DETROIT -- Ford Motor Co.’s Joe Hinrichs, 53, is retiring as president of the company's global automotive operations, and Jim Farley, 57, president of new business technology and strategy, will become COO, Ford said.
The management shakeup, effective March 1, comes three days after Ford posted disappointing fourth-quarter earnings and profit guidance, with Wall Street analysts pressing company leaders for more details about a transformation plan that has yet to produce positive financial results amid a period of profound disruption across the industry.
Ford CEO Jim Hackett on Friday stressed the need to move with more urgency as the company attempts to implement elements of his self-described “fitness” plan.
Hackett is targeting 8 percent operating margins on the company's global automotive business, and 10 percent margins in North America, or roughly double what the company has achieved in recent quarters, and well below recent margins at rivals General Motors and Fiat Chrysler.
“Ford has struggled with execution -- potentially explaining this move,” Dan Levy, an analyst for Credit Suisse who cut his rating on the company's shares to the equivalent of a hold earlier Friday, said in a note to clients. “Farley’s promotion to COO positions him as a successor to the CEO role.”
Ford, which is preparing to launch a redesigned F-series pickup, the all-new Mustang Mach-E and a revived Bronco SUV, is targeting adjusted free cash flow of $2.4 billion to $3.4 billion this year and adjusted earnings of $5.6 billion to $6.6 billion, below analysts’ expectations.
In addition to steep investments in electrification and autonomous vehicles, Ford and other automakers face a U.S. new-vehicle market that is expected to fall below 17 million units for the first time since 2014, even as rising transaction prices help pad revenues and profits.
On Wall Street, Ford shares fell 1.7 percent to close at $8.11 on Friday. The stock earlier hit a new 52-week low.
'Right person'
Farley, who joined Ford in 2007 from Toyota, is expected to retain his role as head of Ford Smart Mobility, the company's autonomous vehicle unit, and its partnership with Argo AI, a Pittsburgh-based autonomous technology firm.
"Jim Farley is the right person to take on this important new role," Hackett said in a statement. "Jim's passion for great vehicles and his intense drive for results are well known. He also has developed into a transformational leader with the imagination and foresight to help lead Ford into the future.
“I have a partnership with Jim Farley in that I think the two of us compliment each other really well,” Hackett said, adding he had no plans to vacate the CEO role.
In addition, Hau Thai-Tang, Ford’s chief product development and purchasing officer, will take on an expanded role and will report to Farley, Ford said. He will add responsibility for the company’s Enterprise Product Line Management and connectivity arms.
“Hau will be the primary architect as we bring together the vehicle architecture and software stack to create products, services and experiences our customers will love,” Hackett said. “ We are moving forward with an integrated approach to vehicles and connected services, all anchored in an obsession for the customer, great design and a commitment to strong returns.”
Broad respect
Hinrichs has been steering Ford's automotive operations since May and is well-respected in Ford’s factories and among dealers, and was seen by many as a likely successor to Hackett. He had broad authority over Ford’s automotive operations, including product development, and recently helped the automaker come to terms on a new four-year labor contract with the UAW.
Hackett called him a “really good friend and accomplished global leader” who was “instrumental” in helping Ford survive the Great Recession and also played vital roles on issues ranging from labor to manufacturing to trade.
“To a person, he was beloved,” Hackett said. “Joe’s going to have a wonderful career. But everybody believes the momentum that we’re talking about building here is the right thing to do.”
Ford’s disappointing earnings were due in part to the botched launch of the redesigned Explorer crossover, one of the company's most profitable nameplates, but Hackett on Friday said Hinrichs' decision to retire was “not tied to that at all.”
Hinrichs also holds Ford’s seat on the board of directors at startup Rivian. A Ford spokesman said Friday that no decision has been made on replacing Hinrichs with another executive. Ford invested $500 million last year in the Plymouth, Mich., EV maker and said recently that an upcoming Lincoln EV will be based on Rivian technology.
The Wall Street Journal first reported the latest management changes at Ford.
Ford survivor
In May 2017, former Ford CEO Mark Fields attempted to force Hinrichs out as president of Ford's Americas unit, a post Hinrichs had held since December 2012.
With Hinrichs in the key role, the company earned about $38 billion in North America, or 92 percent of the automaker's total pretax profits during the period. He also oversaw the successful redesign of Ford's best-selling and most profitable vehicle, the F-series pickup.
Still, days before his ouster as Ford CEO in May 2017, Fields moved to fire Hinrichs in part to relieve some of the pressure Fields was facing from a skeptical board of directors, Automotive News reported at the time.
Fields intended to get approval from company directors for his decision to fire Hinrichs during the week of May 14, sources told Automotive News.
Fields' plan backfired, however, when directors decided instead to part ways with him, along with communications chief Ray Day, following a May 19 board meeting.
Instead of a pink slip, Hinrichs was given a promotion to a newly created post -- president of Ford's worldwide automotive business, including global product development; manufacturing and labor affairs, among other things.
Richard Truett, David Phillips and Bloomberg contributed to this report.
