Ford CEO Mark Fields: With an eye on the future, the automaker explores new ideas

DETROIT -- More than a year into his tenure as CEO of Ford Motor Co., Mark Fields has a redesigned F-150 and two updated SUVs at his disposal just as demand for those types of vehicles is surging. Amid that fortuitous timing, Fields is also trying to position Ford for a time when gasoline is more expensive again and fewer consumers want to own cars at all.

This month, he announced a $4.5 billion investment to develop more electrified vehicles over the next five years, even though sales of plug-ins and hybrids are slow at the moment. He also said Ford is radically changing its product-development process in the hopes of making vehicles that better fit people's changing needs. And through the Smart Mobility initiative he started, Fields is pushing the automaker to explore new ideas such as e-bikes that help drivers get through congested streets and an Uber-like shuttle service for employees that eventually could help Ford move beyond selling cars by getting into the ride-hailing business.

Fields, 54, was interviewed at Ford headquarters in Dearborn, Mich., by Staff Reporter Nick Bunkley, News Editor Dave Guilford and Dave Versical, director of editorial operations.

Q: What's your expectation for industry sales in the next few years, as gasoline prices and interest rates rise?

A: I think the next couple of years for the industry could stay at a very healthy level. Do I think it's going to grow another 10, 15, 20 percent? Probably not, just because of capacity. But the state of the labor market is very healthy -- wages and incomes are growing.

I keep reminding folks that the Fed, if and when they raise rates, it's a sign of a healthy economy. The Fed raised rates on Dec. 18. With housing starts and new home sales that are still below pre-recession levels, I think that bodes well for the industry.

To what extent is your plan to invest $4.5 billion in electrified vehicles driven by regulations rather than consumer demand?

It's a big piece of it. In this business you have to project where you see consumer demand going forward. We have to project out four or five years. How you view things depends upon where you stand. Right now, where we stand, gas is very inexpensive. Think about 4 or 5 years ago, where gas was. It was a little bit different. We have to project out, and our view ongoing is still that the price of a barrel of oil is going to go up over time. So it's really important for us to anticipate that.

Secondly, we have the [corporate average fuel economy] regulations that are out there -- the one national standard -- and we have to meet that. And that's why the midterm review becomes so important for us, because we want to make the investments.

But at the same time there has to be a market there for it. And that midterm review was all about agreeing with the government on looking at the consumer acceptance of the technology, looking at the costs -- to the companies, to the consumers, what impact it may have on jobs and things of that nature. So we're looking forward to that discussion.

What's your plan going into the midterm CAFE review?

Overall, we want it to be very fact-based. We'll have to look at what has been the acceptance of the technology. It's more than a bit challenging. There's probably 50 or 60 electrified vehicles in the marketplace. Year to date, it's a little over 2.5 percent of the total industry. Four years ago, there were maybe 10 or 12 models, and it was about 2.5 percent of the industry.

We want it just very fact-based -- lay it out. We want to be part of the solution. But we want to make sure it works for consumers and it works for us as a company.

With transaction prices and profits up, are you able to try to regain some market share?

Our main priority is to run a disciplined, profitable business. Going out and chasing market share is not part of our plan.

You have said that Ford is reimagining product development. How will that work?

This is very different. We're calling this experience-led development.

In addition to normal market research, where you ask very practical and specific questions, we're doing something called ethnographic research. It's a subset of anthropology that tries to see how people live their lives.

So we actually have Ford researchers and folks going out, living with people for a time, videoing them and seeing how they live their lives.

The beauty of it is not only does it help you focus on an experience, but it also, rapidly at early stages of a program, allows you to eliminate certain features that really aren't relevant to a consumer.

How has the Ford F-150 redesign gone compared with your expectations?

We are really pleased with the F-150 launch. We were right on plan. We did a lot of planning upfront, starting back in 2010. Our supplier partners have delivered exactly to plan, and that's allowed us to have a product that is a smash hit in the marketplace. It goes from strength to strength.

Our retail market share in the third quarter was above the pre-changeover market share for the vehicle. You've seen the data on the transaction prices.

How is Lincoln doing?

I'm really encouraged with where we are on the Lincoln journey -- and, listen, we said it's a journey. We said this is going to take a number of years. When we close the books this year, we should have the second year in a row of sales growth.

When you look at our launch in China, it's really encouraging to see not only the brand perception from Chinese consumers, but when you look at the rate of our growth -- listen, we're still relatively small, but we're ahead on our dealer openings, so we feel really good about our trajectory in China.

Would Alan Mulally have spiked Lincoln if you had not saved it?

We were all supportive of keeping Lincoln, but thank you for the question.

Since you don't have an entry in the subcompact crossover segment, will the EcoSport come to the U.S.?

Nothing to talk about at this point, but we're always looking at the marketplace and trying to discern how that drives our product plan going forward.

What about a smaller pickup?

Our focus, as we've said before, has been on the F-150. But, again, we'll continue to always look at the marketplace, and if there are opportunities, we'll look at them very seriously.

Your margins are up and you had a record North American profit in the third quarter, but Ford's stock price has been flat. What more do you think Wall Street is looking for?

We have really looked at what are the drivers of creating value in a company. The key drivers are around revenue growth, operating margin expansion and dividends. We have worked on those, we are delivering on those, and over time I think we'll get rewarded for those.

Do we run the company to juice the stock price? Absolutely not. We run the company to run a profitable, growing organization. Our hope is that will be recognized by the market at some point.

How much of your research is focused on your Smart Mobility effort?

We're very committed to these emerging opportunities in Ford Smart Mobility, but clearly we want to make sure we never forget that we love and nurture that core business and make sure we're resourcing it appropriately. It's not about just going from an old business to a new business. It's about going to a bigger business.

What have you learned from your Silicon Valley research lab?

Being part of that community has allowed us to uncover things that we otherwise wouldn't have uncovered being in another part of the country. A great example is the Apple Watch when it came out. We had an app developed in a week for one of our hybrids because we were able to have our people go and see that early on.

Some other things we learned is that for young people and a lot of people out there, the most important thing -- yes, you have to compensate them appropriately -- but the most important thing is give them meaningful work. They want to make their dent in the universe, and what more meaningful work can we give them than designing and developing great vehicles and also helping change the way the world moves as we think about Ford Smart Mobility? We've attracted a lot of talent there.