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Ford replaces CEO Fields as challenges mount

Posted by: Admin | Posted on: May 22nd, 2017 | 0 Comments


PARIS/DETROIT Ford Motor Co. is set to replace Chief Executive Mark Fields with James Hackett, the head of its mobility arm, company sources said, responding to growing investor unease over the U.S. carmaker’s stock performance and prospects.

The departure of Fields, 56, is likely to be announced on Monday, the sources said, adding Hackett, 62-year-old head of the division responsible for autonomous driving, would take the helm in a broader shake-up aimed at speeding up decision making and improving execution.

A Ford spokesman declined to discuss any management changes, but the company called a news conference for 1345 GMT (0945 ET).

“We are staying focused on our plan for creating value and profitable growth,” the spokesman said. “We do not comment on speculation or rumours.”

Ford shares are down 37 percent since Fields took over three years ago, at the peak of the U.S. auto industry’s recovery. Now, sales in the United States are slipping, and Ford is trailing the profitability of larger rival General Motors, whose shares fell 13 percent over the same period. Ford’s board and Chairman Bill Ford Jr. have been unhappy with the company’s performance and sought reassurance that investments in self-driving cars, electric vehicles and ride services would pay off.

The upheaval at Ford underlines pressure on all three Detroit automakers to prove they can avoid losses, as the U.S. auto market begins to slow from last year’s record sales.

FiatChrysler is fighting diesel emissions-cheating allegations from U.S. and California regulators, following CEO Sergio Marchionne’s failed bid to find a merger partner.

GM boss Mary Barra is fending off attacks from investor David Einhorn’s hedge fund Greenlight Capital, which wants to install three new directors and split GM’s stock.

NEW SCRUTINY

In March, GM sold its loss-making Opel division to France’s PSA Group, effectively exiting Europe in a move Barra promised would free cash for share buybacks.

The shake-up at Ford may bring new scrutiny of its own plans in the region. Jim Farley, Ford of Europe chief since January 2015, is set to move to oversee Ford’s regions, global marketing and sales, as well as its Lincoln Motor Co, the sources said.

Joe Hinrichs, head of the Americas since December 2012, will manage global product development, manufacturing and labor affairs, purchasing, and environmental and safety engineering, while Marcy Klevorn, vice president of information technology and chief technical officer since January, will oversee Hackett’s Ford Smart Mobility.

Ford posted a record $1.2 billion European profit last year but warned the impact of Britain’s vote to leave the European union would put a dent in 2017 earnings.

Fields also faced clamor for share repurchases – which boost the value of stock – at the annual shareholder meeting earlier this month. “Confidence is created by hard currency, not proclamations that are often qualified,” one investor told the meeting in a question read out by the chairman.

Ford said last week it would cut 1,400 staff positions in North America and Asia, a small fraction of the 20,000 job cuts some news outlets had reported were imminent.

CHALLENGING TIMES

Fields had outlined a variety of initiatives to confront challenges from technology companies such as Alphabet Inc that want to control a future of autonomous, data intensive vehicles.

“You have to have one foot in today … but also one foot in the future,” Fields told reporters last month. “I think investors understand our strategy.”

Among his bets on technology is a plan to invest $1 billion over the next five years in tech startup Argo AI.

Ford has churned out strong profits on his watch, reporting a record $10.4 billion in pretax earnings in 2016.

However, investors were concerned by a weak first quarter and lower profit forecast for 2017, as well as higher costs for investments in “emerging opportunities.”

Silicon Valley electric car maker Tesla Inc was valued at $51 billion on Friday, more than Ford’s $43 billion. The contrast is a dramatic sign of how little confidence investors have that old-line automakers can transition to a future where software substitutes for pistons and transportation is sold by the mile or the minute.

At the same time, GM is turning up the pressure on Ford in the North American truck and sport utility business, the source of 90 percent of Ford’s profits.

GM is gearing up an “onslaught” of trucks for the North American market, the automaker’s President Dan Ammann told Reuters last week, including a new generation of the Chevrolet Silverado large pickup truck that competes with Ford’s primary profit machine, the F-series line of trucks.

Fields earned $22.1 million in 2016.

(Additional reporting byJoe White in Detroit, Edward Taylor in Frankfurt, Costas Pitas in London, Ismail Shakil in Bengaluru, Andreas Cremer in Berlin; Editing by Clara Ferreira Marques, Edwina Gibbs and Mark Potter)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/1tDU2ACQ3rY/us-ford-motor-ceo-idUSKBN18I0LK

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