Ford Chair Bill Ford Has Run Out of Excuses

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There is a myth that battered Ford CEO and President Jim Hackett runs Ford Motor Co. (NYSE: F). It is not true. Hackett works for William Clay Ford Jr., who has been board chair since 1999 and currently holds the title of Executive Chairman. Ford’s latest earnings statement shows how poor a job Bill Ford has done as the company’s performance continues to deteriorate.

Third-quarter revenue fell from $37.6 billion in the period a year ago to $37.0 billion. Earnings were much worse, down to $0.11 per share from $0.25. The company blamed high warranty costs, poor sales in China and discounts. The operation in China is a particular debacle. Deliveries in the world’s largest car market were down 30% in the third quarter to 131,060 vehicles. No major car company can do well globally without strength in China. As for discounts and high warranty costs, there is no reason to believe those will go away.

Worse than the poor third-quarter results, Ford cut its guidance for the year. Ford expected what it calls adjusted earnings per share to be $1.20 to $1.32. Before, the forecast called for $1.35 per share. Bloomberg pointed out that the numbers may cause S&P to cut Ford’s debt to BBB, one level below a junk rating.

The situation at Ford is worse than the earnings tell. Hackett’s $11 billion restructuring has barely begun. Ford’s move into autonomous and electric vehicles appears no faster than or superior to similar projects at other global manufacturers. In short, Ford has not done anything to lead outsiders to think its prospects are anything other than mediocre and could be bleak.

Ford’s shares have sold off 25% over the past two years. There is almost certainly a recession on the horizon, which usually hits car sales hard. Bill Ford may need to dismiss Hackett soon. That will not alter the fact that the buck stops with him.


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