On his first day on the job as CEO of Ford Motor Co. (NYSE: F), Jim Farley has outlined his key goals for turning around the 117-year-old carmaker. He also announced the first of several organizational changes in the company’s top managers.
Farley’s key turnaround goals are allocating capital to Ford’s strongest franchise (that would be trucks and sport utility vehicles), building “compelling, uniquely Ford electric vehicles at scale” and pushing a new autonomous vehicle business.
His immediate objectives include top-line growth, operational excellence, improved customer satisfaction, “sustained” EBIT margins of 8% and “strong” automotive adjusted free cash flow.
In the first half of 2020, Ford’s adjusted free cash flow has totaled a negative $7.6 billion and EBIT margins have totaled a negative 1.6%. Clearly a lot of room for improvement at present.
Referring to his predecessor, Farley said, “During the past three years, under Jim Hackett’s leadership, we have made meaningful progress and opened the door to becoming a vibrant, profitably growing company. Now it’s time to charge through that door.”
Though Farley’s goals for growth are broad, he’ll soon have to get down to the nitty and the gritty. As recently as July, Ford had offered plans to invest around $11.5 billion to introduce 40 electric vehicles and hybrids by 2022. That’s hardly focusing on the company’s strongest performers.
The first of those vehicles, the Mustang Mach-e is due in dealerships in December. That may seem unremarkable, but Ford drew up the schedule before the COVID-19 pandemic hit.
A recent spate of new, publicly traded electric vehicle makers has focused Ford’s attention on the shift to electric vehicles, and Farley says he wants the company to “compete like a challenger” by allocating capital to higher growth and returns the long-term value for the company.
A new chief financial officer was the first of Farley’s new appointments. John Lawler who had been in charge of the company’s finance and credit division, replaces Tim Stone who is leaving the company to become chief operating officer and chief financial officer at artificial intelligence company ASAPP. Lawler has filled a variety of roles in his 30-year career at Ford.
Ford’s chief information officer, Jeff Lemmer, will retire on January 1 after a 33-year career at the company. A successor has not been named yet. Joy Falotico, Ford’s chief marketing officer and president of Lincoln, will be put in charge of growing Ford’s luxury brand, and a new chief marketing officer will be named shortly. Ford also has announced a change in its European management, where Kieran Cahill will replace Dale Wishnousky as vice president of European manufacturing. Wishnousky will retire at the end of the year.
Autonomous vehicles and mobility are another area where Farley wants Ford to speed innovation to become a leader. It should go without saying that this will be a cash sink for at least several years before it begins to pay off.
Ford stock traded up about 1% Thursday morning, at $6.72 in a 52-week range of $3.96 to $9.57. The price target on the stock is $7.66.