Why Jim Hackett is wrong about Volvo, Jaguar and Land Rover
DETROIT -- Ford Motor Co. CEO Jim Hackett this week candidly admitted that he wishes the automaker still owned some of the brands it shed during Alan Mulally's "One Ford" transformation, including Volvo, Jaguar and Land Rover.
He declined to elaborate, respectfully saying he didn't want to "walk on someone else's grave."
It's understandable why Hackett feels that way.
Volvo's operating profit rose 66 percent in 2016 to $1.24 billion as revenue jumped 10 percent. Jaguar and Land Rover in 2016 helped parent company Tata Motors post a nearly threefold rise in profits.
Each brand is pumping out unique, fresh product driven by new ownership that leveraged the heritage of the brands and gave them the money to develop new engines, architectures and technologies.
Look, Jim, I get it. It's easy to look at an ex and feel a twinge of jealousy when they're with a new partner, especially when it looks like they've hit the gym and upgraded their wardrobe from back when they were with you.
But it's important to remember why things didn't work out in the first place.
The former brands that made up part of the Premier Automotive Group never would have flourished under continued Ford ownership.
Company leaders rightly chose to circle the wagons and focus their attention on the Ford and Lincoln brands in their fight for survival. Even then, they still barely escaped bankruptcy.
Even before Ford chose to sell, the brands were, to put it kindly, not living up to their potential.
In an effort to keep costs down, Ford tried to force the brands to use common parts and platforms that didn't quite work.
Remember the Jaguar X-Type? It made Time Magazine's "50 Worst Cars of All Time" in large part because it felt too much like a Fusion/Mondeo, prompting customers to look elsewhere.
Ford at one point wanted Land Rover to base a vehicle off the Escape. While the small crossover was a hit for the Ford brand, the car-based design would have never worked for the authentically British off-road brand.
Let's say Ford chose to keep JLR and Volvo and somehow managed to survive a likely bankruptcy.
Ford is expected to lose $600 million on Brexit related charges when it reports 2017 earnings next week.
That figure would be much worse if it still owned the additional plants and employees from the European brands, endangering the profitability of its already tenuous business in that market.
And, in a fact of which I'm sure Hackett needs no reminding, Ford has its hands pretty full. He's already juggling the present with a future that requires billions of dollars of investments in autonomy, electrification and mobility services. Some of Ford's best minds are focused on those problems.
Would it really have the resources to be able to spread management and engineering talent over three additional brands?
PAG just needed a little TLC. Ford could never offer that 10 years ago.
Hackett needs to remember that the breakup happened for a reason.
All parties are better off today because of it.
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