Ford has fired its CEO, replacing him with the head of its smart and driverless car division.
Mark Fields had only been in the job for three years, now he is out. In his place comes Jim Hackett.
Mr Hackett has an odd background for a man seeking to make Ford fit for a digital future. Until four years ago, he hadn’t even worked in the car industry. Before that, he had worked for US furniture company Steelcase, where he oversaw a pretty dramatic turnaround.
So, he may have previously been the head of Ford’s future looking division, but he is a turnaround guy, not a techie.
But changing Ford is a tad more challenging than changing Steelcase. The latter has a turnover, of $3.12 billion, Ford is a little bigger – turnover slightly more than 100 times more than that.
2017 has seen Ford make a loss, and saw its market cap fall below that of Tesla’s.
Tesla made 70,000 cars last year, Ford sold 6. 6 million. Ford turned over $152 billion in 2016, Tesla managed $7 billion.
But can Ford really compete in an age of accelerating technology?
There are two issues that relate to this.
Number one, has it left it too late? Ford has earmarked $1 billion to invest in AI and autonomous cars over the next five years. As part of this, it has bought AI company, Argo AI. But then think of it in these terms. Ford has to master AI in order to survive, yet it is investing just two per cent or so of its market cap – the cost to shareholders, if it fails, maybe a lot more than a few billion dollars.
As Elon Musk said: “The programming of the robots and how they interact is far more complex than the software in the car. I think this is going to be a very difficult thing for other manufacturers to copy. I wouldn’t want to be in their position.”
The other issue relates to the car industry itself. Recently, Tony Seba, an economist at Stanford University, predicted the rise of transport as a service, or TaaS, as autonomous cars and the Uber type economy converges.
He predicted by that 2030, the number of cars on US roads would fall from 247 million today to 44 million. A disruptive change like that may produce a shock that only the most forward-looking of companies will survive – not all major car companies will manage it. Will Ford, under Hackett be sufficiently forward looking?