Jim Farley, of Ford Motor Co., reflects on his time at the company and how his love of cars has helped his career and embrace change in the industry. Detroit Free Press
Ford Motor Co. announced Tuesday that CEO Jim Hackett will retire from the company he has led since May 2017, and Chief Operating Officer Jim Farley is taking the helm.
Hackett, 65, who went to Ford after retiring as CEO of Steelcase in Grand Rapids, “elected to retire from the company,” the automaker said in a news release. Hackett oversaw another high-profile succession when, after retiring from Steelcase, he was the University of Michigan’s interim athletic director and hired football coach Jim Harbaugh.
Farley, 58, assumes his new role as CEO on Oct. 1. He was also elected to the company’s board of directors.
While industry observers anticipated a change of leadership this year, the pivot on Tuesday caught some by surprise.
“I said we ought to do it now, the wind in our sails is really starting to pick up,” Hackett said in a conference call with reporters. “Jim’s grasp of products is legendary.“
Ford has struggled under Hackett’s leadership with product launch problems involving the Ford Explorer, the Lincoln Aviator and the Police Interceptor, issuing frequent apologies after sales and earnings reports, and seeing a steady drop in stock value that predates the pandemic.
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“Under Hackett,” the company said in a statement, “Ford moved aggressively into the new era of smart vehicles and drove a deeper focus on customers’ wants and needs. At the same time, Ford improved the fitness of the base business — restructuring operations, invigorating the product portfolio and reducing bureaucracy.”
In the first three months of 2020, Ford reported a $2 billion earnings loss. A week ago, the company reported a $1.9 billion earnings loss for the second quarter, which was better than Wall Street predicted. But the company has sustained criticism for emerging from 2019 without healthier financials.
Ford has been working on an $11 billion restructuring plan that Wall Street has failed to reward with higher stock prices. A bank analyst call in July focused on the speed of the changes or lack thereof.
“I knew I would test the patience of our stakeholders,” Hackett told reporters Tuesday. “I was OK with this because I had done this once before. … We had to reduce bureaucracy.”
Executive Chairman Bill Ford Jr. said in a conference call with reporters that Farley is “intensely competitive” and the company has watched the former Toyota executive “develop into a transformational leader” at Ford over the past decade.
“Jim (Farley) is a car guy through and through,” Bill Ford said.
Ford described Hackett as “brave” and praised him for “taking on the tough issues” and “slaying sacred cows.”
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Bill Ford, who was the force behind hiring Hackett — with whom he has forged a close relationship — credited the outgoing CEO with making the company more modern and competitive.
The company touted the “new product vision,” led by the all-electric Mustang Mach-E SUV, the 2021 F-150 and the Bronco and Bronco Sport, that “is taking shape.”
“We now have compelling plans for electric and autonomous vehicles, as well as full vehicle connectivity,” Bill Ford said.
He told reporters during the call the company did not seriously look at external candidates to succeed Hackett.
“We clearly talked about taking a look outside,” Bill Ford said. “Increasingly, everybody was getting inspired by Jim Farley’s leadership. While we talked about it and did throw some names around, every time we did that, we always felt Jim Farley rose to the top.”
“There is great strength in continuity, particularly if you’re on the right path,” Bill Ford said. “Our board felt we were on the right path.”
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Farley, who worked at Toyota before being tapped by former Ford CEO Alan Mulally in 2007 as head of global marketing and sales, was named chief operating officer at Ford in a management shake-up in February.
Now his top priority is flawless execution of product launches and expanding an affordable lineup for consumers, Farley told reporters on a conference call Tuesday.
The company noted key periods in Farley’s background:
- He joined Ford in 2007 as global head of marketing and sales.
- He went on to lead Lincoln, Ford South America, Ford of Europe and all Ford global markets in successive roles.
- In April 2019, he was tapped to lead Ford’s New Businesses, Technology & Strategy team, helping the company determine how to capitalize on forces reshaping the industry — such as software platforms, connectivity, AI, automation and new forms of propulsion.
Hackett will continue as “a special advisor to Ford through March of 2021,” Ford said, adding, “the time is right to pass the mantle of leadership to Jim Farley.”
“My goal when I took on the CEO role was to prepare Ford to win in the future,” Hackett said in a statement. “The hardest thing for a proud, long-lived company to do is change to meet the challenges of the world it’s entering rather than the world it has known. I’m very proud of how far we have come in creating a modern Ford and I am very optimistic about the future.”
Farley has been “instrumental in crafting our new product portfolio and redesigning our businesses around the world,” Hackett said. “He is also a change agent with a deep understanding of how to lead Ford in this new era defined by smart vehicles in a smart world.”
Looking back
By the time Farley was 5 years old, he was being groomed by his grandfather, Emmet Tracy, an early employee of company founder Henry Ford. Tracy went on to run an auto parts business and a car dealership in Grosse Pointe.
While other grandparents read Dr. Seuss, Tracy sat down with issues of Automotive News when his grandson visited during Christmas and summer breaks. The two would drive past automotive landmarks including the Packard Plant, Ford’s Piquette Street Plant and the Ford Rouge Plant where Tracy had worked.
“You’ve got to go to college because these are really tough jobs,” he told the child.
Emmet Tracy mentored his grandson, who developed a unique understanding of the auto industry and car dealers. Farley is pictured here around 1989 at his grandfather’s home in Grosse Pointe while on Christmas break from UCLA. Tracy died in 1998 at age 98, never having seen his boy work at Ford.
Even now, Farley said, he can picture his grandfather arriving at Ford’s Highland Park factory with his lunch pail as one of the nameless, faceless workers who built Model Ts.
After earning degrees in economics and computer science at Georgetown University and an MBA at UCLA in 1990, Farley scored job offers from Ford, General Motors and Toyota. At Ford, he would have concentrated on just one aspect of the F-Series truck. Toyota offered him the chance to focus on the whole car, specifically the launch of a new luxury brand no one had heard of — Lexus.
“We grew every month for 20 years at Toyota,” Farley said. “It was all about new opportunity, new growth, finding new products that didn’t exist in the market.”
Meanwhile, Ford presented a stark contrast to Toyota.
By 2006, Ford was looking for new blood and new direction. Bill Ford hired Mulally to guide the company. Mulally, who drove a Lexus when he came to Detroit, publicly declared that he would benchmark Ford against Toyota. Getting Farley onto the team would become part of the strategy.
“It was a new experience, consolidating and shrinking to grow the business, like we went through at Ford in 2007,” Farley said, “We had to get the size and cost structure down to a point where it was healthy so we could grow again. Same thing we’re doing now.”
He spent three years in Europe implementing a turnaround plan for Ford, oversaw the multibillion-dollar operation, and stopped the bleeding. From 2015-17 as president of Ford Europe, he executed a plan that led to record profitability, record margins and increased sales.
Looking ahead
Farley said he was “honored by the opportunity to serve” and take the company into a “new era.”
“Like so many, Ford Motor gave my family an opportunity,” he told reporters after the announcement.
“Ford has endured for 117 years because our values are timeless. The courage to bet the farm on a big idea like building the Rouge or a new silhouette like Mustang or the integrity to provide equal opportunities for African Americans and other minorities during the Great Migration … the strength to weather the 2007 crisis without a government bailout, the vision to restore a once great train station to reinvent the future of transportation and be a positive symbol for the city we love, Detroit.”
Farley said he had “unbridled enthusiasm” and humility. He promised to merit the trust of carrying the company forward.
While many people may not know the name “Jim Farley,” non-automotive people recognize the name of Farley’s cousin, Chris Farley, the brilliant comedian who died at age 33 and with whom Jim Farley was very close.
Surprises remain
Reaction to Tuesday’s news from industry analysts was swift.
Jon Gabrielsen, an automotive industry market analyst, said simply, “Hallelujah.”
Michelle Krebs, executive analyst at Cox Automotive, said, “Jim Farley takes the helm of Ford at a critical time — in the midst of a global pandemic, on the eve of a host of critical product launches and on the verge of massive transformation of the industry. His challenges are immense.”
Charles Ballard, an economics professor at Michigan State University, said, “Ford faces fierce competition, with rapidly changing technology and a market buffeted by COVID-19. Fortunately for Ford, Jim Farley knows the industry well. He will need all of that knowledge, plus hard work and some luck, to steer Ford on the bumpy road ahead.”
In noting Farley’s strength with new technology, the outgoing Hackett was not alone.
John McElroy, host of “Autoline After Hours,” said, “Ford clearly believes that Jim Farley can best lead the company in an industry where the business model is changing. Data mining and monetization, online services and over-the-air updates now represent the greatest growth opportunities for automakers — probably more important than new models and features. Farley’s background and expertise makes him perfectly placed to lead Ford into this new future.”
When discussing Ford’s competitors, Farley did not mention General Motors or Fiat Chrysler. Instead, he cited Amazon, Tesla, Apple and Toyota.
“We’re committing to develop a very specific plan for everyone. That will come out in due course,” Farley said, noting the potential for software business. “We’re very committed to expanding our affordable vehicles and not just vehicles, services. You’ll learn more.”
‘Steady hands’
Rory Gamble, UAW president, issued a statement praising the leadership change.
“Having worked with Jim Farley through the many challenges of the COVID-19 pandemic, I know that Ford Motor Company is in steady hands that will continue the long Ford family tradition of leadership that respects its workforce and keeps communications open in a challenging industry,” he said.
Ford is the biggest employer of hourly workers in the automotive industry in the U.S.
Bob Rudzonis of New Jersey, a retired Ford engineering manager, was one of many stockholders who emailed the Detroit Free Press, saying they’re grateful to see a new CEO. “Finally a ‘car guy’ who knows what it takes to build cars.”
Contact Phoebe Wall Howard: 313-222-6512or phoward@freepress.com. Follow her on Twitter @phoebesaid. Read more on Ford and sign up for our autos newsletter.
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