will shift some more focus on AI. Considering the recent 1billion purchase of Argo we're go to see Ford make a serious attempt to enter that market.
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Obvious given, but not sure it makes sense. Instead what I think is happening is that they are calculating a few things. The auto industry hit saturation on sedans and suvs/crossovers. So it's becoming a niche market; which will be shortly followed by a recession. Which Ford is basically able to ride out safely, and then the question is what happens on the exit of the recession. It's the ride sharing and automation.
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Jim Hackett was the head of AI
Incorrect.
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Jim Hackett was the head of the Smart Mobility Unit (AI Unit) not sure what was incorrect about that.
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Smart Mobility LLC was more of a market research wing than engineering for autonomous development. All work on autonomous driving was done under research and advance engineering, under a completely different set of managers.
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The bolt and model 3 arent going to be big money makers.
The money has been in trucks, SUVs, and crossovers the last couple years, Ford hasn't had much in that market outside the F series. It has shareholders pissed no doubt, because they've been off developing sports cars and dumping billions into driverless cars and EVs.
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The bolt and model 3 arent going to be big money makers.
What colour is the sky in your world? Those 2 cars are going to be the standard of their genre.
The money has been in trucks, SUVs, and crossovers the last couple years,
The bolt is a crossover first of all so I'll take that as you conceding on that. Meanwhile the Model 3 got 400k pre-orders in a month, like forever ago. They have years worth of capacity in known pre-orders and probably have even more than that now.
Ford hasn't had much in that market outside the F series.
They have a few things in the future including a hybrid mustang and pretty clever f150, but nothing today. By the time they get that out in a couple years, will they have missed the mark and still be behind the industry?
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Those 2 cars are going to be the standard of their genre.
Bolt is currently costing more to make than it can sell for. Maybe that will change in the future. Tesla has lost money on every single car they make. Ramping up production to 10 times their previous capacity doesn't usually create profitability overnight.
The bolt is a crossover first of all
Wrong. It's a compact hatchback.
They have years worth of capacity in known pre-orders
Which guarantees exactly zero in terms of operating margin.
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What colour is the sky in your world? Those 2 cars are going to be the standard of their genre.
But the issue here is profit and stock price. What's the return on a Bolt vs a Focus? I'm guessing Chevy isn't making a huge profit on Bolt sales, though kudos for them entering the electric/hybrid market.
And these cars are still very much niche vehicles. Truck and SUV sales dwarf that market and will likely continue to do so until fuel prices inevitably rise again.
Gas is cheap. An F150 is cheap to produce. Ford has deferred to their stockholders and appear to have put profits above being an "industry leader" in producing hybrids/electrics.
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I'm guessing Chevy isn't making a huge profit on Bolt sales, though kudos for them entering the electric/hybrid market.
You're guessing? Good job.
Gas is cheap. An F150 is cheap to produce. Ford has deferred to their stockholders and appear to have put profits above being an "industry leader" in producing hybrids/electrics.
You put that like there's some sort of shadowy set of cigar smoking fat cats instead of just an unnamed number of like million's of people's retirement funds making the decision.
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The bolt has been out for quite a while now and I still haven't seen a single one. Meanwhile when the new f150, Tahoe, ete came out I was seeing dozens every wheek.
Where have you been?
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The Bolt has only been available in 8 states so far. Primarily being in California first
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Where have you been?
I'm in Canada and I've been seeing them. They havent really been pushing like any marketing yet because you cant buy them in the usa like anywhere. I'm pretty sure in Detroit you cant buy them even though that's where GM is... Pretty sure it's 2018 model year before the bolt is available.
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You're absolutely insane if you think the majority would buy a Ford or a Chevy over a Tesla. Not to mention these are not high $$$ making cars either.
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The public found out before the employees did...
There are quite a few changes going on at the top going on I believe. Not sure about this Hackett guy though.
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Hackett is fantastic.
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Hackett has a great track record (Michigan alum here), and he previously was head of Ford's autonomous sector. Oddly enough, said investment into future tech ultimately is what ousted Fields, oddly (so much investment into something that doesn't return dividends quite yet, and stockholders weren't happy).
I'm still sad to see Fields go. I think history will look on him more favorably than right now, but I could be wrong.
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head of Ford's autonomous sector
Keep seeing this. It's wrong. Autonomous development is within the research and advanced engineering group here. Smart Mobility LLC (what Hackett was heading up) has nothing to do with the actual engineering. It's more of a market research wing separate from the actual design and engineering work.
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Ah thanks for the heads up. I misread an article it looks like.
Still, part of the forward-thinking ideology within Ford. So that's good, in my eyes
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He was investing in the right things as well. Feels like shareholders looking for a scapegoat for short term losses.
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Why?
Theyre making awesome cars lately. They better not go back to making shit
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I always say this, and I'll say it again here. Performance models are not what keeps companies in business. Right now Ford is doing all right, the market is down across the board for automakers. The auto industry had a run of steady growth for the past eight years. The longest sustained period of growth in recent history. Unfortunately for the auto industry that run has ended. Thus far car sells are down by quite a bit this year. This is not just a Ford problem, it is a problem facing the whole auto industry. Many economist chalk it up to everyone that wanted a new car has gone out and bought one.
Fords biggest issue is a lack of confidence in the direction that their company is going. That is what drives stock prices up and down, and ultimately influences the stockholders decisions. While the Mustang, Fiesta ST, Focus ST, Focus RS and GT350 are awesome cars, they are part of the old guard. Ford has invested very little into the production of autonomous cars, and electric vehicles. This is Fords main problem at the moment. They lag behind many of the big auto companies in this area, and they have neglected development of these technologies. Ford has no Bolt, no Leaf, no Prius, no Model S. Shareholders see autonomous and EV's as the future, and Ford has done little to make headway here. This is the crux of the issue Ford is facing as a company.
I believe I heard that the new CEO of Ford worked in the autonomous vehicle development branch of Ford. I think that says volumes about which direction shareholders want to take the company. While we all love the GT350 and Ford GT these vehicles are a dying breed. We are slowly but surely moving to hybrids, EV's and autonomous vehicles as much as it pains me to say.
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Have you been following the story? You seem to have it backwards.
Investors are upset Ford has invested so much in automation and electric cars recently instead of focusing on short term profits. I almost guarantee they will shift more towards selling crossovers and suvs than continue developing automated cars.
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Here is another Forbes article that is linked by the one OP posted and speaks to your point.
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They've been talking about it on NPR this morning, saying that they want to put less emphasis on the low profit models and focus more on vehicles with higher margins.
GG Ford, sounds like they want to become some combination of pre-2008 GM and present day Toyota. Devote all your resources to boring garbage and full size SUVs that will become worthless as soon as fuel prices start to spike again.
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Investors are upset Ford has invested so much in automation and electric cars recently instead of focusing on short term profits.
That's annoying, as a happy Ford owner who's moving to an EV in the next two or three years. If they had a direct competitor to where the Model 3 and Bolt will be in 3 years, they'd have the edge (maybe based a lot on unfounded brand loyalty, but still).
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Do you think in the coming years there will be some good deals on new/slightly used/cpo cars due to downtrend?
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Yes, that is what is being predicted by Morgan Stanley:
Off-lease supply: This has already more than doubled since 2012 and is set to rise another 25% over the next 2 years.
Extended credit terms: Auto loans are at record lengths and lease assumptions (residuals, money factor) are at record levels of accommodation.
Rising rates: Starting from record low levels in auto loans.
Overdependency on auto ABS: The outstanding balance of auto securitizations has surpassed last cycle's peak.
Record high deep subprime participation: 32% of subprime auto ABS deals were deep subprime (weighted average FICO < 550) in 2016 vs. 5% in 2010.
Record high units of new car inventory: 2016YE unit inventory levels were near 10% higher than 2015YE, and are continuing to trend higher in 2017.
OEM price competition: Car manufacturers have capacitized to a 19mm or 20mm SAAR. At this point in the cycle we start seeing more money 'on the hood' to move the metal. As new car prices fall, used prices look relatively more expensive, which necessitates a decline in used prices to equilibrate the supply/demand imbalance. Increased ADAS penetration: We expect auto firms to achieve nearly 100% active safety penetration by 2020, creating an unprecedented safety gap between new and used vehicles, accelerating obsolescence of the used stock. Rising insurance premiums on older cars could accelerate this shift.
Trouble in the car rental market: Due to a number of secular shifts, including how consumers access transportation options (e.g. ride sharing), car rental firms are facing stagnant growth, weak pricing and over-fleeted conditions. As these cars hit the auction, the impact on prices could be significant.
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Wow thanks for the link! I wonder if this will cause "performance/fun" cars to be hit particularly hard as people will likely get a practical car if they have to get one.
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That's true of every down turn or gas price increases
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Fords biggest issue is a lack of confidence in the direction that their company is going. That is what drives stock prices up and down, and ultimately influences the stockholders decisions. While the Mustang, Fiesta ST, Focus ST, Focus RS and GT350 are awesome cars, they are part of the old guard. Ford has invested very little into the production of autonomous cars, and electric vehicles. This is Fords main problem at the moment. They lag behind many of the big auto companies in this area, and they have neglected development of these technologies. Ford has no Bolt, no Leaf, no Prius, no Model S. Shareholders see autonomous and EV's as the future, and Ford has done little to make headway here. This is the crux of the issue Ford is facing as a company.
It's like you're going out of your way to prove you have no idea what you're talking about, or that you even read the article.
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No, I have a good idea what I'm talking about. Bill Ford said the automaker needs to address underperforming areas, modernize its business and invest in The Future." This is significant because Bill Ford is the majority shareholder in Ford, and has the biggest say on what goes on in the business.
Mark Fields has also been quoted on saying that he does not want to the the first one with an autonomous vehicle. I've done more reading on the issue than just one Forbes article.
Moreover the main reason why Ford decided not to open up a plant in Mexico is it instead wanted to put that money and an additional 3 billion towards the development of electric cars and autonomous vehicles.
http://money.cnn.com/2017/05/22/news/companies/ford-ceo-fields-hackett/
As for what I said about the stock market, it has always been the case. Stock price is largely based on confidence in the companies vision and ability to execute said vision. That is why Tesla is trading above Ford despite not being that profitable yet as a company. Ford by contrast had two record setting years in 2015, and 2016, yet the stock prices continued to plummet.
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This was expected at some point. Ford isn't doing poorly per say, but they have just been treading under his leadership rather than showing real growth. The company's lineup has held up well despite its age, but it still has one of the oldest fleets in the market. When was the last time the Focus, Fusion, Edge, Explorer, etc. were redesigned? These are cars in core segments that are amongst the oldest in the industry.
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Employees told that Mark Fields elected to retire, but it was all so short notice that I'll bet that's all bullshit.
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CEOs rarely get "fired." They probably had a discussion after the shareholders meeting and did not agree on what the vision for the future was.
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Honestly, this feels very necessary. Ford looks like its doing very well by 20th century car company standards, but they aren't ready for the 21st century.
Ford is doing very well with the F-Series and the Mustang, but they have nothing in electric, nothing in assisted driving. That is where the car market is heading, while big V-8s is where the car market was. Their luxury division Lincoln is also a mess, and that's putting it kindly.
They need a major shakeup at the leadership level to focus away from shaving 0-60 times in their performance cars and towards where the market is heading.
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You have it backwards. They were trying to position themselves for the future but shareholders want profit now.
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Good. Guy was a prick. Coming from a Ford family, he's been nothing but a disappointment. There's a reason investors are more interested in GM and Tesla.
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Explain?
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I am hoping to God they don't revert back to being a shitty company. The FiST, FoST, FoRS, GT, GT350/350R... These are all signs that Ford grew as a company from what we remember of them over a decade ago. I'm hoping this works out for them.
God speed.
The new ceo's experience is running a luxury office furniture company and working at Ford mobility for a year...Not sure how they come up w these decisions...
Al Mulally was CEO of a airplane manufacturer and knew nothing about cars.
Sure, but he probably knew more about high tech, large scale systems integration, SCM, etc than the incoming CEO. There's decent overlap between building cars and airplanes, not so much with luxury furniture and cars.
There's a world of difference between an engineer that was the CEO of a plane company and a finance guy that was the CEO of a company that sells luxury office chairs...
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CEOs are also businessmen, they make decisions based on market trends. Simply put; because a CEO made one company grow in one type of market, it is very likely that the very same person would be good at making another company grow in another type of market.
Its kind of like... The sales person at a car dealership doesn't need to know how a turbocharger works to sell a turbocharged car, he needs to know his customer better than his product, make friends with the customer, and suddenly you can sell a ketchup Popsicle to a woman wearing white gloves, it isn't hard.
Disgusting imagery. I like it.
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Being CEO of a multinational company doesn't require expert level domain knowledge.
Do you think Steve Jobs understood a whole lot about Apple's technology? Job's wasn't even a technologist. Do you think Jonny Ive does? He certainly isn't one.
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He turned around the University of Michigan's athletic program in a year as interim director. He hired Jim Harbaugh as head football coach (poaching him from the NFL) and worked out an unprecedented apparel deal with Nike and Jordan.
Nepotism I'm guessing.
What? Fields has only been CEO since 2014. Mullaly was CEO before that, and Mulally is largely credited with bringing Ford back from the grave, not Fields.
Fields was an awful CEO and I'm glad he is gone.
Sadly, their investors probably want them to abandon these low profit enthusiast cars and focus more on crossovers and trucks.
Focus on crossovers and trucks, like the Explorer, Escape, Edge, Flex, Expedition, upcoming Bronco, upcoming Excursion, and the insane lineup up F-series pickup trucks?
... they need more focus on these types of vehicles?
edit: ... and upcoming Ranger and upcoming Ecosport
All those vehicles except the f series are old designs and not selling as well as competing crossovers and suvs
I should've finished my thought. It seems to me like they've focused pretty heavily on this segment - more specifically, flooding the market with models.
Making a lot of performance cars means very little in the grand scheme of things.