A leader’s job, on an ongoing basis, is to thoroughly understand what is going on in the business, have in place a high impact plan to significantly improve the business, and to continually execute with excellence. Any sign of weakness/opportunity should be tackled with gusto, and necessary initiatives launched to stay on track for continual success.
We have seen none of this from the Ford Motor Company in recent years. The results of the latest quarter, and their projections for 2020, are typical of Ford’s current ineptness. Specifically, the company reported 12 cents of per share earnings for Q4; Wall Street expected 17 cents. Revenue dropped 5%. The real downer was Ford’s revised estimate for 2020 that it will earn $1.07 a share, well below the $1.26 Wall Street predicted.
When those quarterly results were announced three weeks ago, the stock price dropped -10% to the $8.00 range, and has been there ever since. Over the past 5 years, Ford stock has dropped -52%, while the S&P 500 Index has gained +58%.
Ford pinned the disappointing results on lower production volumes in North America stemming from problems with launches of key models, including the redesigned Explorer and Escape sport-utility vehicles and its Super Duty pickup truck. The Explorer mess-up was particularly disappointing, in that it was to be the big event of the year. Unfortunately, there were problems ramping up production and a lot of vehicles had to be shipped back to Detroit for repairs before being sent to dealers. In China, where Ford lost $200 million in the most recent quarter, the Company has been very slow in updating its vehicle lineup and keeping pace with Chinese tastes.
The current CEO, who has been in the job for 3 years, commented: “the company’s 2019 performance was short of our original expectations, mostly because of operational execution.” It was just one year ago when the same CEO was giving a similarly anemic explanation about Ford’s weak 2018 results, commenting to his staff in a memo that he was angry about the mediocre results and advised employees to “bury the year in a deep grave.” I am not sure what kind of message that delivers!
When pressed to talk about plans to get Ford back on track, the current CEO cited the futuristic initiatives he has launched, such as testing driverless pizza delivery and an all-electric SUV version of the Mustang. Pizza delivery? Muddling Mustang’s strong muscle-car image? Not exactly excitement-generating stuff!
The ideal leadership actions cited at the beginning of this blog are currently nowhere in sight at Ford. The good news is that the Board of Directors seems to have noticed this, and very recently named a Chief Operating Officer who is clearly destined to replace the current CEO, who will reach the age of 65 within a year. Ford shareholders must be hoping change will occur much quicker.