Cars and Drivers
Ford Fumbles As It Promotes One Ford Executive to Help Another
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Ford Motor Co. (NYSE: F) demonstrated just how poorly run it is when it posted earnings for the final quarter of 2019 and also the full year. Almost immediately, the company’s reaction was to promote an executive who has been with Ford for 12 years. It is a wonder Ford did not go outside the company. Ford also dumped another senior manager who has been at Ford for 19 years.
Jim Farley will be Ford’s chief operating officer. In his role, he will run global markets, worldwide automotive operations, Ford Smart Mobility and the company’s autonomous vehicle efforts. Each of these has been a disappointment. Prior to his new job, Farley ran Ford’s New Businesses, Technology & Strategy team. There, he was responsible for plans to “capitalize on the powerful forces reshaping the industry.” This included areas where Ford has been flat-footed, particularly software development, connectivity, artificial intelligence and electric car development. Ford is considered behind the curve in these areas, particularly when measured against other industry giants, Tesla and several tech companies, which include Google.
Ford did not signal what Farley might do with the company’s disaster in the Chinese market. Ford’s sales in the world’s largest market were 567,854 last year, down 26.1% from 2018. That puts it miles behind leaders Volkswagen, General Motors and Toyota. Ford has not set out a detailed plan for how it will catch up.
Farley’s promotion was not paired with a plan to better its disappointing 2020 forecast. Ford lost $1.7 billion on revenue of $39.7 billion in the fourth quarter of 2019. Ford said 2020 operating earnings would be between $0.94 and $1.20 per share. This was a disappointment. There is concern Ford may have to cut its dividend. Ford has denied that as a possibility.
Ford’s one major announcement about a next-generation vehicle is its 2021 Mustang Mach-E. The electric vehicle is expected to have limited sales, particularly against market leader Tesla. Virtually every other major car company has come to market, or will soon, with one or more mainstream electric vehicles.
The autonomous car market also has become crowded, so crowded in fact that a tech company, Alphabet’s Waymo division, is among the leaders.
Ford stock barely trades about its 52-week low of $8.02 per share, and management has not offered any plan to move the price higher. Ford may fire CEO Jim Hackett if results do not improve this year, along with the share price. If Farley replaces him, one company man will replace another.
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