DETROIT — Ford Motor Co. CEO Jim Hackett has called 2019 a "year of action" as many of his organizational changes take root.
In spite of Wall Street's continued worries about the company, as well as a harder-than-expected launch of the redesigned Explorer and Lincoln Aviator, Hackett, 64, is confident in the path Ford is on.
The automaker this year inked partnership deals with Volkswagen and Mahindra to collaborate and share costs on region-specific vehicles, wrapped up an organizational redesign that will save money and make the company more nimble and recently unveiled the Mustang Mach-E, an electric crossover developed through a process designed to be the template for future vehicles.
Hackett says he's also thinking about fundamental changes to the content of vehicles and how dealers interact with customers. He detailed some of those plans in an interview last week with Staff Reporter Mike Martinez, News Editor Nick Bunkley, Chief of Editorial Operations Dave Versical and ANTV Reporter China Haley. Here are edited excerpts.
Q: Can a CEO of any automaker run a business in a way that would please Wall Street?
A: Imagine you came from Mars. You know a little bit about Earth, and you happen to meet Jim Hackett, and you knew he ran a large automotive company. The Martian asked Jim Hackett, "How do I know the company's doing well and is designed to last a long time?" and I say, "Look at today's stock price." It doesn't make any sense. Why does it move every day? I understand the value of shareholders and am really in favor of what they bring. And I'm really in favor of long-term shareholders because their commitment and understanding of what it takes to make a long-lived company is aligned with how we're running the business. I understand what Wall Street's prerogative is, but I don't know I always agree it drives long-term value.
The introduction of the Mustang Mach-E focused heavily on the work of Team Edison. Can you take the Team Edison model — small group, quick-thinking, moving like a software startup — and apply that to other nameplates?
The underpinnings of the team structure at Edison is a fundamental shift in the way knowledge work is going to happen at Ford. So it's referred to as agile teams. The software industry really adopted the word "agile" in front of "teams." But team-based innovation is something I was known for in my last job.
The emergence of it comes because you need a collective of different kinds of intelligence around the table. The problem is so hard that you have to work these things in parallel. So you have to have software engineers next to mechanical engineers, next to marketers, you know, next to other kinds of scientists. In an old-fashioned bureaucratic structure, you would come in to our conference room and see PowerPoints that would kind of argue each one of those vertical areas of excellence and then someone, like a sage, would sit and hear all that and decide what to do. Five to seven years ago, that's how work was done at Ford. That's what we had to tear up and start over.
When you came in, the Mustang Mach-E project was torn up and moved in a different direction. Are there similar things going on with other products at various stages of the process?
One of the inside comments that I got, like, 48 hours into the job was, "Hey, Jim, now you're not going to come and stop all the work, are you?" Because if you're an engineer or in product development, they've got years invested in a lot of the things that are making their way to market, like the new Explorer and Aviator. This new consciousness, you know, couldn't get applied to [those products] because it was too late. But the Bronco, which had made progress, yes, we are applying that. The F-150, yes, we are applying that.
Former Fiat Chrysler Automobiles CEO Sergio Marchionne once asked customers not to buy electric vehicles because he lost money on each one sold. How were you able to make the Mustang Mach-E profitable?
When we came in in June 2017, we looked at the whole portfolio, and there were products that could not make the test for the future, some of which you've written about. This was birthed under that kind of scrutiny. It took not more time, but a lot of attention to make sure that it could perform in a world where the scrutiny was much higher on the profitability. Secondly, the battery used to be 70 percent of the cost of the vehicle back when [Marchionne] made that comment. And it's probably now 30 percent. So the battery costs have dropped in a way that make it feasible. But the third thing is — and this is where I credit Jim Farley and Hau Thai-Tang and Joe Hinrichs. The three of them reasoned that by associating this with a badge like the Mustang, we get the kind of price realization that now will generate the kind of contribution margin.