Among Detroit auto companies, Ford Motor has been the most vocal about the need to adapt to the new future of transportation.
Its executive chairman, Bill Ford Jr., has talked for years about the need to balance transportation modes with protecting the environment. The company has taken office space in a shopping mall near its Dearborn, Mich., world headquarters for an effort to come up with new ideas.
Unfortunately, its investors have not been convinced Ford was moving fast enough. Ford shares have fallen nearly 40 percent since 2014. And now, that perception has cost CEO Mark Fields his job.
Ford announced Monday that Fields will be replaced by James Hackett, who has been in charge of Ford Smart Mobility, the new division that is tasked with the company’s efforts on self-driving cars, ride sharing and everything to do with mobility.
Bill Ford and Jim Hackett outline plan for a more dynamic Ford, focused on improving people’s lives and creating value for all stakeholders. pic.twitter.com/uZEDduUX9X
— Ford Motor Company (@Ford) May 22, 2017
The swift action, which was barely rumored for a week, puts mobility front and center among Ford’s priorities.
Under the old rules by which car companies played, Fields should have had a solid grip on the company’s operations. Ford, like other Detroit carmakers, has enjoyed recent record profits based on strong sales of pickups and sport utility vehicles. It even posted a $2 billion profit last year in Europe, long a sore spot.
But the old rules are no longer how car companies are judged. The competition is no longer between Detroit, Tokyo, Korea and Germany. The Americans have to prove they can keep up with Silicon Valley companies, such as Google, Apple and especially Tesla, which has become a darling of the technology world for its electric vehicles.
Earlier this year, Tesla’s market capitalization — the value of its outstanding shares times its stock price — exceeded that of General Motors.
GM, meanwhile, has been shedding operations in Europe as well as places like India and South Africa, as it also embarks on an effort to compete in the mobility sweepstakes. And Fiat would love to find a buyer for Chrysler so it can speed up its worldwide operations.
“We have to modernize the business,” Ford executive chairman Bill Ford Jr. said Monday.
But, that is a big challenge for Ford, as well as the other Detroit companies. They were devastated by the Great Recession last decade, seeing auto sales drop 40 percent in 2009. Ford escaped the need for a federal bailout by refinancing its operations, and executives understandably vowed they would never experience another such scare again.
However, in order to finance their global businesses, the companies have to earn billions of dollars a year in profits. And right now, the business case simply is not there for a wholesale shift away from the internal combustion engine.
That’s the situation into which Hackett steps. Aside from his scant year in Ford’s mobility wing, he has no formal automotive experience. He served as the chief executive at office furniture maker Steelcase, and he spent a memorable stint as the interim athletic director at the University of Michigan, his alma mater, where he played football for legendary coach Bo Schembechler.
Hackett had no sports background beyond his time on the playing field, yet he recruited one of the most high profile coaches in college football, Jim Harbaugh. He arranged a contract with Nike and he hired Ward Manuel from the University of Connecticut as his replacement.
Can he score as well for Ford? The company’s future is resting on the answer.