By on July 26, 2018

2018 Ford F-150 , Image: Ford

It’s generally agreed that former Ford CEO Mark Fields was shown the door after failing to turn around the company’s steadily declining stock, but his successor hasn’t had any success on that front, either.

Jim Hackett took over in May of 2017 and, despite an ongoing cost-cutting program and numerous new model (and technology) promises, Ford’s share price shows no lift. Wednesday’s earnings call was easily the worst of Hackett’s tenure.

As Bloomberg reports, no member of the Detroit Three went unscathed yesterday. Headwinds in China, rising commodity prices, and new tariffs took a bite out of earnings, with all three automakers adjusting their annual profit forecasts downward.

Ford had the worst showing. Revenue from its automotive division fell by $1.2 billion in the second quarter of 2018, with Europe and especially China posing a major problem. Both regions saw a combined loss of nearly half a billion dollars. Chinese Ford sales fell by 25 percent over the first half of the year, and it’s worth noting that the country’s retaliatory tariffs only took effect this month.

While Hackett claims his $25 billion-plus streamlining plan continues to “take hold,” investors weren’t happy to see profit per share fall to 27 cents — below expectations. That’s half of what Ford saw in Q2 2017. On Wednesday, Ford’s share price dipped to a 52-week low, flirting with the $10 mark.

According to CNBC, Ford’s head of global markets, Jim Farley, called the overseas results “unacceptable,” while CFO Bob Shanks forecasted more pain in the months ahead. The United States’ tariffs on steel and aluminum will likely cost the company $600 million in profit by year’s end, he said. In a statement, Hackett said, “We’re clearly committed to redesigning and restructuring the underperforming parts of our business.”

An investor meeting scheduled for September is now off, with no word on when it will be rescheduled.

Adam Jonas, analyst at Morgan Stanley, wasn’t reassured by what he heard. He got into it with Hackett after the CEO stayed tight-lipped on the company’s restructuring.

“I really do hope you can reconsider the communications strategy, because it’s just not good enough, Bob,” Jonas said. The analyst, no doubt thinking of Fields, asked Hackett if he expected to still have his job by the time the investor meeting rolls around.

“Hell yes, I expect to be in front of everybody declaring where we’re going and what we want to get done,” Hackett replied. “There should be zero question around that.”

[Image: Ford Motor Company]

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38 Comments on “Hackett’s Much-needed Stock Boost Is Nowhere in Sight...”


  • avatar
    silverfin

    Hopefully the new Ford Ranger pick-up coming to the US market in January of 2019 will be a hit and provide a new source of revenue for Ford. In reviews from the Australian and South African markets it trounces the Chevy Colorado in every category. It appears that the dimensions and character of this truck will not change much for the US market which means it is slightly smaller that the Toyota Tacoma and usually gets better scores on most fronts except resale vs the Hilux. I will be cross-shopping this against the 2019 VW GTI (dont ask!). If it can be flat towed behind my Class A diesel motorhome and has no fatal flaws it’s a buy.

    • 0 avatar
      ajla

      I anticipate the Ranger will do very well for Ford.

    • 0 avatar
      Big Al from Oz

      silverfin,
      Ford’s problem is overheads ….. commodities ….. The Trump Tariffs on metal.

      Prior to the Trump Tariffs Ford whined that commodity price impacted their bottom line.

      Aluminium ain’t as cheap as steel to buy, use, fabricate.

      Then Ford’s Chinese sales have tanked, again before the Trump Tantrums towards China.

      Then you have the impact of Trump’s Trade Tirade pushing up the US dollars compounding the uncompetitive Trump Tariffs.

      Ford is gonna’ find it challenging. All that’s needed is a Trump induced recession, I’ll call it a Trump Slump to make things more interesting.

  • avatar
    seth1065

    And somewhere Mark Field’s is drinking a glass of scotch and laughing. Tough times for all US automakers but it seems GM is setup better for the long run vs Ford. I will leave FCA out since they are their own mess.

  • avatar
    NN

    The stock market rewards projected and perceived growth (see Tesla).

    Who wants to buy the stock of a company whose business plan is to shrink? I sold all my Ford stock earlier this year after holding a position for the past 10 years.

    IMO it doesn’t matter that crossovers and trucks are where today’s profits are. What about tomorrow? In China, just this past month, crossover sales crashed and sedans were the growth market. Cars will come back into vogue here and Ford will have none.

    Detroit chases today (all trucks and crossovers!), but by the time they get there, it is tomorrow. Ford’s plan for tomorrow is “Mobility” which doesn’t mean anything when there is no tangible way yet to determine how profits will be derived from it.

    Look at their Ranger–coming for 2019! 10 years late!

    I can’t wait for the 2030 Focus to come back and storm the market!

    Ford is chasing instead of leading and completely lost.

    • 0 avatar
      200k-min

      Agree completely. My major complaint about public companies and the executives that run them is they are too focused on share price and not enough on the actual business they are in. Ford sees CURRENT sales and sees traditional sedans aren’t a profit center so they axe them. OK, that works for TODAY, but you don’t know what works for TOMORROW. That’s why you need to be a full line manufacturer… I think Wall Street is punishing them for their foolishness. When I invest I look into how well I think the company will do in the future.

      I like Ford and want to defend them but they are setting up a horrible position for the next oil spike, I sure as heck wouldn’t buy the stock.

      • 0 avatar
        StudeDude

        In this case, it’s all about the Ford family. They still control the majority of shares one way or the other.

        • 0 avatar
          DenverMike

          Family owned businesses are free to think outside the box, and not under the gun of stockholders that have their own interests at heart, and probably know very little about business.

          There’s also the popular “Monkey See Monkey Do” approach to running a corp.

          But it’s the whole mentality that somehow taking sales away from your competitor, just to take them away, will improve your business, even if you have to take a loss in doing so.

          I understand the “Loss Leader” aspect, when there’s prize at the end of the rope. Otherwise it’s just a loss.

          An automaker or any business focusing on their strengths, doubling-down on them even, streamlining their business model along in the process and cutting slack, is seen a negative and or poor decision making?

  • avatar
    JimZ

    “The analyst, no doubt thinking of Fields, asked Hackett if he expected to still have his job by the time the investor meeting rolls around.”

    why do these analysts expect instant turnarounds? you’d think the industry’s typical long lead times would be no secret by now.

  • avatar
    EBFlex

    Fields was set up to fail. He had to fix the massive mess than Mulally left and he wasn’t given enough time. Then they brought in a furniture salesman and expected to see an increase in profit and, no surprise to anyone, that didn’t happen.

    Maybe someday Ford will have a competent CEO.

  • avatar
    DeadWeight

    The next scalp to he taken will be Hackett’s. I’m pretty good at this stuff and am predicting that he will be gone in less than 2 years, and likely by the end of 2019 (so let’s call it 15 months).

    The truth is that GM, Ford and FCA have some pretty serious structural problems, global headwinds, and cyclical issues right now, but Ford is in by far the worst shape, and being viewed Hoyer-critically (for good reason) by competent auto analysts as it is engaged in really, really idiotic investments right now, had rapidly shrinking margins, and even has gone so far to postpone an investment conference call indefinitely citing that it would be better held when more precise information is available.

    Hackett is to Ford what Wayne Fontes was to the Detroit Lions.

  • avatar
    DeadWeight

    p.s. -‘p Seriously TTAC, FIX YOUR WEBSITE.

    I realize it’s free to view and post (excluding the ad assault and analytics data gathering), but the log-out/log-in bug, posting of comments whenever at random times, and other issues are getting really, really old.

  • avatar
    Sub-600

    Is the Ranger going to be a Ranger or is it going to be bigger than a ‘97 F-150?

    • 0 avatar
      ajla

      It’s a “mid-size” truck. Looking at the dimensions, it is nearly smack in between the size of a ’97 Ranger and a 10th gen F-150 supercrew.

    • 0 avatar
      igve2shtz

      Coming from someone who has owned a ranger, owned a 2003 and a 2008 F-150, the Ranger will be a nice size, and compares closesly to the Explorer Sport trac

      Using Australian dimensions (will be close to US spec, but maybe not exactly)

      Length:
      New Ranger: 213.6 (either config)
      2010 Sport Trac: 210.2
      2003 F-150: 222.3″ (SuperCab, 6.5′ bed) 226.2 (SCrew, 5.5′ bed)
      2018 F-150: 231.9″ (either config)

      Width (excl mirrors):
      New Ranger: 73.2 (either config)
      2010 Sport Trac: 73.7
      2003 F-150: 79.5-79.9
      2018 F-150: 79.9

      Wheel Base:
      New Ranger: 145 (either config)
      2010 Sport Trac: 130.5
      2003 F-150: 138.8 (either config)
      2018 F-150: 145 (either config)

      To sum up, a new Ranger will be 18″ shorter than a 2018 F-150, and more importantly, 6.7″ narrower.

      It is importatnt to note that the dimensions between a 1998 and 2018 F-150 are not that much different. the 2018 grew 5 inches, but width stayed the same. Ground clearance, loading height, hood height and grille shape have all grown to make it appear much bigger.

      To me, the Ranger interior is the size of a Focus, whereas the F-150 interior is bigger than a Taurus. All depends where you place your priorities.

  • avatar
    StudeDude

    Hackett will be out sooner than later per DW. Jim Farley will be next in line.

  • avatar
    Jerome10

    I have always found it idiotic when companies chase stock performance.

    I get the markets are broken, there is no way companies like say Tesla, or Netflix, maybe amazon, Facebook etc should be priced where they are. Ford, and others, probably wondering why when they can actually produce profits their stock goes nowhere.

    Perhaps I’m old fashioned, but the stock should reflect the performance and ability of the company behind it to generate $.

    And Ford is flailing around like crazy, zero vision, just throwing massive money around and see what sticks. Cost cutting to profitability rarely seems to go well for any company beyond a very short term. And it isn’t like Ford doesn’t have some issues where they should be spending MORE money to fix them, not less.

    Then you got an odd product plan, billions flowing around on iffy far in the future mobility, problems in Europe (Europe economy is a mess in general, for most companies, I actually believe GM bailing was a very good move), problems in the only real growth market, and a CEO that doesn’t appear to have a plan or to be a steady leader….

    And Ford winders why the stock doesn’t go up?

    Obsession with stock price and short term moves to boost that price while leaving the long term a big question mark are just not gonna work, for the stock and for the company.

    Anyone know what Hackets incentive package is? Are we looking at a guy who’s only care is hitting $15/share within 3 years, the rest be damned, and he’s out on his yacht for retirement?

    • 0 avatar
      dwford

      “Anyone know what Hackets incentive package is? Are we looking at a guy who’s only care is hitting $15/share within 3 years, the rest be damned, and he’s out on his yacht for retirement?”

      Yes. And that’s the problem.

  • avatar
    tomLU86

    With long lead times for REAL THINGS, there is no magic bullet.

    Fields may not have been Bob Lutz, or even Mary Barra, but he knew a lot more than Hackett.

    Perhaps I underestimate Hackett’s motivational skills to get a large enterprise to aggressively cut costs and improve, because I am tired of hearing this BS at work and reading about it in the media.

    I certainly don’t underestimate his political skills (that is the one area all US execs are good at). However, intellect and imagination are obviously not his strong suits, since he must envision a world of cheap fuel, where people earning slave wages can assemble vehicles for US consumption, hence Ford no longer needs small cars. Getting rid of small cars is the only notable thing Hackett has done, and it will prove to be a very expensive mistake for Ford, the company, and the heirs (who profess to love the planet so much).

    When truck sales decline, as they inevitably well (just like ‘personal luxury’ coupes a generation ago did, and sedans have, the F150 Motor Company will have some serious challenges.

    • 0 avatar
      DenverMike

      Sedans are extremely overrated. What’s so “challenging” or Rocket Science about them?

      If they sell an SUV, FWD based especially, they already have a “sedan” (plus a lift kit). The Ford Ecosport is just a high-rider Fiesta. Check out how many current sedans share platforms with SUVs/CUVs.

      When truck/SUV sales decline, a company like “F-150 Motors” could basically whip up a sedan in a matter of months, if not weeks, assuming they don’t already keep a pre-production “mule” running around, at all times. Or a real/production sedan, same SUV platform, running around Europe.

      Plus an automaker like “F-150 Motors” would be raking in ungodly sums of money in the interim, not wasting a stupid chunk of it on loser sedans, while waiting around for the next oil crisis to hit.

      • 0 avatar
        AVT

        Except you have to go through regulatory approval and such which unfortunately does not happen over night. Also, the assembly lines would have to be redone to accept the new vehicle even if they are on the same platform. Then theirs the tooling cost and design and teething issues with any new model. Then theirs sourcing the production and such. While ya they probably have the capability, the difference is capability does not represent the reality of actually doing it.

        • 0 avatar
          DenverMike

          A complete change in buying habits likely wouldn’t happen overnight, especially with fleets, government issue, etc.

          Life’s a gamble either way. I’ve been successful in business, longterm by stockpiling cash (hoarding real estate, muscle cars, etc) capping growth, while competitors have gone bankrupt spending/spreading themselves too thin, in hopes of dominating the market.

          The “full lineup” mentality is obsolete same as Halo Cars. This isn’t 1962. Just as in theives, there in no honor among buyers. They cherrypick from every segment. F-150 for dad, 3-series for mom, Versa for daughter, and so on. When do you see a driveway filled with the same Make?

    • 0 avatar
      TW5

      @ tomLU86

      Abandoning sedans was the smart thing to do. For generations sedans have been getting more cramped, less powerful (generally), and lower to the ground to satisfy CAFE requirements. Americans slowly walked away during the 80s and 90s, and now that CUVs have reached critical mass, sedan sales are in relative free fall.

      More importantly the US footprint-specific regulations are at odds with mass-specific regulations and consumer demand in other markets. Europeans have no need for vehicle wheelbases to extend or for vehicle track to widen. Despite what we’ve been told by previous administrations, there is no common ground between our regs and mass-specific regs in other markets. The only way to reconcile the competing demands of regulators is to spend extraordinary sums on powertrains; therefore, the new game is the same as the old game but now with higher costs.

      Embracing CUVs was smart. They can streamline product development and abandon unprofitable segments in the US. Their cars can be built to the mass-specific standards used in Europe and elsewhere.

  • avatar
    DeadWeight

    Whisper rumor that Ford is about replace Jim Hackett with Elizabeth Holmes.

  • avatar
    hreardon

    The reason why share price is so important is that when a stock falls too low, the risks of a hostile takeover become significant. See: Chrysler Corporation, mid-1990s and Kirk Kerkorian’s attempt.

    Ford stock was $17/share in 2014. It’s at $9.96 today. It peaked at $34 in 1999.

    For comparison, Volkswagen is E144/share (up from $106 at the start of dieselgate), GM is $39/share, FCA is $19, Toyota is $133.

    So yes, I’d say there is legitimate concern about the share price.

  • avatar
    AVT

    While I don’t own any stock in Ford, I can understand why I’d be pissed if I was an investor in it. If you pull up the stock values for the last 5 years (excluding tesla, as they represent somewhat of a outlier) of the big 3, FCA has made significant gains, GM seems to have stagnated, but at a somewhat higher value as of late, and ford has been declining. Obviously the market has expanded since 2014, so assuming ford was at least matching their competitors, you’d at least expect to see the price either be stagnating or slightly increasing. So the question becomes, what is ford doing (or not doing) that GM and FCA are? All three have remarkably similar lineups as of late and all 3 rely mostly on the domestic market for the majority of income. And just for a frame of reference, fluctuations in the stock price of VAG and Toyota can be greater than the entire value of ford stock as of late. Granted, VAG and Toyota differ greatly from the big 3 with much larger volumes and far larger market reach. I think what scares investors more than anything is ford does not seem to have very good control over the variable costs. GM/FCA don’t expect to suffer anywhere near the amount ford does with regards to their material costs. I think the bigger issue that seems to really hurt them though is warranty repairs. Ford has spent considerably more than both GM and FCA in regards to paying out for warranty repairs over the last decade. Thats something ford has admitted is a problem for them but they still don’t seem able to resolve it. Why not? Things like this by themselves don’t seem like a large problem but suddenly you add them all together and whoa, so thats where that extra billion or so in profit got spent on. Compound that over the course of a few years and ya, I’d be rather unhappy as an investor.

  • avatar
    James2

    “The reason why share price is so important is that when a stock falls too low, the risks of a hostile takeover become significant. See: Chrysler Corporation, mid-1990s and Kirk Kerkorian’s attempt.”

    Yeah, but… the Ford family’s stake is the ultimate poison pill and also the reason why the stock is stuck.

  • avatar
    TW5

    Ford is fine. Panic has set in because we have a glut of capital in the US, and Wall Street is spinning itself in circles trying to find a profitable place for it to land. Contagion is driving the market so everything is relative. EPS is almost irrelevant. If you’re underperforming your sector, you’re vulture vittles.

    The CUV boom has created a half dozen new segments, and Ford need not cater to the rental fleet customers by pursuing cars in the US. Streamlining the product portfolio in the US will take time, but it will pay off. Ford’s euro-centric focus on passenger car development will pay off in the long run as well, and the Lincoln brand will rise over time.

    Ford will shrug off its woes in China and make inroads in Europe.

  • avatar
    V16

    Outside of the current F Series, what vehicle in the Ford lineup is considered category leading?
    The stock price is a negative answer to the above question.

  • avatar

    For the first time since the recession Ford’s stock is in the single digits (9.86usd). The shocking announcement that Ford was cancelling their entire carline was seen as a desperate not strategic move. It was suppose to prop up Ford’s stock price, but has done just the opposite. With Fields in charge Ford had a decent lineup of cars and trucks. Now Hackett has made Ford into a one trick pony that will be almost totally reliant on trucks and SUVs. The next scenario to this sad story is once loyal dealerships will be leaving Ford for greener pastures.

    This is the one car company that is should be on a dead watch. Please no more stories praising Fords one dimensional truck line. I am sick of F-150 stories. One successful product does not make a company. Besides GM sells far more trucks and SUVs than Ford does. They are also still selling cars.

    • 0 avatar
      DenverMike

      It reminds me of my favorite burger joint “franchise”. They’re family owned, and keep it under 400 locations in the south west only.

      Just burgers, fries, drinks and shakes. No breakfast, open at 10. If you want a taco, burrito, chile relleno, churro, etc, you’re plumb out of luck.

      Yes no stockholders to tell them what to stuff in the menu. Technically they shouldn’t exist.

      And it’s the busiest place in town, most places. They keep it simple, nothing frozen, all fresh and delicious. No other place can do that, I guess.

      • 0 avatar
        DeadWeight

        I really miss In-N-Out and go there every time I’m in west for biz.

        I try to keep a clean diet but definitely make exceptions for places as well-run, immaculately clean, with tremendously “punch way above their weight” quality as In-N-Out.

        Their menu is a perfect model of simplicity yet orders can be customized (e.g. 3×3 Animal Style).

        Their employees are incredibly well-trained to be incredibly friendly, polite and efficient.

        It doesn’t even bother me that they print biblical references on their burger wrappers, cups, etc. – they even manage to do this in a totally subtle, non in-hour-face way, and it wouldn’t surprise me if unlike many people “of relogious faith” that they’re genuine, and not hypocritical blowhards (reason I no longer belong to organized, institutional religion I was raised in accordance with).

        • 0 avatar
          DenverMike

          “3X3” is 3 patties, 3 cheese slices, for those wondering. I’ve had a 4X4 (their biggest) but at one time, there was no limit and would pile them on as high (laying on it’s side) as you wanted!

          Animal Fries are great too. But how dare they “break out” of the traditional, written in stone, fast-food, burger joint, 90 damn things on the menu, business model?

          If they were a Wendy’s or something, and decided out of nowhere to narrow their entire menu to just burgers and fries, stockholders would freak the hell out! And rightly so. What do you think would happen to stock prices?

          Toyota, Nissan, Honda couldn’t do what Ford is doing, and really have no reason to. They have a stronghold on sedans/coupes/subcompacts, but definitely couldn’t live off their “trucks” alone.

          Toyota, Nissan, and Honda are like the McDonald’s, Jack in The Box, and Burger King of the new car scene.


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