By on January 25, 2019

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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.]

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63 Comments on “Ford CEO Issues No-nonsense Letter to Employees, Seeks Doubling of Profits...”


  • avatar
    R Henry

    Hackett’s best contribution to Ford will be to leave the building.

  • avatar
    turbo_awd

    . Sometimes I wish it would be “$x thousand successfully employed” AND $7B profit to boot! Mind you, corporations SHOULD make profits, but not profits at any cost…

  • avatar
    wooootles

    The message is framed very wrongly and/or out of touch, in my opinion. It’s so very CEO-speak.

  • avatar
    jkross22

    Hackett thought this was going to somehow fire up the troops.

    That troubling judgement – more than anything else – spells trouble for the blue oval.

    • 0 avatar
      highdesertcat

      ” spells trouble for the blue oval.”

      IMO, not just the blue oval. Many auto industry analysts and forecasters predict a downturn in new vehicle sales for 2019 and 2020. It already started with the 2018 MY, and will continue to decline worldwide.

      Those of us in the real estate business have already begun to see a reduction in the sales of homes, while at the same time seeing an increase in the demand for rentals (apts, condos, townhouses, and yurts.)

    • 0 avatar
      trackratmk1

      For the vast majority of employees at Ford who are working for a paycheck NOT linked to 7 figure bonuses, they couldn’t care less about the corporate P&L statements. I think this will leave a lot of folks at best bemused, and at worst completely under appreciated for their contributions.

      Does anyone working below the C-suite level in Dearborn feel like they will get a slice of the extra 7 Billion they should earn for the company in 2019?

  • avatar
    seth1065

    I do not know if the Ford workers have faith in him, at least in Mark Fields they had someone who know and grew up in the company. This kind of strikes me as ” the beatings will continue until morale is better” I understand the F150 can hide a lot of sins but it seems Ford is slipping behind their competition.

  • avatar
    Asdf

    If only Ford continues to trim its lineup even further, decimates its workforce in US and Europe, and bends over for the pleasure of the Chinese, everything will be hunky dory in the end.

    • 0 avatar
      highdesertcat

      Hey, demand for Ford F-series pickup trucks is up! And with the new Ranger, sales will pick up even more.

      Queue the Fiesta trucklet, for even more sales.

      America is overwhelmingly choosing pickup trucks and SUVs/CUVs as their primary vehicles of choice.

  • avatar
    conundrum

    Hackett advises employees the beatings will continue until morale and profits improve. Doubling profit, hah. Who got the Blue Oval into the apparent mess it’s in in the first place? The people assembling vehicles? Give me a break – into somewhere sanity reins rather than corporate nonsense: “it’s not our top management’s fault, now you people get to work!”

  • avatar

    Hackett said the same thing nearly a year ago. Until Hackett is fired nothing will change. At least the rail station will be look nice.

  • avatar
    JoDa

    “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.”

    “While I sit here and babble no-nonsense and be mad at myself.”

    Hackett and No-nonsense? Seriously?

  • avatar
    Jerome10

    I don’t work for Ford. I don’t know anyone working for them.

    But I am growing ever more convinced that Hackett is that type of CEO/manager that doesn’t have much talent, shows up at the new job, and tells all the employees to “just get it done” while snapping his fingers.

    I can’t STAND that type of manager. Nothing makes me, or other employees more sick of hearing BS spewing from their mouths than this type of manager. I bet he’s also the kinda guy that’s willing to gut the company so he can hit his profitability targets….for a couple years….before the lack of investment in the future causes the entire thing to fall apart. But he’ll have hit his targets for a couple quarters and be well on his way to Florida and his yacht by the time the thing sinks to the bottom.

    Ford needs to get rid of this guy NOW.

    And I keep wondering to myself how some of the largest companies on the planet keep having such a hard time finding a worthwhile CEO. General Motors has had a string of awful ones. I’m not sure Barra is really much better. Better, yes, but not great. And outside Mulally, has Ford done any better?

    GET RID OF THIS JOKE.

    • 0 avatar
      Menar Fromarz

      Oh, but its the standard mantra of “must have “X%” PTOI or this business group will get sold/slashed/spun off and then sold/whatever”
      I used to work at a US conglomerate, which had a requisite target margin for all its businesses, hit or exceed the number or else, which in our case was selling the underperforming units.
      Not a big surprise Jim’s little fireside chat, but with only one real business, its hard to hit a number consistently without real hit products, which Ford has in some cases and hopes to cull the rest. Problem is there is no room for error and the lead-times are long. Like the “wall st. valuations” or not, but it does say volumes about consensus from the street on their ability to execute.
      FWIW, I’m not sure how realistic that margin expectation is in the current market, and even less so going forward into the future, but that’s just my opinion.

  • avatar
    OE Supplier Veteran

    “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.”

    Is it just me, or does this just sound like adolescent raving?

  • avatar
    Fred

    My company did this awhile back. Asking around a lot of folks suggested we get rid of half the managers. That didn’t happen, but we got a couple of big orders and everyone was happy.

  • avatar
    Vulpine

    Isn’t it funny that both GM and Ford are blaming their workforce for their woes.

  • avatar
    dwford

    Over the last 10 years Ford has made $68 billion in net income. Where did all this money go??

  • avatar
    Michael S6

    Hackett has done a very poor job of communicating Ford’s plans and visions for the future. Wall Street does not like secrecy especially when you are not doing well and thus Ford’s stock is in the Grave. Hopefully with a new line of SUV and trucks Ford’s fortune will improve next year although it will be unrealistic to expect a doubling of profits.

  • avatar
    deanst

    I’d like to point out that Ford made $7 billion last year, and had a 4.4% operating margin.

    Seriously, does anyone edit these posts?

  • avatar
    Master Baiter

    This guy’s an idiot. Financial goals are not a way to motivate an organization.

  • avatar
    Jeff S

    @Vulpine–This is the same tactic that some of the politicians use blaming Government workers for everything that is wrong with the Government. For now the politicians are quiet but wait till 2020 and those Government workers will be blamed for the shutdown. Take peoples attention away for real problems and deflect the blame. Maybe some of these corporations need to hire CEOs from other countries that actual know how to run a company and know something about the product and not pay them these exorbitant salaries.

    • 0 avatar
      Vulpine

      No, Jeff, it isn’t. Having been a union worker myself I understand the benefits of union membership but I also recognize when union LEADERSHIP goes out to screw the companies they work for. The workers would be happy just to have a fair deal and an honest paycheck but the leadership knows they have most of these companies over a barrel. I’ve seen unions drive good-paying jobs offshore because they just had to have that extra $2-$5 per hour on a job that already pays top scale for the skill level. BUT… eventually the jobs go away because the company (or the community) can no longer afford to pay their wages and salaries.

      And yes, corporate and governmental leadership is the same. It wasn’t always so but they all seem to get greedy in the end. Personally, I’m opposed to “professional” government where the top people buy their way into office instead of working themselves up by merit. We wouldn’t be seeing the kinds of issues we have now.

      • 0 avatar
        highdesertcat

        “eventually the jobs go away because the company (or the community) can no longer afford to pay their wages and salaries.”

        Vulpine, I want to commend you for telling it like it is, raw and unadulterated.

        The flip side of the coin is that union leadership believes that it MUST seek these increases or be seen as ineffective and redundant.

        I grew up Democrat in a TWO union household and that exposure motivated me to leave the Democrat beliefs and tenets plus avoid union membership at all costs.

        • 0 avatar
          Vulpine

          @hdc: Interesting. I grew up in a non-union, Republican household. Guess what I am.

          — I’ll bet you’ll be wrong.

          • 0 avatar
            highdesertcat

            Vulpine, I would not dare risk a guess because of the political journey I have taken through my own life.

            Like I said, I started life in a Democrat household. However, when I joined the military my views became definitively Republican, and I registered and voted that way for more than 20 years.

            But once I retired from the military in 1985 I found myself with equal disdain for both political parties. Neither of them could govern and it was like the blind leading the blind in the land of One-eye, Reagan.

            Been a registered Independent since 1 July 1985, and voted for the most qualified candidates ever since, without regard to political party.

            What say you?

          • 0 avatar
            Vulpine

            Registered Republican but vote for best, regardless of party.

          • 0 avatar
            highdesertcat

            Wow!

  • avatar
    Matt51

    Stephen Ballmer at Microsoft used to chant to his audience at the annual Christmas party “Show me the money!”.
    Now the CEO at Ford is whining to his employees “Give me more money”. Never believe the executive management at your company is more intelligent than you are – it probably isn’t true.

  • avatar
    Lightspeed

    So, nothing about helping Ford employees make a better product so maybe more people will buy them and, oh, they’ll make more money?

  • avatar
    Jeff S

    @Vulpine–Federal Government workers are much different than corporations. It is illegal for a Federal worker to strike and Federal unions cannot strike. True unions like the UAW have become greedy but don’t you think that the CEOs and the Board are as greedy? Do you think a CEO like Mary Barra is worth 25 million a year? It is far too easy to blame unions for everything especially if it deflects attention away for poor CEOs and managers. So when a politician campaigns with the position of all Federal workers are overpaid and are causing most of the problems with our country do you believe those politicians? What about shutting down the Government for 35 days and asking those deemed essential employees to work without a paycheck but when a member of Congress is asked why they should take pay during the time of the furlow they say they earned their pay because they are working. Do you really believe that Government unions can stop the Government from recalling employees to work without pay. I get some of the animosity toward unions but are you saying that all unions are bad and that every worker is lazy, overpaid, and doesn’t deserve to be treated fairly. Maybe you are right that only the leaders should call all the shots and the rest of us are little people and should be screwed.

    • 0 avatar
      Vulpine

      Jeff, read what I said again. The issue with unions is at the executive level both in the unions and outside of them. The ‘lowly’ worker gets their candle burned at both ends.

  • avatar
    Jeff S

    @Vulpine–I grew up in a Republican family and my Congressman was George H Bush. The Republican party that I grew up with is not the same party. Fiscal conservatism has gone out the window but extreme right wing ideology has replaced it. If you are a middle of the road person who is fiscal conservative you have no place in the Republican or Democratic party. The new Republicans call me a liberal and a socialist but that is what Reagan would be called today by these Republicans. I shouldn’t have gone off on this discussion but it was not I that abandoned the party but the party abandoned me. Little room in both parties for pragmatism.

    • 0 avatar
      Vulpine

      Believe it or not, JeffS, I agree with you. The only reason I’m still a registered Republican is so I can vote in the primary and at least TRY to nominate somebody more intelligent and/or less greedy than the rest.

  • avatar
    Jeff S

    @Lightspeed–Unfortunately many CEOs could care less about the quality of their corporations products or services. It is more of how can I boost the earnings per share and the stock price to get my bonus because that is what their pay is based on. Short term profits at the expense of long term viability. Once the CEO has gone off to another corporation or retired they are not looking back most don’t care. Obvious from Hackett’s statement that he doesn’t care just so long as he doesn’t get fired and receives his bonus.

  • avatar
    Jeff S

    Personally I believe if they are going to outsource production of vehicles outside of North America that these companies should not get the tax benefits they are currently getting. For sure I believe if GM, Ford, and/or FCA come to the Government to ask for another bailout they should not get one. They have had their chance and I as a taxpayer don’t want to give them anymore loans or bailouts.

  • avatar
    jthorner

    Wow, what a tone deaf “leader”. Does he really think that folks are going to rally around the notion that $7 billion profit just isn’t enough?

    I wonder how many Ford employees think the whole “ditch all the cars” and “we are all in on vapor ware self driving electric mobility” executive plans are something they are lucky to help make happen …. all while wondering which executives are going to pay themselves handsome bonuses for pushing through layoffs, which layoffs either will put said employee out or work or will result in more confusion, work and stress for those lucky enough to be left working.

  • avatar
    JoDa

    I don’t think you can associate “No-nonsense” with an American MBA. I think it’s illegal.

  • avatar
    namesakeone

    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!

  • avatar
    danio3834

    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.

    • 0 avatar
      DenverMike

      Electric vehicles, ride sharing, etc, aren’t exactly rocket science, but a big company can spread whatever losses over high-volume, very profitable vehicles.

      More so as they ditch the less profitable cars and outright losers.

      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?

      • 0 avatar
        danio3834

        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.

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