Buried in Ford Motor Co.’s (NYSE: F) announcement of its second-quarter earnings were the figures for the period. After posting a long list of modest successes, the data showed that Ford revenue was basically flat at $38.9 billion. Earnings were $0.04 per share, compared to $0.27 in the year-ago period. This is another sign that the turnaround at Ford is really no turnaround at all. CEO Jim Hackett has had over two years to show some progress. Absent any, the Ford board of directors needs to fire him.
Hackett made comments about the second quarter that had nothing to do with the figures or Ford’s lack of progress. He said, “Midway through this key year of action, we are pleased with the progress we are making toward creating a more dynamic and profitable business. In this time of profound change in our industry, Ford has amazing opportunities to delight customers, innovate and collaborate in new ways, and create value.” The figures show that Ford has not excited the number of customers the board must have hoped for since Hackett was promoted.
Ford continues to struggle in its home market. U.S. unit sales in the first half were down 2.9% to 1,240,585. Car sales fell 22.5% to 208,460. As Ford pulls most of its passenger cars out of the American market, it could take years for it to gain back total market share.
Ford’s problems in China, the world largest auto market by far, are much worse than in the United States. The company announced that it had “second-quarter sales in China of 154,042 vehicles, a 21.7 percent decrease compared to the same period last year.” China is not only the world’s largest market. It is likely the most competitive. Every major manufacturer in the world understands it cannot do well globally without a strong performance in China. And local car companies jockey for position every month as well.
Ford has shown little progress in what Hackett says is its future. This is primarily self-driving and electric cars. Its most recent announcement about its plans in these areas was a joint venture with Volkswagen. It was also short on real details. The most visible part of the plan is that the two companies will invest in Argo AI, an autonomous vehicle platform company. It is one of several companies that have targeted the same market. There is no evidence that it will become the market leader in the second, which is crowded with products from other tech and automotive businesses. The companies also will cooperate in the electric car business.
Hackett’s comments about the VW deal gave Ford investors little comfort: “While Ford and Volkswagen remain independent and fiercely competitive in the marketplace, teaming up and working with Argo AI on this important technology allows us to deliver unmatched capability, scale and geographic reach. Unlocking the synergies across a range of areas allows us to showcase the power of our global alliance in this era of smart vehicles for a smart world.” It is more likely that VW will injure Ford worldwide in the sales race among the two companies and their global competitors than that the joint venture will drive Ford’s global unit sales higher.
Hackett has promised he will invest billions of dollars in self-driving and electric cars. He also plans to restructure Ford to save money in other areas. Much of this involves people. Ford already has said it will cut 10% of its salaried workers. That is about 7,000 people. Almost certainly the layoffs have not ended.
Ford’s stock dropped as much as 7% after the announcement and trades near $10 a share. Its shares are down about 7% over the past two years. Shares of rival General Motors are up about 16% over the same period.
Hackett has delivered nothing in two years and has produced nothing that approaches a turnaround. The Ford board has had a habit of dismissing CEOs in the past. It is Hackett’s turn.