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We sit down with Jim Hackett, Ford Motor Company’s new CEO, to talk about his new position and the company’s future. Kimberly P. Mitchell/Detroit Free Press
Ford China CEO and chairman Jason Luo, who began his job just a few months ago, has resigned.
(Photo: Key Safety Systems)
Ford China CEO and chairman Jason Luo, who held his job just short of five months, resigned on Monday from the company, effective immediately.
The move, for unspecified personal reasons, startled industry observers as Ford struggles to gain footing after offering a tepid outlook for 2018.
“Was this the new guy that just started? Jason Luo?” asked Dave Sullivan, product analysis manager at AutoPacific Inc.
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Before joining Ford, Luo was CEO of Sterling Heights-based Key Safety Systems, engineering the purchase of Takata Corp. out of bankruptcy and sale of KSS to a Chinese conglomerate.
His sudden resignation comes less than a week after a disappointing Ford annual earnings report that included declining sales in China, the world’s largest car market. Ford said Luo’s departure had nothing to do with performance.
A carefully worded press statement indicated Luo had a very specific issue that resulted in his exit. He did not respond to an e-mail sent by the Detroit Free Press to his personal account during the night in Shanghai.
“Jason offered his resignation for personal reasons that predate his time at Ford,” Peter Fleet, Ford group vice president and president, Ford Asia Pacific, was quoted as saying. “Ford accepted Jason’s resignation as the right way for him and the company to proceed. Jason’s decision was not related to the business strategy or performance of Ford China, which remains robust, with a bright future ahead. We continue to act in the best interest of our company, employees, and stakeholders.”
Luo joined Ford to oversee operations in greater China, including its import business, Lincoln; its passenger car joint venture Changan Ford; its commercial vehicle investment in Jiangling Motors Corp., and the company’s operations in Taiwan.
“Jason made valuable contributions in accelerating our electric vehicle strategy, exploring opportunities to provide future smart mobility solutions for customers in China, and identifying ways to become more operationally fit,” Fleet said. “We are grateful for Jason’s service to the company and wish him all the best in the future.”
Ford did not name a replacement, saying it will be “the subject of a future announcement.” Fleet will assume the role as Ford works to build its business in China.
Ford CEO Jim Hackett has said publicly the Dearborn-based company must do better. On Jan. 24, the night of the annual earnings report, he told investors, “Clearly, I and my team are not satisfied.”
In recent filings, the company noted:
In 2017, sales in China were down 6% from 2016, with nearly 1.2 million vehicles sold.
December 2017 sales in China decreased 9% year over year, totaling more than 140,000.
Annual 2017 sales for Changan Ford Automobile (CAF) dropped 14% compared with the full year 2016, totaling nearly 827,000 vehicles.
December 2017 sales for CAF dropped 12% year over year, totaling more than 102,000 vehicles.
When Ford announced Luo’s hiring, Fleet said, “Jason’s leadership and track record of business growth and transformation in China make him the ideal person to lead Ford in the world’s largest vehicle market. He will help us raise our vision in China.”
Ford stock has dropped in recent weeks or remained stagnant while other automakers see steady growth. It closed Monday at $11.12 per share, down 2.2% for the day.
“You have to wonder if something is a bit amiss,” Sullivan said. “It is disheartening to see rapid turnover in a market that has quickly bubbled to the top in terms of growing the company. They’re reshuffling the deck chairs while playing musical chairs. It still remains to be seen where everyone will be when Jim Hackett’s music stops. It’s too soon to say what’s going on.”
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Kristin Dziczek, director of the Industry, Labor & Economics Group at the Center for Automotive Research, said, “When an executive resigns ‘effective immediately,’ it often— but not always — means it wasn’t their choice. Ford sales are down in China while the market is up and other producers are seeing growth. The company’s reboot in China just happened in September 2017. It’s still very early to be seeing business results from any changes Mr. Luo may have instituted.”
Ford executives have consistently said they’re encouraged by the potential in China. In December, the company announced it would introduce more than 50 new vehicles in China by 2025, including eight all-new SUVs and at least 15 electric vehicles from Ford and Lincoln. It has partnered with online retailer Alibaba on sales plans.
Ford Escort set its best-ever monthly sales in China in December, increasing 18% to more than 42,000 vehicles. And Ford Mondeo, a version of the Ford Fusion, sold nearly 15,000 vehicles, up 6% year over year. Both models set the best quarterly sales in fourth quarter 2017 as well, Ford noted.
“Looking forward, we recently announced Ford’s China 2025 plan to further accelerate our growth,” Luo said when sales figures were announced in early January. “In 2018, we will build our success on providing customers in China with our best products, services and mobility solutions.”
Bob Wiseman, senior associate dean at the Eli Broad College of Business at Michigan State University, said Luo’s departure can be managed in a way that doesn’t cause alarm.
“Companies have an obligation to honor individual rights and protections with confidentiality,” he said. “The investment community will look and say, ‘Is it a disruption to the succession of leadership in China?’ And they’ll look at how critical Ford’s operation in China is to Ford overall. Is there a person behind him that can step in quickly? If so, this is a blip.”
Fleet, 51, who now steps in to assume Luo’s duties, became group vice president and president, Asia Pacific, in July 2017. He has led all of Ford’s operations and partnerships in Asia Pacific while reporting to Jim Farley, executive vice president and president, Global Markets. Fleet has held leadership roles in Ford’s marketing and business operations for nearly 30 years.
Luo, prior to joining Ford, had been president and CEO of Key Safety Systems since 2007. He led global expansion of the company, which develops and manufactures automotive safety systems. In the 10 years previous to being CEO, he held roles that included vice president of global engineering and president of the Asia Division. He is known for his work in mergers and acquisitions, divestitures, corporate strategy and global operations. In 2015, Luo was recognized by Ernst & Young for entrepreneurial excellence in the automotive supplier category.
Born in China, Luo earned a bachelor of science degree in mechanical engineering from Beijing Institute of Technology, China; a master of science degree in mechanical engineering from the University of Toledo; and a master of business administration from Michigan State University. Luo is a member of the MSU Broad College Alumni Association board of directors.
Luo, 51, led Key Safety to become one of the fastest-growing auto suppliers and oversaw a months-long bid to acquire Takata out of a bankruptcy stemming from faulty air bag inflators. Takata’s malfunctioning airbag inflators have sent shards of metal into drivers and passengers, killing them.
Takata filed for bankruptcy protection in Japan and its U.S. subsidiary, Auburn Hills-based TK Holdings Inc., filed for Chapter 11 protection in Delaware in June 2017 in a prepackaged agreement to sell to Key Safety.
Key Safety in 2016 was acquired by Ningbo Joyson Electronic Corp. in a $920-million deal.
Contact Phoebe Wall Howard: 313-222-6512 or phoward@freepress.com. Follow her on Twitter @phoebesaid
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