Ford CEO Jim Hackett stepping down

Hackett, 65, elected to retire, the company said in a news release Tuesday, and will be succeeded by Chief Operating Officer Jim Farley, 58, effective Oct. 1. Farley was also elected to the board of directors.

The leadership shake-up comes at a critical time for Ford, one that both executives and analysts say was a long time coming. The 117-year-old auto giant was looking for a reboot when Hackett took the helm in 2017. He has been credited with streamlining operations while balancing an $11 billion restructuring program and several crucial product launches against growing competition from such companies as Tesla, Apple, Baidu and smaller start-ups. The pandemic and ensuing recession have slashed revenue and its stock price; Ford shares have lost more than a fourth of its value since the start of the year.

In Farley, Ford gets a 30-year industry veteran who left Toyota in 2007 - during the Great Recession - to head up global marketing and sales. He went on to lead Lincoln, Ford South America, Ford of Europe before taking on all of Ford's global markets. On Tuesday's conference call, he referenced his grandfather, who began his career at Ford's Highland Park, Ill., plant in 1913 - the same year the automaker launched the world's first moving assembly line - as part of his heritage.

"My unbridled enthusiasm and humility in being asked to lead Ford at this time is rooted in the desire to serve our customers, our team and most of all, these values," Farley said during a Tuesday conference call. "Yes, I'm my own man, but we have a tremendous team at Ford and I'm really optimistic."

Hackett and Farley partnered on Ford's Creating Tomorrow Together, the company's growth initiative, which overhauled product strategy and moved the company away from sedans. In April 2019, Farley took over the new businesses, technology and strategy team, overseeing software platforms, AI, automation and new methods to integrate technology within the company. He was named chief operating officer in February.

"Jim [Farley] is a car guy through and through," Ford Executive Chairman Bill Ford said during the call. "He can be found on weekends, often at racetracks, racing his vintage cars, and it's his joy."

David Whiston, a Morningstar equity strategist who covers the U.S. auto industry wasn't surprised by the succession - he expected it after Farley was named COO. When clients came to him in the past asking when Ford's stock would move up, he advised them to wait for a new CEO.

"A lot of the difference may just be more in communication style," Whiston said. "It's not a secret if you listen to earnings call. There are people out there who are frustrated with Jim Hackett."

When Hackett took over as chief executive in May 2017, Ford stock was trading shy of $11 a share, Whiston said. It closed Monday at $6.69, a roughly 40% decline. Whiston said it will take time for the stock to bounce back - it jumped 2.5% after Tuesday's announcement to close at $6.86 - but he said he's hopeful Farley can do what his predecessors couldn't.

Hackett, who said he's been thinking about retirement since the spring, will stay on in an advisory role through March 2021.

"It will be seamless because these guys have worked together so closely for these last three years," Bill Ford said during the call. "We have lots of work ahead of us to really complete our mission, but thanks to Jim we are a really different company than we were three years ago."

Last week, the automaker delivered better-than-expected second-quarter results in the face of rolling shutdowns of its plants around the globe. It posted $19.3 billion in revenue, according to an earnings release. That's a nearly 50% drop from the nearly $39 billion recorded in the year-ago period.

During Hackett's three-year stint as chief executive, he focused on modernizing the 170-year-old company and revamped its product vision, notably with the Mustang Mach-E, new F-150 and Bronco line. Hackett said he takes pride in what he's accomplished at Ford.

"How to get [Ford] to recognize what is really powerful about who they've been but more promising about who they can become . . . that takes time," he said during the call. "It's about transformation, it's about working on the bureaucracy, how decisions are made, how reasoning is done."

Bill Ford expressed gratitude for Hackett's leadership during the coronavirus crisis. "He moved us very quickly to protect our business, and then he stepped up to help our country in a time of need," he said.

Ford halted most of its global production in late March and started a phased-in reopening in May. During its second quarter posted almost $46 billion in debt, according to the company's earnings report.

Farley said Ford will continue to focus on its growth initiatives, such as self-driving cars, the software business and underperforming global markets, as well as its commitment to its customers.

"I'm feeling fantastic about our ability to compete with new competitors," like Tesla and Baidu, he said during the call. "Look, I took almost a year out of the core business to really learn about this technology and these new competitors, so I'm saying that from a perspective of learning and listening to these new competitors themselves."

Whiston said he expects Farley to continue the company's restructuring but hopefully will focus more on competitors like Tesla by accelerating its plans for Lincoln electric cars.

"I don't think he's going to radically blow up anything already in place," Whiston said. "Hopefully over time they'll be more specific [with plans for electrification]. Otherwise, it'll just be the same old Ford."