Ford CEO Issues No-nonsense Letter to Employees, Seeks Doubling of Profits

Matt Posky
by Matt Posky

Ford’s chief executive, Jim Hackett, told employees Thursday evening that 2019 cannot be a repeat of last year.

“2018 was mediocre by any standard,” Hackett said in an email to employees. “Yes, we made $7 billion last year. But think of it this way: this represents a 4.4 percent operating margin, about half what we believe is an appropriate margin. So we are aiming for much closer to $14 billion.”

Despite being at the helm of The Blue Oval for nearly two years. Hackett’s Ford continues to endure a slipping share price and a market cap of 34.5 billion — substantially less than General Motors’.

“I become mad for a short time. Likely mad at myself, but also because I know we are better than that,” the CEO said of Ford’s current situation. “I know that our competition hasn’t been better than us by magic.”

Reuters, which was the first to report Hackett’s letter to staff, outlined recent moves aimed at making the company more competitive, while also citing its current financial situation. Ford, which announced fourth-quarter results on Wednesday, reported a $7 billion operating profit for 2018, with a profit margin of 4.4 percent. That’s significantly less than 2017’s 6.1 percent, but last year wasn’t particularly kind to the industry as a whole — giving Ford an easy out that Hackett wisely isn’t interested in taking.

He claimed it was “time to bury [2018] in a deep grave, grieve over what might have been and become super focused on meeting, and, in fact, exceeding this year’s plan.”

Ford’s already trimming down its lineup and restructuring its global operations, including plans for widespread job cuts in Europe. It also recently announced an alliance with Volkswagen to jointly produce commercial vehicles before potentially moving on to co-developed electric and self-driving vehicles. Hackett claimed Ford accelerated its timeline for the introduction of new EVs and the electrification of its broader portfolio since taking the helm of the company.

Hackett’s letter also asked what the company could do about China, a region where General Motors has thrived and most other automakers see a future, but Ford has repeatedly struggled with.

[Image: Ford Motor Co.]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Namesakeone Namesakeone on Jan 28, 2019

    Somehow, I don't believe this is all on Mark Hackett. His board, like a lot of stockholders, demands huge results at any cost. What usually happens is the executives capitulate, the stock goes up quickly and dramatically, and...the stockholders sell for a quick profit and go after someone else's company. And everyone's happy. Well, everyone except the employees that got laid off, the employees that are about to be laid off (from a severely weakened company), the customers who have an inferior product, the dealers who now have to sell an outdated product (because the R&D teams are usually the first to go), and the stakeholders. But the executives get their bonuses, and the stockholders got their profits, so they're happy enough for all of them!

  • Danio3834 Danio3834 on Jan 28, 2019

    He's concerned about margin, yet so far most of the plans and direction we've heard are margin constraining. Mass electrification, mobility dead ends, making their highest margin vehicles with needlessly expensive materials and tech. With all this whiz bang talk, they can't seem to get customers to pay more to make up for increased costs. Ford needs to wake up and realize that it's a mainstream automaker and not some glamorous tech company. Wall Street isn't buying it and neither do customers. They've made a move to cut cars which will improve margin but decrease revenue. I'm not saying they shouldn't have done that because I don't believe they could effectively increase margins on cars. But while the margin looks better on paper, you can't put margin in the bank either.

    • See 1 previous
    • Danio3834 Danio3834 on Jan 29, 2019

      @DenverMike Not sure if you read what I wrote or not. Anyway: >Electric vehicles, ride sharing, etc, aren’t exactly rocket science, but a big company can spread whatever losses over high-volume, very profitable vehicles. This is a big part of the margin erosion problem. >Less revenue, less sales doesn’t necessarily mean less net profits. If Wall Street can’t understand this, why should anyone care what they think? Everyone understands this, especially Wall Street. They aren't being punished for cutting cars, on the contrary. They're being punished for their hubris of a plan to be "Mobility" and all the talk about how many profit sucking EVs they will crank out without elaborating on how they will actually improve their margins.

  • Bkojote Allright, actual person who knows trucks here, the article gets it a bit wrong.First off, the Maverick is not at all comparable to a Tacoma just because they're both Hybrids. Or lemme be blunt, the butch-est non-hybrid Maverick Tremor is suitable for 2/10 difficulty trails, a Trailhunter is for about 5/10 or maybe 6/10, just about the upper end of any stock vehicle you're buying from the factory. Aside from a Sasquatch Bronco or Rubicon Jeep Wrangler you're looking at something you're towing back if you want more capability (or perhaps something you /wish/ you were towing back.)Now, where the real world difference should play out is on the trail, where a lot of low speed crawling usually saps efficiency, especially when loaded to the gills. Real world MPG from a 4Runner is about 12-13mpg, So if this loaded-with-overlander-catalog Trailhunter is still pulling in the 20's - or even 18-19, that's a massive improvement.
  • Lou_BC "That’s expensive for a midsize pickup" All of the "offroad" midsize trucks fall in that 65k USD range. The ZR2 is probably the cheapest ( without Bison option).
  • Lou_BC There are a few in my town. They come out on sunny days. I'd rather spend $29k on a square body Chevy
  • Lou_BC I had a 2010 Ford F150 and 2010 Toyota Sienna. The F150 went through 3 sets of brakes and Sienna 2 sets. Similar mileage and 10 year span.4 sets tires on F150. Truck needed a set of rear shocks and front axle seals. The solenoid in the T-case was replaced under warranty. I replaced a "blend door motor" on heater. Sienna needed a water pump and heater blower both on warranty. One TSB then recall on spare tire cable. Has a limp mode due to an engine sensor failure. At 11 years old I had to replace clutch pack in rear diff F150. My ZR2 diesel at 55,000 km. Needs new tires. Duratrac's worn and chewed up. Needed front end alignment (1st time ever on any truck I've owned).Rear brakes worn out. Left pads were to metal. Chevy rear brakes don't like offroad. Weird "inside out" dents in a few spots rear fenders. Typically GM can't really build an offroad truck issue. They won't warranty. Has fender-well liners. Tore off one rear shock protector. Was cheaper to order from GM warehouse through parts supplier than through Chevy dealer. Lots of squeaks and rattles. Infotainment has crashed a few times. Seat heater modual was on recall. One of those post sale retrofit.Local dealer is horrific. If my son can't service or repair it, I'll drive 120 km to the next town. 1st and last Chevy. Love the drivetrain and suspension. Fit and finish mediocre. Dealer sucks.
  • MaintenanceCosts You expect everything on Amazon and eBay to be fake, but it's a shame to see fake stuff on Summit Racing. Glad they pulled it.