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Executive shakeup at Ford to reinvent what it means to be an automaker

Executive shakeup at Ford to reinvent what it means to be an automaker
This handout photo obtained May 22, 2017 courtesy of Ford Motor Company shows Bill Ford (R) and Jim Hackett as Hackett met with employees and members of the press to discuss his appointment as president and CEO of Ford Motor Company in Dearborn, Michigan. Ford Motor Company on May 22, 2017 named Jim Hackett as president and CEO, replacing Mark Fields, as the company faces declining sales in the US and Chinese markets. The management shakeup included naming three new executive vice presidents to oversee global markets, global operation and mobility. (HANDOUT/AFP/Getty Images)

Ford Motor Company on May 22 replaced its chief executive, Mark Fields, with former office furniture executive Jim Hackett. The 114-year-old auto giant seeks to become a transformative company capable of taking on Silicon Valley darling Tesla and the coming revolution in smart driving.

Fields retired after 28 years at the company, replaced by former Steelcase CEO Hackett, who has almost zero experience in automobiles until he joined the company last year to head its "smart mobility" transportation initiative.

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"We need speed [in] decision making," Ford Chairman Bill Ford Jr., said in a Wall Street Journal interview Monday. Ford, the great-grandson of company founder Henry Ford, said he expects the 62-year-old Hackett to be in the job "for a good, long time."

Ford earned more than $25 billion in profits in the past four years, helped largely by the surging U.S. auto and truck market. But the auto icon is reeling from several challenges, including a stock price that has plummeted more than 30 percent since Fields took over three years ago from Alan Mulally, a former Boeing executive known for his open management style.

Despite its 14.6 percent share of the U.S. car and truck market in 2016, Ford's market value of $44 billion has been surpassed by electric-car upstart Tesla at $50 billion. The booming U.S. auto market is expected to slow this year.

Hackett's job will be to reinvent Ford into a new transportation company capable of prospering in a highly competitive and fast-changing business.

Ford is facing compeititon not only from traditional competitors such as General Motors, Toyota and others. The icon is also battling a new cadre of would-be transportation players who have Detroit on edge.

In addition to Tesla, ride-sharing companies like Uber Technologies, and tech juggernauts such as Alphabet and others are venturing into the transportation domain with smart-car ambitions and revolutionary ideas around fuel.

Palo Alto, Calif.-based Tesla, founded by billionaire Elon Musk, lost hundreds of millions of dollars last year, has yet to turn a profit and last year produced just 84,000 cars. But its rise has put a scare into the legacy automakers such as Ford and General Motors.

Ford is betting that Hackett is up to the job. The University of Michigan graduate is a personal friend of Bill Ford, whose family controls the auto giant through its ownership of voting shares. Unlike most auto executives, Hackett does not have a long history in the industry.

When Hackett joined Ford Smart Mobility, he had been on the Ford Motor board of directors for three years.

"Hackett, together with Bill Ford, will focus on three priorities: Sharpening operational execution, modernizing Ford's present business and transforming the company to meet tomorrow's challenges," according to a news release by the company.

Ford is known for making some unusual CEO choices. Bill Ford in 2006 hired Mulally from Boeing. Mulally privately borrowed nearly $30 billion to rebuild Ford without government assistance. His overhaul of the automaker included forging new agreements with auto unions that saved costs. Mulally retired after putting the company on a solid footing.

Hackett is known as a customer-minded turnaround artist who thinks outside the box. Like Mulally, Hackett's style is reported to be more relaxed and direct than the hard-charging Fields, who had climbed the ranks at Ford to the top job.

The company seems conscious enough about those comparisons that in a news conference the morning of Fields' firing, chairman Bill Ford said "I promised myself I wouldn't compare [Hackett] to Alan this morning because it's not right—they're very different leaders for very different times." But, he said, "I'll break this rule just this once," saying both Mulally and Hackett were the types of leaders able to "capture the hearts and minds of employees" and make them feel that "not only could we win but we were going to win and they were going to have fun on the journey."

Ford could also be hoping an outsider will strike gold again, bringing a fresh set of eyes to a car company that could use a jump-start.

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"It certainly breaks with a long, in-bred tradition," says Noel Tichy, a professor at the University of Michigan's Ross School of Business who has studied CEO succession. Traditionally when it comes to succession, "these guys live in a little cocoon in the greater Detroit area," making Mulally and Hackett more unusual picks.

As the chief executive of Steelcase, where he served for almost two decades, Hackett transformed the business culture of the office furniture company and advocated a more open-office physical space. He stepped down in 2014.

His nontraditional background includes 16 months at the interim athletic director at the University of Michigan, where he is best known for hiring Jim Harbaugh as its head football coach.

Tichy, who said he has worked with Hackett helping with leadership development and consulting for more than two decades, called Hackett a "transformational leader" who's good at team-building and is known for having a reputation for integrity, Tichy said.

The former Steelcase CEO voluntarily recalled wall panels of cubicles at the Pentagon that weren't up to higher fire standards; later reviews said the updated walls kept the fires from spreading on the morning of the Sept. 11, 2001, terrorist attacks, Tichy said of a story that has also been recounted in management guides.

Chris DeRose, a consultant in Ann Arbor, Michigan, who has worked with Tichy and with Steelcase, said of Hackett taking the helm at Ford: "The analogous thing is he would talk about taking Steelcase out of commodity hell. When you think about where the auto industry is, I think there's a pretty clear message that here's a guy who knows how to differentiate in a low-margin, commodity based business."

Thomas Heath and Jena McGregor for The Washington Post.

Ford Motor Co. major events that occurred during Fields' tenure.

July 1, 2014: Ford President and CEO Alan Mulally retires. Mark Fields, who has been Ford's chief operating officer since 2012, becomes president and CEO. Ford's stock is trading at $17.24 per share.

October 2014: Ford launches luxury Lincoln brand in China.

November 2014: Ford starts production of a new F-150 pickup with aluminum sides, which saves weight and fuel economy. It's a big bet on one of the company's most profitable products.

December 2014: Ford ends the year with a 15 percent share of new vehicle sales in the U.S., its biggest market.

January 2015: Ford opens a research and development center in Silicon Valley. The company shocks the Detroit auto show with its new GT supercar.

November 2015: Ford reaches a new contract with the United Auto Workers union. The company promises to create or retain 8,500 U.S. factory jobs and invest $9 billion in U.S. plants.

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December 2015: Ford ends the year with a 14.9 percent share of U.S. new vehicle sales.

January 2016: Ford earns a record pretax profit of $10.8 billion for 2015. But its stock price falls to $11.94 on investor worries that the U.S. market is peaking.

April 2016: Ford announces it's opening a $1.6 billion plant in Mexico and will move small car production there from Michigan. Presidential candidate Donald Trump criticizes the move, even though Ford plans to put new vehicles into the Michigan plant.

June 2016: Ford GT wins the Le Mans endurance race in France for the first time since 1966.

December 2016: Ford ends the year with 14.8 percent of U.S. new vehicle sales.

January 2017: Ford says it's canceling the Mexico plant, winning praise from President Trump.

February 2017: Ford invests $1 billion over five years in Argo AI, an artificial intelligence startup that will help develop a self-driving shuttle due out in 2021.

May 2017: Ford announces it will cut 1,400 U.S. salaried jobs by September in an effort to trim costs. The cuts will be voluntary, and Ford will offer buyout packages.

May 22, 2017: Ford announces Fields is retiring at age 56 after 28 years with the company. Jim Hackett, a former Ford board member and CEO of Steelcase Inc., becomes Ford's new CEO. Ford's stock price rises 2 percent to close at $11.10.

Associated Press

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