Ford Motor Co. investors had plenty to like in the company’s third-quarter earnings report Oct. 27. President and CEO Jim Farley and his team reported stronger-than-expected numbers, raised their earnings guidance and reinstated the dividend they had suspended early last year. All good things for the short term, which is why the company’s shares (Ticker: F) popped nearly 9% Oct. 28.
Those looking primarily at Ford’s longer-term prospects in an era of rapid change also likely would’ve taken heart in some of Farley’s comments on a conference call about how the business is adapting to an environment that increasingly prizes agility, innovation and speed to market. Asked by an analyst about a pace of change in the electric vehicle market that feels like it’s accelerating, Farley said Ford is beginning to reap the rewards of “tough choices” its leaders made several years ago – including ditching the production of many cars in 2018.
“We have a plan. It’s not advertising or a PR tagline; everyone in the company knows what we have to do,” Farley said. “We are out of time and we have focus. We need to get an 8% margin as a company because we have to fund a high-growth [EV] and digital business.”
Farley joined Ford from Toyota in late 2007 and took over as CEO from Jim Hackett in October of last year. Before that, he was COO for a few months and led the company’s new business, technology and strategy group, a role that put him at the forefront of many of the digital- and EV-focused initiatives Ford is focused on. Points of emphasis, he said on the conference call, are to be quicker, more accountable and less bureaucratic.
“It’s all a mission and the team knows the plan,” he said, noting that the new Maverick hybrid pickup truck’s launch process was 20 months shorter than it might have been several years ago. “And I think the culture is starting to change.”
Being more flexible and less hierarchical has been on Ford leaders' wish list for years: When Executive Chairman Bill Ford named Hackett CEO in the spring of 2017, he lauded the former Steelcase CEO as a "cultural change agent" and praised the work of his predecessor, Alan Mulally, on that front. Farley on Oct. 27 said that, beyond a higher pace of product design and development, his team has been hammering on making Ford’s industrial systems more agile and embedding speed in every part of the company’s operations.
“We have to do our job to break constraints now so that we can deliver hundreds of thousands of battery electrics next year,” he said. “That to me is the proof of our change.”
