Ford's Board Turns Up the Heat on Mark Fields

[grbeck]

What akirby said, with one exception. At this point, it's safe to say that the non-premium, large sedan market is effectively DOA in this country. Investing money in Taurus updates won't halt that decline. The newer (and well-reviewed) Chevrolet Impala isn't gaining any traction, and GM seems to have already given up on the new Buick LaCrosse, given the lack of advertising in support of that car.

[RichardJensen]

 

Focus has $5000 cash back, Fusion up to $4650, Escape $3900

​On the investor side the family also doesn't care about the stock price, they only care about dividend. Which is why you wont see a large stock repurchase program or massive changes. Honestly, If the right buyer came I could see them going private again.

 

Those numbers are not reflective of nationally averaged incentives by Ford, which are as you are no doubt aware, significantly lower than GM's.

 

And the Ford family would not sell, IMO. Not this generation, and probably not the next either.

 

Look at Ford's credit portfolio, their inventory base, and their aggregate estimated incentives. This is a company that is consciously leaving sales on the table in a bubble.

 

It is also a company that has more cash on hand than GM, more cash net of debt than GM, and significantly less pension obligations than GM. There is not a reasonable long-term metric between the two companies that favors GM.

Edited May 10, 2017 by RichardJensen

[akirby]

I wonder what exactly is meant by "heighten his focus on growth opportunities". That seems to be the opposite of sacrificing near term sales and market share in favor of new platforms with more electrification and more performance.

 

Does anyone recall that a few years back Fields stated that Ford would grow its global sales to some larger number by late this decade? I can't find the remark when I search, but I'm pretty sure I remember such a statement. Or am I remembering it incorrectly?

 

In order to have overall growth you have to maintain the existing lineup (even non-growth market segments) while adding new vehicles in new segments. The new stuff is fine but it's taking too long to get here and letting a lot of the existing products languish in the meantime simply isn't working. Sure, it's helping profitability short term but long term it's going to be a detriment.

 

Ford seems to be acting like they have limited funding and resources so they can only do one or the other and that doesn't make sense from a financial standpoint. If it's a people issue then hire more people. They certainly have the cash and profits to do it.

[silvrsvt]

Ford seems to be acting like they have limited funding and resources so they can only do one or the other and that doesn't make sense from a financial standpoint. If it's a people issue then hire more people. They certainly have the cash and profits to do it.

 

The problem with hiring people is that there seems like there is a shortage of qualified people out there. I know my company is having a hard time finding people (Engineers and security types) and my wife is having problems hiring people in her industry because of host of different reasons from the job field itself to credentials they need to perform the job.

[jasonj80]

 

Those numbers are not reflective of nationally averaged incentives by Ford, which are as you are no doubt aware, significantly lower than GM's.

 

And the Ford family would not sell, IMO. Not this generation, and probably not the next either.

 

Look at Ford's credit portfolio, their inventory base, and their aggregate estimated incentives. This is a company that is consciously leaving sales on the table in a bubble.

 

It is also a company that has more cash on hand than GM, more cash net of debt than GM, and significantly less pension obligations than GM. There is not a reasonable long-term metric between the two companies that favors GM.S

Sorry should have been more clear, I meant the Ford family itself would take it private if it could find the right silent investors. They would still remain in control and wouldn't have to play the Wall Street dog and pony show of gambling.

 

​GM (and more so FCA) is a s*** show their old mentality is poking up again. GM actually has some great product now, better than Ford in most markets they compete, they are just pushing way too hard to move it. It is a Race to the Bottom. GM is in an all out fire sale right now-- as is FCA (and Toyota on some models) which in a way explains why Ford is losing share. Issue becomes if I can buy a better car cheaper, why wouldn't I.

Ford's major problem they keep looking at GM and FCA and think we're better then them and they are. That is the same issue they have had for 40 years with the Japanese they don't view them as competitors. Ford has handed Subaru so much market share when they have in their portfolio vehicles they could easily use to compete. A 1.5T AWD Fusion which wouldn't set speed records would be a perfect legacy competitor in NE, Colorado and the NW. Do a Fusion Wagon with a body kit, lift it 2 inches an you have an outback competitor. Same holds true for the Focus market, Focus Hatchback AWD, lift and you have the crosstek competitor. Ford still looks for sales in the 100K+ range and haven't realized that the market fragmented and that 40K here and 40K there still have a decent ROI with common parts sharing and you don't need crazy volume.

 

They haven't simplified their ordering guides. Way too many options, they need to be in Packages, like Honda, Subaru, Toyota, Nissan, VW. Other than the F-150 which needs to be highly customizable for the different uses the truck sees. This speeds up ordering, streamlines manufacturing and lowers costs.

 

​I think Ford overall is doing well, and like most of their management. I don't like Fields, he is sleazy and out of touch. Raj Nair is my choice for who would be a great CEO at Ford.

[akirby]

That's possible. But even if that's the case I think they would be better served to delay some of the new stuff a little and pay a little attention to the current stuff.

[jasonj80]

 

The problem with hiring people is that there seems like there is a shortage of qualified people out there. I know my company is having a hard time finding people (Engineers and security types) and my wife is having problems hiring people in her industry because of host of different reasons from the job field itself to credentials they need to perform the job.

 

​Totally off topic but in the hiring I have done of late the internet has made it impossible. The amount of Resumes you get is laughable, 99% of the people have 0 of the skills we look for that is stated in the ad. I had ~2100 applicants for one job last year, had 5 people called in based on search scores and no one came close to what they had on their resume when they came in. (Job hunting tip, don't show up in Flip Flops and Gym Cloths) We talked the next person we hire there will be no online submittal and people will be required to mail their application in, hopefully 46 cents stops the majority of them.

[silvrsvt]

 

​Totally off topic but in the hiring I have done of late the internet has made it impossible. The amount of Resumes you get is laughable, 99% of the people have 0 of the skills we look for that is stated in the ad. I had ~2100 applicants for one job last year, had 5 people called in based on search scores and no one came close to what they had on their resume when they came in. (Job hunting tip, don't show up in Flip Flops and Gym Cloths) We talked the next person we hire there will be no online submittal and people will be required to mail their application in, hopefully 46 cents stops the majority of them.

 

Yeah I've heard this too, we have a service (Yoh I think?) and they've been pretty terrible from a couple different people I've talked to (HR and non HR people) with getting resumes in for open positions.

 

As for getting back on topic, check this article out...its basically Wall Street punishing GM and Ford for being successful in good times

 

http://www.businessinsider.com/nightmare-scenario-starting-for-ford-and-general-motors-2017-5

[fuzzymoomoo]

That's possible. But even if that's the case I think they would be better served to delay some of the new stuff a little and pay a little attention to the current stuff.

How much more can they delay it? The closest brand new model launch is Ranger and that's still a year and a half away. We found out about that one 2 years ago already. Sure you have the new Expedition and Navigatior this year but those are new versions of existing models. By all indications CD6 (or whatever they decide to call it) is still at least 3 years away. And they're moving even slower with Lincoln.

 

Edit: forgot about Ecosport... should at least mention it.

Edited May 10, 2017 by fuzzymoomoo

[jpd80]

There's nothing wrong with the productivity and profitability of Ford or GM, the issue for Wall street is how little

of that profit and success is flowing to stock as dividends for stock holders. That's a long way different to

either company being imperiled by lack of performance on the financial side.

 

All of this is confidence based and announcing a few plans for the near future would help ease some pressure,

it would also give traders and investors reason to keep or acquire more Ford stock. We also have to understand

that Ford having $28 billion in cash or cash equivalents sitting there while dividends are low irks the market.

Edited May 10, 2017 by jpd80

[bdegrand]

Name five and provide external citations for each.

I know of Fields spending over a billion on moving 1800 employees into Fairlane Shopping center and including 2 MPH walkways for convenience, open areas for meetings, etc probably exercise rooms...maybe use some of the theaters that were at the mishandled shopping center..that was closed due to the area going downhill with crime. Also spending additional billion on self driving cars that now won't be available till mid 2020s...for a small segment of rich people who will probably buying the foreign brands. Also electric bike industry...etc..(Sounds like Jack Nasser and his electric golf cart failures)). In the meantime, GM jumps on the eco SUV market and is scoring big time. Fields has the Eco Sport....importing from India maybe late end of this year. Ouch! That was a major miss on Ford. That's a couple billion I can think of off hand.

[630land]

Wall St types still think Ford is building Pintos and 10 mpg land yachts. "Oh my grandparents drove US cars" says many yuppies who never drive in Manhattan/Brooklyn.

 

The "flyover/rust belt" image persists, but where are those new Teslas?

 

But seems like stockholders want another '65 Mustang, '86 Taurus or '91 Explorer, i.e. to be "Blown away". Or, "release the 100 MPG carburetor!"

They complain about "too many trucks", then "too many tiny cars". Maybe they should come up with ideas instead of whining?

Edited May 10, 2017 by 630land

[silvrsvt]

In the meantime, GM jumps on the eco SUV market and is scoring big time. Fields has the Eco Sport....importing from India maybe late end of this year. Ouch! That was a major miss on Ford. That's a couple billion I can think of off hand.

 

The small SUV market is going to be like the subcompact car market...there is going to be a niche for it, but it still won't be as big of a market as the small or mid-sized CUV market.

 

lets not discount the Ecosport before it even makes it over here. If its priced decently, I think Ford won't have any problems moving them and moving production to Mexico if needed if the market demands it.

 

As for the Mall thing, Ford has been short on office space and won't have all of it done for a few years...why not use some "cheap" to hold them over?

[Anthony]

​Totally off topic but in the hiring I have done of late the internet has made it impossible. The amount of Resumes you get is laughable, 99% of the people have 0 of the skills we look for that is stated in the ad. I had ~2100 applicants for one job last year, had 5 people called in based on search scores and no one came close to what they had on their resume when they came in. (Job hunting tip, don't show up in Flip Flops and Gym Cloths) We talked the next person we hire there will be no online submittal and people will be required to mail their application in, hopefully 46 cents stops the majority of them.

Yeah I've heard this too, we have a service (Yoh I think?) and they've been pretty terrible from a couple different people I've talked to (HR and non HR people) with getting resumes in for open positions.

Ugh, this is my life right now. You'd think finding a experienced Wordpress developer would be an easy task in the general NYC area. I sent out a detailed experience qualifier to various agencies and I've got people coming in saying they know Wordpress and they can hardly log into it. Dude, my requirements were pretty friggin' specific. The headhunters are getting really sloppy.

[fordmantpw]

 

Ugh, this is my life right now. You'd think finding a experienced Wordpress developer would be an easy task in the general NYC area. I sent out a detailed experience qualifier to various agencies and I've got people coming in saying they know Wordpress and they can hardly log into it. Dude, my requirements were pretty friggin' specific. The headhunters are getting really sloppy.

 

 

Hey, I know Wordpress!

 

 

....quickly googles it to find out more details...

 

 

Yeah, I'm your guy!

 

Honestly, it's just hard to find good workers that are willing to put in an honest day's work for an honest day's pay.

[RichardJensen]

 

​hopefully 46 cents stops the majority of them.

 

That's an awesome line.

[RichardJensen]

I know of Fields spending over a billion on moving 1800 employees into Fairlane Shopping center.

 

You have an external source for that number?

[RichardJensen]

Ford has handed Subaru so much market share when they have in their portfolio vehicles they could easily use to compete. A 1.5T AWD Fusion which wouldn't set speed records would be a perfect legacy competitor in NE, Colorado and the NW. Do a Fusion Wagon with a body kit, lift it 2 inches an you have an outback competitor. Same holds true for the Focus market, Focus Hatchback AWD, lift and you have the crosstek competitor. Ford still looks for sales in the 100K+ range and haven't realized that the market fragmented and that 40K here and 40K there still have a decent ROI with common parts sharing and you don't need crazy volume.

 

They haven't simplified their ordering guides. Way too many options.

 

IMO, you're not going to overcome the entrenched 'mind share' that Subaru and Jeep have in those areas; it's one of the reasons I'm a bit suspicious of the upcoming Bronco.

 

I don't think you could raise the Fusion 2 inches and convince Outback buyers that you've built something that is as capable as they believe​ their Outback is, even if, in reality, it is as capable.

 

Also, Subaru is no longer independent--and, in fact, they never really were. They can do niche cars because there's a larger corporate entity that's there to provide a bit of extra funding. Subaru is basically like Lincoln in that respect. Additionally, Ford hasn't the capacity to add niche product, and there's minimal value in replacing an adequately selling sedan with a niche product that doesn't cover the cumulative costs of differentiation.

 

--

 

Finally, I'm pretty sure that nobody in Ford's manufacturing engineering or purchasing departments like the fact that option combinations are getting out of hand again. I expect that's a ground up thing.

 

Dealers will tell you in consecutive sentences, "It's too hard to order a new Fusion" and "Why do you have to get leather with a sunroof?"

 

What they say they want and what they want and what they don't want and what they say they don't want are fundamentally incompatible.

[RichardJensen]

One thing I'd like to see: What do Subaru's market share gains look like if you reduce them by the cumulative percentage of population increases in "Subaru territory"

 

Move to Colorado with a Malibu, and all your neighbors have Subarus, and well... peer pressure.

[bdegrand]

You have an external source for that number?

Here you go...

http://www.mlive.com/business/index.ssf/2016/05/ford_and_fairlane_mall.html

I'm not trying to be negative, but rather concerned about certain future pathways that Mark endeavors to pursue. Note this comment about self driving technology:

Building a self-driving car is one thing, but the next critical phase will be coming up with ways to integrate the cars into normal traffic. Safety regulations, licensing and even how to accurately insure a car without a human driver remain major question marks. That's why Sam Abuelsamid, senior research analyst at Navigant Research, refers to these hurdles as "the remaining questions that are in many ways more difficult to answer than developing the foundational technologies."

Edited May 10, 2017 by bdegrand

[Harley Lover]

I think the decision to build a $1.6 billion plant in Mexico, then the reversing of that decision after the plant was under construction would be a large enough event to bypass the 'mulligan' attitude of the the Board and cause some questions to be asked. That particular situation, in my opinion, needs very thorough vetting by the board.

[tbone]

Here you go...

http://www.mlive.com/business/index.ssf/2016/05/ford_and_fairlane_mall.html

I did not interpret that article as spending 1.2 billion on moving to the mall.

[bdegrand]

I did not interpret that article as spending 1.2 billion on moving to the mall.

The "campus" is the mall.

[jasonj80]

The "campus" is the mall.

No, the campus is everything in Research and Development Center, as well as the improvements by World Headquarters.

 

https://corporate.ford.com/company/community/dearborn-campus-transformation-.html

Edited May 11, 2017 by jasonj80

[bdegrand]

No, the campus is everything in Research and Development Center, as well as the improvements by World Headquarters.

https://corporate.ford.com/company/community/dearborn-campus-transformation-.html

Yes, I wasn't clear, the mall is part of the transformational campus and not just the campus. The point being, Ford is spending well over a billion dollars, probably closer to a couple billion on a 10 year investment! It's a concept somewhat similar to Auburn Hills ...and we all know what happened there! It's simply going to allow workers more wasted time with walking to this department or that department , when they could more easily use electronic conferencing. I remember, in my experiences at Ford, when I tried to reach this person or that....they were NOT at their work station

because they had left to walk to another department. 10 more years on a project that is revenue neutral....and who really knows where Ford is going to be in another decade?

Also understand Ford is dumping another quarter billion dollars on a new wind tunnel in Allen Park. It's suppose to help with Ford's racing program. I think those wind tunnels have no real effect on most vehicles that drive 65MPH compared to NASCAR. Why not rent available tunnels for race cars and use that Quarter billion on more efficient ENGINES and Transmissions.?

Edited May 11, 2017 by bdegrand