Ford Gives New CEO Jim Hackett A Big To-Do List
Ford Motor Company's new CEO, Jim Hackett has a pretty daunting job description: prepare Ford for a future of self-driving cars and keep things profitable by selling trucks. While Hackett has a unique set of skills, that's still an extremely tall order.
Ford Motor Company is different than the other car companies.
"The Ford name is on the building and on the company, I think there's extra sensitivity by the family," says Michelle Krebs, executive analyst at Autotrader.com. Many of the family members are very involved in the business; Bill Ford is chairman of the company, after a stint as CEO.
"When the company starts getting bad press" Krebs says, "I think the family takes that fairly personally."
Actually, Ford didn't start getting outside CEOs until the 1980s.
The previous CEO Mark Fields had a nearly 30-year career at Ford. Fields was one of the architects of the plan that kept Ford from going bankrupt. He'd led divisions such as Mazda. It was during his tenure that the company hit records in sales and profits. But Fields also became the candidate and President Trump's favorite whipping boy in the auto industry.
Negative press for Ford
Candidate Trump attacked Fields and Ford specifically for plans to move some production to Mexico.
"When that [negative press] starts to sully the family name, then the family steps in to make a change," Krebs says. She points out that this short of shake up happened about a decade ago when Bill Ford went shopping for the last chief executive.
Ford Chairman Bill Ford described in an interview with PRI's Marketplace Kai Ryssdal his reasons for finding a replacement for Field:
Ryssdal: Let me ask you a more focused question, then. Mark Fields was with the company for 25, 28 years, groomed for the CEO role, was there for three years. Would he still have his job if Ford share price was still at 17 bucks, where it was three years ago when he got the job?
Ford: Well, you know the share price is the fallout of a lot of different things. And, you know, Mark did some great things for the company, not the least of which delivered us record profitability over the last several years. And so, now we have the financial wherewithal to create our own future. And for that I will always be enormously grateful to him. Mark had a great career, and he did great things for our company. We're in a different time now, on a different place, even than we were three years ago. We have different competitors coming into our space, the rate of technology is just exploding, and we need to speed up our decision making.
"They want a charismatic cheerleading leader who will rally the troops," Krebs says.
"The Turnaround Specialist"
And in steps Jim Hackett, former CEO of Steelcase, the furniture company. More importantly, Hackett has been called "The Turnaround Specialist" for his tenure as athletic director at the University of Michigan. Hackett arrived at Michigan, when the football program was at its all-time lowest point since 1879.
John U. Bacon has written the book on Michigan Football, a couple of times , EndZone The Rise Fall and Return of Michigan Football. He describes the environment in Ann Arbor when Hackett took over: "The stands were empty, the budget was a disaster, the morale could not have been lower."
In addition the football program was being investigated for concussions. When Hackett took the helm, Bacon says things began to change almost immediately "he turned around the whole mood, if not all the finances... very quickly."
Most important to the turnaround was that Hackett hired Jim Harbaugh, the legendary coach. Bacon says with a laugh, "Do that around Ann Arbor, you're a hero right there, so he knows how to hire good talent."
From his time at Steelcase and Michigan, a picture of Jim Hackett emerges. "He delegates a lot, which at Ford he's going to have to being he's not an engineer, obviously."
Bacon says the skillset that he brings probably will adapt very well to Ford. He adds, "he's certainly got the full support of Bill Ford Jr." Bill Ford resides in Ann Arbor which can't hurt.
While Hackett is a relatively new arrival at Ford, (he's been leading the company's self-driving car division) he's become a Michigander (though he was born in London, Ohio, and is the son of Bill Hackett, who was a consensus All-American from Ohio State in 1944) through and through.
Mark Fields had previously been criticized for not living full time in Michigan, and for flying home to Florida on weekends.
But will Hackett get the support of Wall Street? Already, the answer to that question is a tepid maybe. In a report out this week from Morgan Stanley says about Ford:
"In our opinion, Ford's current and forward year warnings guidance should not be relied upon—we believe the earnings situation may need to get materially worse before it gets better ... We believe the company must absorb substantial up-front cash and non-cash expenditure for the purpose of long-term strategic reposition that may weigh substantially on near term results."
Meanwhile, Michelle Krebs, the analyst says the challenge for Hackett isn't how many cars or trucks can he sell. It's can Ford be profitable, while investing in the self-driving cars and electric cars. Krebs says a fundamental problem is waiting for that change to happen.
The question is she says, "How does it change? When does it change? And when is the payoff for the company? And there are also a lot of new competitors that didn't exist in this space before and I suspect we'll see some competitors we don't even know about yet."
Bacon devotes a chapter to Hackett in his book, From Endzone: The Rise, Fall, And Return Of Michigan Footballabout him taking over leadership of Michigan's football. Here's an excerpt:
"Gee, I've got to ask Kathy," Hackett said. "So I hung up, and talked it over with her. It was really difficult because she had already lived through the CEO life for two decades, and we had this promise of leisure time with the grandkids. But she knew I wanted to do this, she knew what Michigan meant to me, so she supported the decision, if that's what I wanted to do."
And that was the next question: Did Hackett want to do this? Before committing to such a position, he needed to be sure.
"I called one more guy before I called Mark back," he recalls. "Dale Jones. He works for Heidrick & Struggles, one of the top CEO recruiting firms. He helped President Obama recruit his cabinet, which often entails convincing very rich and powerful people to take a gigantic cut in pay to work incredible hours, under immense pressure and scrutiny. He can recruit! He often overcame their objections by simply saying, 'Some jobs are for God and country.' It usually worked.
"Over the years, he's been a muse for me. So I said, 'Dale, I've got this interesting thing that just came up, but you can't talk about it.' As a headhunter, he's used to this, and I trusted him. I asked him, 'What happens to people in my situation, after being CEO? Do they go into the abyss? Do they take another position? Is taking a new position a bad idea?' "
Jones replied with the obvious: It all depends on what the next position is. After Hackett told him about President Schlissel's offer, and what the University of Michigan meant to him, Jones had his answer.
"Jim," he said, "some jobs are for God and country. For you, this is it."
"That's what I needed to hear," Hackett said.
Jim Hackett hung up the phone, and sent President Schlissel a text: "I'm in."
Full disclosure, it must be noted that NPR's Sonari Glinton worked on a Ford assembly line during college and his mother is a Ford Motor Company retiree.
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