Will Ford Replace CEO Hackett?

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Morgan Stanley analyst Adam Jonas asked Ford Motor Co. (NYSE: F) CEO Jim Hackett whether he will still have his job when the company hosts its investors day in mid-September. Hackett answered “hell yes.” Hackett, however, does not hold his fate in his own hands. The Ford family, led by Executive Chairman William Clay Ford Jr., does. Ford has been impatient with CEOs before and pushed them out. Hackett may be no exception.

Hackett has been in his job since May 2017. Ford’s shares are off 5% since then, while the S&P 500 is 27% higher. Hackett has presided over several failures and an inability to present his “vision.” His weakness could catch up to him soon.

Ford’s revenue dropped from $37.1 billion in the second quarter of last year to $35.9 billion most recently. Net income dropped from just over $2 billion to just over $1 billion. Ford management said that a sales decline in China and the disruption of the supply chain for some products had hurt it. That was an observation short of what analysts wanted, but what was worse was the vague explanation of what Ford will do next. Among the plans:

In Asia Pacific, the company is focused on China and taking urgent action to address underperformance. This includes improving cost competitiveness with aggressive fitness actions, localizing more product in China, as well as recruiting more local talent to key management positions. New products will also soon be entering the market, with 60 percent of the line-up being refreshed or new by the end of 2019.

What are “fitness actions” and why will local management be helpful?

Even more vague and a cause for deeper concern:

Ford continues to be focused on redesigning business models by reallocating capital to opportunities with higher returns, restructuring and leveraging strategic partnerships. New this quarter, the company announced that these activities could have potential EBIT charges of $11 billion, with cash-related effects of $7 billion, over the next three to five years.

Hackett announced a restructuring plan last year. What relationship that plan has to this plan was left unspoken.

Finally, outsiders want to know what Hackett’s plans are to advance the company’s autonomous car and electronic vehicle efforts. He made another announcement recently about the formation of Ford Autonomous Vehicles, which also had a vague vision.

William Clay Ford Jr. has sacked CEOs before. Hackett may be next, at least based on his recent performance.