Why Ford Motor Company (F) Will Regret Making Jim Hackett CEO

Mark Fields is out and Jim Hackett is in, but Ford stock holders will soon learn that not all change is for the better

The Ford Stock Price Today Offers Value (And Cash) Amid The Risks

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So long, Ford Motor Company (NYSE:F) CEO Mark Fields. You were at the helm for only three years, so it feels like we hardly knew you. But considering Ford stock fell 40% since you took over, your ouster can’t come as a complete surprise.

Source: Ford

Ford CEO Mark Fields

Source: Ford

Investors kind of notice these things.

On the other hand, investors also tend to be short-sighted. While F stock has lost a lot of ground during a time when the broad market gained 20%, Ford’s annualized sales have grown 6%, and profits have grown accordingly even if not briskly. It could have been worse.

With that as the backdrop, the exit of Fields and the entry of his replacement, board member Jim Hackett, could and likely will end up reminding Ford stock owners that sometimes the devil you know is better than the one you don’t know.

Why Fields Is Out (But Maybe Shouldn’t Be)

The changing of the guard, so to speak, is reportedly an amicable one. Major shareholder (and namesake) Bill Ford even made a point of clarifying that Fields isn’t being fired. It’s just time for another evolution, and Hackett is a “visionary” better suited to lead Ford in its next era. Fields even politely said the same.

But calling a spade a spade, it’s rare for a 56-year old industry veteran who has been with the company for 28 years (but only acting as chief for the last three) to first float the idea of leaving.

The irony? While Hackett has been hailed as a visionary, it’s Fields’ vision that’s the compelling one.

Fields was far from perfect, as Ford stock longs can attest. Perhaps the most damaging of missteps one could point to is the lack of certain cars in certain markets. For instance, while the EcoSport is coming to America in 2018 and the Ranger small pickup truck will be back on dealers’ lots by 2019, those are vehicles that should have been available in the U.S. now. Fields arguably should have kept his finger on the market’s pulse better than he did.

But considering the Ford umbrella includes several brands and a few dozen manufactured models, it’s tough to deliver the perfect mix of autos.

Fields also has never been under any illusion that the business isn’t changing. The company can’t afford to see itself as a carmaker any more. It’s now in the business of transportation solutions, and Fields hasn’t been shy about moving in that direction.

Case in point: Well more than a year ago, Ford unveiled its FordPass app, which among other things serves as a digital wallet and helps you find a parking space, was built in such a way that would eventually facilitate a ride-sharing feature.

Autonomous driving has been another focal point for Ford. While the company may not be as far down that road as, say, rival Tesla Inc (NASDAQ:TSLA) or General Motors Company (NYSE:GM) are, it’s at least on that road. That’s largely Fields’ doing.

That’s not to suggest Hackett is a slouch. He has spearheaded automaker’s mobility effort since early 2016, and mobility rather than vehicle owners is the new mindset for consumers. Prior to becoming part of Ford’s board of directors in 2013, he led a successful turnaround effort at Steelcase Inc. (NYSE:SCS). He also spent a couple of years as the athletic director at the University of Michigan after his time at Steelcase and before he joined the Ford team.

The company could do worse.

Be Careful What You Ask For

On the flipside, while outside and unrelated experience can been be a good thing, sometimes it isn’t.

It’s difficult to digest the notion that a background in office furniture and college athletics is going to be applicable to automobiles … especially when Ford’s doing reasonably well as it is. The only thing that’s broken here is Ford stock, but that’s largely out of the CEO’s — any CEO’s — hands.

That said, while Hackett’s primary purpose at Ford Motor Company thus far has been leading the mobility effort, that’s the one aspect of Field’s vision that seems to be hitting a development headwind.

Maybe that’s on Fields Or, maybe that’s on Hackett.

Bottom Line for Ford Stock

The point is, Mark Fields wasn’t a bad CEO. Perfect? No, but he has to be given credit for recognizing early on that the automobile industry was changing forever. He’s taken some pretty smart and decisive actions to fix what he can, drawing on nearly three decades of carmaking experience.

Jim Hackett, on the other hand, is a well-respected leader (and deservedly so). But of the 7 billion people on the planet, there must be someone with at least a little more relevant experience and at least a little more effective as a visionary available to take the job.

This is a move Ford stock holders could and likely will end up regretting.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/05/why-ford-motor-company-f-will-regret-hiring-jim-hackett/.

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