Hackett claims early momentum at Ford

on Jul30

Hackett: “I see opportunity in every area where we can be better.”

DETROIT — In his first two months on the job, Ford Motor Co. CEO Jim Hackett has started to make his mark, but bigger changes are coming.

Hackett, tapped in May by Executive Chairman Bill Ford to transform the culture and speed decision-making, has shortened his top executives’ schedules by 30 minutes a day and said morale has already improved.

“When you work the hours these folks do, that’s found money,” he said last week. “The body language is now translating down to the teams. We have some early momentum here.”

Hackett, who joined the Ford board in 2013 and headed Ford’s mobility efforts for 14 months before taking over as CEO, plans to use that momentum to make sweeping changes to the 114-year-old automaker after his 100-day review of the business. On his first earnings conference call with analysts and reporters last week, he repeatedly promised more details would come this fall.

He’ll take a look at Ford’s product investments, global business units and emerging technologies, among other things, as he re-evaluates the plans put in place by his predecessor, Mark Fields.

“I see opportunity in every area where we can be better,” he said.

Ford already made a move on its slow-selling Focus compact car, announcing last month it would shift North American production to China in 2019. It said last week that it would stop building the car in South America, too.

“We doubt that Mr. Hackett has the internal political capital to push for a powertrain [joint venture]/deconsolidation at this point,” Barclays analyst Brian Johnson wrote in a research note. “Rather, Mr. Hackett is more likely to attack the capital efficiency related to small/mid cars, manufacturing, and regions where Ford is unprofitable (i.e. Southeast Asia).”

Ford has been reviewing its business in India and could potentially withdraw from there, as General Motors said in May it would do by year end. In recent years, Ford has notably held on to struggling business units, such as Russia, even when competitors have pulled out.

“I think the new reality is that we really have to ask ourselves: What do we have to [achieve] to get to the returns that we expect?” Hackett said. “If we can’t [reach] that, we can’t be there.”

Hackett did confirm one region where Ford will remain: Europe. The automaker made $88 million there despite lower volume and financial trouble stemming from Great Britain’s decision to leave the European Union. GM is selling its European business after failing to find a sustainable way to make significant money there, but Hackett said Ford will take a different course.

“I want to leave the message that Europe is a place we’re going to be,” he said.

Ford has been able to turn a profit there in recent years thanks to a revamped product lineup that includes an upscale Vignale trim, popular performance models including the Focus RS and fast-selling commercial vans.

Hackett also is keeping a close eye on the sizable gap between profit margins at Ford and GM. GM last week reported a 10 percent second-quarter margin globally, while Ford’s was 5.9 percent.

“It’s the kind of thing that doesn’t go over the top of our heads,” Hackett said. “The speed at which you can address something like that is a big improvement. You wouldn’t know that based on the data you’re looking at right now but it’s something we need to prove to you.”

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