A Crazy Plan to Save Detroit Could Help Save Ford Stock

There's a plan to reimagine Detroit that could really boost Ford stock

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Never let it be said Ford Motor Company (NYSE:F) CEO Jim Hackett doesn’t think big. His thinking may be misguided and dangerously optimistic, ultimately posing a tremendous risk for owners of Ford stock. But, at least it’s big.

The latest step forward in what’s now being described as a “transformation” by Hackett himself? On Tuesday, the iconic car company unveiled its plans for Detroit’s dilapidated Michigan Central Station, saying it would turn it into an R&D center that will help usher in the next era of transportation.

Namely, Ford intends to turn up the heat on its self-driving and electric vehicle programs at the new site.

The company’s chief explained:

“It will be the proving ground where Ford and our partners design and test the services and solutions for the way people are going to live and get around tomorrow, creating a Southeast Michigan mobility corridor that spans west from Dearborn to Ann Arbor, and east to Detroit.”

And yet, it’s so much more than just another place for roughly 2500 employees to begin work by 2022.

Recruitment Tactic

The 18-story train station will eventually wind up being more than just office space for Ford. Though the timeline is still fuzzy, it and three other building that will comprise the planned campus in Corktown will offer residences, retail shops and restaurants open to the public.

The idea is to reinvigorate at least this sliver of the struggling city to attract new employees to the area, and start a wave self-supporting improvements all around it.

It’s a mindset no Ford stock holder alive today has seen the company embrace, yet it is reminiscent of a philosophy the company’s founder trusted over a century ago when he insisted on paying workers more than twice the typical wage they would have earned anywhere else for comparable work.

Henry Ford’s theory was, by paying better, he could attract and retain better workers, which would ultimately pay for itself in the end.

The current worker-recruitment plan may be even more overarching in scope.

Sign of the Times

It’s certainly not an unfamiliar idea, given today’s social, political and financial climate. Employees are increasingly expecting their jobs to serve as a means of expressing themselves, with employers increasingly expected to let their workers have a say in making business decisions.

Case(s) in point: A decent-sized swath of Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) recently revolted because the organization had plans to help the Pentagon develop weapons that could be used as a “first strike” tool.

Recognizing that pets are now more like members of the family rather than an animal that happens to live in the house, Amazon.com, Inc. (NASDAQ:AMZN) allows employees to bring their bring their dogs to work.

Ford rival General Motors Company (NYSE:GM) is taking a more direct approach to fostering worker engagement, recently giving hourly employees each a 2017 bonus of $11,750… the highest among Detroit’s remaining carmakers.

It’s a sign of the times, as “old school” employees migrate out of the workforce and are replaced by generations of workers that grew up with a little more say-so, and a slightly-elevated idea of what are the must-haves in life. Easy access to coffee and shopping is wiggling its way into the middle of that list.

Part of a Massive Rethink

Still, the panned mini-city points to an even larger idea that owners of Ford stock have slowly but surely seen materialize. That is, Ford is no longer thinking about what cars will look like a decade from now, and is instead thinking about what transportation itself could look like twenty years from now.

That party quietly began in earnest back in 2016. The company was already working on self-driving cars then, and had become sustainability-conscious. It was the unveiling of an app called FordPass, though, that made it clear this was not the Ford of old.

Calling a spade a spade, FordPass was a solution to a problem that didn’t quite exist, and to the extent the problem did exist, Ford wasn’t the best-equipped solution provider. The app was a ride-hailing tool, a mobile wallet and even a means of paying for a parking space.

Other platforms have since proven better choices for consumers, but the willingness to even try to mainstream the app in the first place spoke volumes about the Ford’s intended future.

In the meantime, Ford’s so-called “City of the Tomorrow” has gotten closer to becoming the reality of the present. That prototypical city will be built on ideas like automated traffic management and wireless charging of electric vehicles, and will eventually become part of the work to be done at the recently-acquired Michigan Central Station.

When employees realize they can contribute not just to the next-generation of cars but can help shape the future of mobility, commitment to the company’s success gets taken up a couple of notches.

Bottom Line for Ford Stock

Maybe the new facility will not only serve as a hub for the next evolution of the automobile industry, but as a model of community-mindedness other companies can embrace and adopt.

Indeed, in some regards it’s already happening, underscoring the notion.

It’s admirable too.

Still, it’s a vision the makes owning an already-beleaguered Ford stock even a little less comfortable, with Hackett ultimately betting a big chunk of other shareholders’ stakes on something on the verge of turning into a social experiment. It’s interesting to see such efforts from companies you don’t own a stake in. When you do own a stake in the organization in question though, it’s just a little scary to see that organization commit to a project that will cost at least $1 billion to develop.

Nevertheless, it’s a development well worth watching if only because it’s unlikely to be the last one of its kind. Ford, and others, continue to blur the lines between personal and professional lives, aiming for a social buy-in that sets the stage for a more literal, fiscal buy-in.

The city of Detroit wins either way.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.

Article printed from InvestorPlace Media, https://investorplace.com/2018/06/ford-stock-saving-detroit/.

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