Solid Fundamentals

Opinion: Ford’s Biggest Problem Is That It’s Simply Not Cool


January 25, 2019 Cars By
Ford-OpEd-Gear-Patrol-slide-1
Ford-OpEd-Gear-Patrol-slide-2
Ford-OpEd-Gear-Patrol-slide-3

Ford is flailing. That’s what the media coverage will tell you at least. 2018 was a disaster. Profits were down. Presentations for the future underwhelmed. Shareholders are antsy. TheFord-VW alliance does not go far enough. Execs will be doing public penance for the sake of the stock price. Spot CEO Jim Hackett scuttling around the Dearborn campus with tools and plaster to keep the edifice from crumbling.

That narrative may overstate matters a bit. Ford still has solid fundamentals, and there are some things to like moving forward. We’re still talking about profit, in the billions. Last time I checked, no Ford vehicle was built in an impromptu tent in 2018.

Ford still claims the automotive industry’s biggest gold mine. The companysold more than 900,000 F-Series pickups in 2018. It turns a significant profit on each truck. The gap between the F-150 and the No. 2 best-seller Chevy Silverado, about 324,000, is close to the number of Honda Civics sold. Selling trucks now funds mobility, connectivity and every other buzzword.

Ford still produces good cars. It’s hard to find a segment where an American competitor makes a better vehicle. The Mustang remains a cut above the Camaro or the Challenger, whatever the horsepower. It’s still the world’s best sports car per dollar spent. The new Bronco will be the most anticipated 2020 automotive debut. Ford drew laments for getting out of the traditional car market because cars like the Focus and Fiesta were fun to drive.

Ford does things the right way, relatively. Ford, as often noted by Ford, never took a government bailout. Ford isn’tstill in court hashing out a multi-billion dollar safety settlement. Media coverage gets lost in investor jargon about streamlining and reducing Ford’s infrastructure costs. Those costs are euphemisms for people working, often in well-compensated union jobs in the Midwest.

Much of Ford’s volatility has not been Ford’s fault. 2018 was the worst year for stocks in a decade. Declining revenue projections hit share prices like Zeus bolts, even in Silicon Valley. Applelost 12 percent of its value in December and could drop further in 2019. Last July, Facebook posted the largest one-day drop (19 percent) in stock market history. The Tariff War and an economic slowdown in China aren’t Ford’s fault. Ford made an $877 million payment to its pension plan to cover for stock market losses. Ford estimates tariffs cost the company $750 million. That accounts for a lot of the lost revenue.

Ford is doing what its shareholders should want. Ford has emphasized the profitable part of the business (America, trucks, and SUVs). It is paring back unprofitable foreign investments and cars dramatically. Ford is investing in EVs, automation technology and, well, scooters. In an uncertain automotive market, Ford is getting more flexible. Sure, the market may shift back toward smaller vehicles and EVs. But, smaller more efficient vehiclescan still be trucks and SUVs. Having an established, expandable platform sharing and development partnership with Volkswagen would not be a bad hedge for that eventuality.

The chief issue for Ford is simple. Ford can’t be the cool new thing, despite the company’s best efforts. Ford doesn’t fit the modern Silicon Valley innovation paradigm. It’s the already grown company, established in 1903, Silicon Valley wants to disrupt. Ford doesn’t produce the quirky, ludicrously performing sports cars venture capitalists and their friends buy. Not being cool has ramifications with investors and beyond that with recruiting talent. There’s a reason Ford bought Michigan Central Station and plans to become a fixture in happening Corktown, Detroit.

As Apple and others have found out, however, the car industry is not the tech industry. Innovation can change the industry. But, it’s much easier for established players like Ford to catch up on technology than it is for a small EV company to scale up to mass production.

Moreover, this is not the first time the media consensus has doubted Jim Hackett. His last high-profile gig was interim University of Michigan athletic director. Hackett inherited a tire fire of scandal, alumni alienation and football underperformance. Reporters convinced themselves he was a dilettante. The national media rubbernecked around Michigan’s coaching search, waiting for the inevitable train wreck. It didn’t work out that way.

Hackett hired Jim Harbaugh, the NFL’s hottest head coaching candidate, to coach a college team. He modernized Michigan’s brand with a $174 million Nike deal. He walked off into the sunset, then to a bigger management role at Ford.

There’s still a chance Ford’s changes could work. Hackett could make a lot of skeptics look stupid. But, Ford desperately needs better headlines. Maybe the new Bronco will be Ford’s Jim Harbaugh.

2020 Ford Mustang Shelby GT500: Affordable and Purpose-Built to Embarrass Supercars

With a supercharged 5.2L V8 that will generate more than 700hp, the Shelby GT500 is the most powerful street-legal Mustang ever.
Read the Story

Newsletter Sign-Up
Get the best new products, deals,
and stories in your inbox daily.

By submitting your email, you agree to our Terms and Privacy Policy to receive email correspondence from us.