Ford Motor Co. on Friday named strategy chief Jim Farley as its chief operating officer in a leadership shakeup after the Dearborn automaker missed 2019 earnings expectations.
Ford CEO Jim Hackett had hailed 2019 to be a "year of execution" as Ford since 2017 has undergone an $11 billion global restructuring, which included cutting costs and layoffs. But operational challenges with the launch of the Explorer SUV last summer sent profits declining 99% year-over-year in 2019, the automaker reported Tuesday. Ford shares took a beating, falling to their lowest price in more than a year.
Farley will take over automotive operations from Joe Hinrichs, president of automotive, who will retire after 19 years at the Blue Oval effective March 1.
"The launch of the Explorer is a company issue that involved a lot of aspects, including Joe's role and others," Hackett said on a conference call. "We share that with others. This, in fact, is not tied to that at all. I want to make that really clear that we're all accountable for that performance."
In addition to overseeing Ford's global markets, Farley, 57, will continue to lead Ford's mobility and autonomous-vehicle ventures as he has since April. The transition, which Hackett said has been in the works for more than a year, is meant to bridge the old auto industry with the new mobility sector involving autonomous, connected and electric vehicles. Farley is charged with nearly doubling global margins to 8%.
"It is my judgment the time is to move with urgency now to fully integrate and accelerate Ford's transformation into this higher-growth and higher-margin business, and leverage the smart connected-vehicles," Hackett said.
By the end of the year, the company expects 75% of its lineup to be new since 2017. The automaker will roll out this year a small off-road vehicle; the all-electric Mustang Mach-E SUV; and the redesigned F-150 pickup, including plug-in hybrid versions. Ford also will introduce region-specific vehicles in places like China.
"We have all the foundation elements of this transformation Jim talked about," Farley said. "Now it's go-time, execution. I'm really excited to lead the team to bring this mission toward visions to life."
The Explorer is Ford's best-selling SUV, but sales declined more than 26% last year as production problems led to months of delays and vehicles coming off the line with buggy software, loose wiring and faulty seats, forcing them to be shipped from Chicago to Flat Rock to be repaired.
"There are only three programs you don’t screw up at Ford: F-150, Mustang and Explorer," Marcus Hudson, executive director of Calderone Advisory Group in Birmingham, said in a statement. "The Explorer launch was Hinrich’s audition for the top post; his leaving speaks directly to the internal view of how well manufacturing is doing at Ford. The Explorer launch obviously didn’t go well; couple that with ongoing warranty issues which imply a drop in quality, which has a direct correlation with customer loyalty, then someone’s head had to roll.”
Hackett, meanwhile, has no plans on leaving: "I plan on staying in this job and working with Jim tightly to now realize the value that we’ve been promising."
Shares continued to fall by more than 1% Friday morning more than equity indexes. Its stock was about $8.15 per share, down from $9.21 prior to Ford reporting earnings Tuesday after the market closed.
Tuesday's results had led Adam Jonas, managing director of research at Morgan Stanley, to blast the Dearborn automaker a day later during an investor presentation held by General Motors Co. that highlighted its future plans.
“I noticed that you were videotaping today’s investor day, it’d be great if someone could send that tape to Ford in Dearborn," he said. "I’m serious. I’ll hand-deliver it myself to them if you don’t send it to them. Your team is really airtight. You should be very proud of this presentation you gave. It’s a kick-(explicit) management team up here in front of us. You are executing."