Will Ford's CEO be driven out due to poor business?

Ford's CEO James Hackett (right) and a team member revealing the company's first mass-market electric car, the Mustang Mach-E, at an event in California last November. Under Mr Hackett's watch, Ford lost US$1.7 billion (S$2.36 billion) in last year's
Ford's CEO James Hackett (right) and a team member revealing the company's first mass-market electric car, the Mustang Mach-E, at an event in California last November. Under Mr Hackett's watch, Ford lost US$1.7 billion (S$2.36 billion) in last year's fourth quarter.PHOTO: AGENCE FRANCE-PRESSE

Mr James Hackett must be feeling the heat at Ford Motor.

He was put in the driver's seat in May 2017 at the Detroit carmaker, but he is finding success elusive.

Witness the company's surprise US$1.7 billion (S$2.36 billion) fourth-quarter loss, unveiled on Tuesday afternoon; analysts had expected a US$650 million profit, according to Refinitiv data.

That is bad enough - chairman Bill Ford and the board ousted Mr Hackett's predecessor Mark Fields after just three years.

But overhauls at rivals, as well as Tesla's surging valuation, pile on even more pressure.

At one point during regular trading hours on Tuesday, Tesla's shares had surged ahead almost 24 per cent, adding some US$34 billion to the electric-car maker's valuation.

That surge alone is just a couple of billion dollars shy of Ford's entire market capitalisation.

Even after falling back somewhat, boss Elon Musk's outfit has doubled in value this year.

Granted, that is bonkers - the car sales or robo-taxi fleets needed in the next few years to justify that are highly unlikely to materialise.

But if nothing else, it emphasises the big role electric and autonomous vehicles are bound to play in the industry.

Ford, along with many traditional rivals, is a slow coach on both fronts.

Tesla's unwarranted stock surge is no reason to ditch a chief executive. More worrying for Mr Hackett are the overhauls at some of his long-time peers.

BMW, Daimler, Nissan Motor and Renault all have two things in common. Their shares are the only ones of the major carmakers to have performed worse than Ford's since Mr Hackett took over; and each of them has replaced its boss since the start of last year.

Granted, Mr Hackett is engaged in a multi-year overhaul of the company.

But so was Mr Fields. And the fruits of the current labour are being pushed further out.

Ford on Tuesday also trimmed its forecast for this year due to high warranty costs and slowing profit at its all-important lending division, Ford Motor Credit.

The almost 10 per cent drop in the stock after hours may get Mr Bill Ford and the board to wonder whether Mr Hackett should be the next automotive boss to be a victim of business Darwinism.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 08, 2020, with the headline 'Will Ford's CEO be driven out due to poor business?'. Print Edition | Subscribe