FORD’S HIGHWAY TO HELL.

By Peter M. DeLorenzo
 
Detroit. (posted 2/7, 3:00 p.m.) "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way..."

No, Charles Dickens didn’t write about the automobile industry, but he might as well have, as the Sturm und Drang and the semi-controlled chaos that are now part and parcel of everyday life in this industry have become magnified with each passing month.

And nowhere is this more on display than at the Ford Motor Company. That Ford has fallen into a kind of a Dr. Jekyll and Mr. Hyde swirling maelstrom of contradictory forces is no big secret. On the one hand, Ford is limned as a train station rehabbing, AI deal-making, Mustang Mach-E-purveying, F150-churning benevolent American icon. This is the Shiny Happy Ford, the car company brimming with indefatigable spirit and with roots that go back to the very beginnings of the auto business in this country.

That this version of the Ford image is carefully crafted and honed to a polished degree is no accident; this is the preferred image for the Ford Motor Company that chairman Bill Ford Jr. not only wants to portray but one that he believes in with all of his heart. And Ford lives up to that ideal in terms of the countless examples of financial support the company gives to the greater Detroit community. That is to be commended and is truly appreciated by the denizens of the Motor City.

But as I indicated, there are two sides to this story. Though Ford operates as Benevolence Inc. and wears its heart on its sleeve while doing so, the company can’t control everything in terms of image and the burgeoning reality of how outsiders view the company.

And the news from Ford World Headquarters in Dearborn early this morning didn’t help. Was it shocking? Oh, maybe for 30 seconds or so, but then again, it really wasn’t a surprise at all. Ford president Joe Hinrichs was being “retired” - at 53 – and Jim Farley was named Chief Operating Officer for the company by CEO Jim Hackett. That Hinrichs was forced out – taking the fall for the company’s dismal fourth quarter financial performance – was no secret, and the fact that Farley had become Ford’s new “golden boy” had already been telegraphed by a series of puff pieces in the media for going on well over a year now. This was after Bill Ford told me four years ago that Farley and Hinrichs "represented the future of the company."

More on Ford’s heir apparent in a minute, but before I get into that, the most pressing question must be asked: Why did Hackett, who presided over the near-cataclysmic financial results that rocked Wall Street, keep his job? I have been waiting for the Hackett miracle to come to fruition for three very long years now, but Ford’s in-house “Professor Moon Beam” has failed to impress at every turn. 

Why does Bill Ford persist in sticking with Hackett? Well, to his credit - or detriment - depending on how you look at it, Bill is loyal to a fault to people he believes in and trusts. Take Alan Mulally, for instance. Bill Ford had absolute confidence in Mulally, and Alan didn’t disappoint, delivering results and profitability while working diligently to fix the “behind the curtain” parts of the business that aren’t glamorous but are so desperately crucial to a company’s success.

Bill Ford didn’t want Mulally to leave and why would he? Bill slept easier knowing Alan was at the helm. After Mulally declined to stay on any longer, Bill channeled his beliefs into who he hoped would be Ford’s next savior, his friend Jim Hackett, an executive who brought a resume to the table that on the surface had nothing to do with running a giant auto conglomerate. Bill Ford alighted on Jim Hackett - who ran Steelcase furniture, with stops at the University of Michigan and in Silicon Valley thrown in for good measure - to be his new “Alan,” or hoped he would be at any rate.

Except it hasn’t worked out nearly as well as he’d hoped. Hackett marked his first year by making esoteric pronouncements on what organizations need and how Ford employees could do better at just being. And while Hackett was busying himself with lectures to the employees and the media on how organizations should run, the people who actually designed, engineered and produced the products were working diligently to keep Ford in the game. After Hackett’s first year of nothingness - and Wall Street’s growing impatience waiting for the “new” Ford - Hackett embarked on the now time-honored industry strategy to reduce costs within Ford with a scorched-earth ruthlessness, endearing himself to exactly no one. 

But the biggest issue Wall Street has is that the professorial, touchy-feely Hackett talks around and around, suggesting the best ways for things to happen, and the way everyone should feel while things are happening, but in true “I’ve-been-lost-on-campus-so-long-I-have-grown-completely-irrelevant-and-out-of-touch” fashion, he is nothing more than an expert air salesman at this juncture. And as we well know – or at least you should know by now – selling air counts for exactly zero in this business. “Selling Air” is the modern-day sequel to the Emperor’s New Clothes, and it’s much ado about nothing because, well, it’s much ado about nothing. So, as much as I loathe the calculated fleecing that’s part of Wall Street’s relentless M.O., the professional scammers there understand when they’re being broadcast to by an air seller, and they don’t much cotton to it. I don’t either. 

Now this has nothing to do about whether Hackett is a decent guy or not, because by all accounts he is, but it has everything to do with the projected image of the Ford Motor Company beyond this region. Here, we accept the fact that Ford does good things for the community, but “out there” in the real – and ever hard-core – investor world, it’s all about “what have you done for us lately?” And Jim Hackett talking about how things are going to be and how we should all feel while these things are happening understandably leaves everyone cold.

And now, at the end of Hackett’s third year in charge, Ford has suffered major screwups with its product launches and recalls, the company’s regions across the globe are in disarray – especially in China, which is Ford’s recurring nightmare – and the company just delivered a devastating quarter of bad news that has the industry talking and Wall Street-types shaking their heads. Tell me again why Hackett isn’t being shown the door? Oh, right, there’s that loyalty to a fault thing, and in this case it’s to the Ford Motor Company’s detriment.

The High-Octane Truth is that Hackett just doesn’t have the depth and breadth of experience to make a real difference at Ford. And right now, the one thing Ford desperately needs more than anything else is a chief executive who understands this business inside and out and can guide Ford through perilous waters. But that is neither here nor there at this juncture. The reality is that Joe Hinrichs got fired, and Jim Farley is now the heir apparent to replace Hackett whenever Bill Ford decides that his loyalty oath has reached its “sell-by” date. 

And what are we to make of Jim Farley? As I said in the beginning, the rise of Jim Farley was almost preordained when he was brought back from Europe three years ago. But who is Jim Farley, anyway? Let’s review, shall we? He is the former Toyota wunderkind who was responsible for the launch of the Scion brand, and who was brought in by Alan Mulally to be Chief Marketing Officer way back when.

And not unexpectedly, his debut at Ford didn’t exactly get off to an auspicious start. Farley didn’t waste any time transforming himself into an enfant terrible right out of the gate. Displaying a prodigiously short attention span and burdened by an excruciatingly painful interpersonal awkwardness, Farley’s belligerent, condescending style of dealing with underlings, along with his classic “parachute in, helicopter out” M.O. - which has defined bad actor executives for decades in this business - became his calling card. Internally, Farley became known as "The Two Jims" and interactions with him became a crapshoot, hinging upon whether people encountered the "good" Jim or the "bad" Jim on any given day. Needless to say, when the "bad" Jim was unleashed, Farley left a trail of bad feelings and highly questionable decisions in his wake. 

Farley has long considered himself to be “the smartest guy in the room” at Ford, much to everyone’s endless chagrin, because the reality is that he isn’t. It’s a carefully crafted façade that is hollow to its core. Farley’s bad executive behavior starts with his inability to listen, considering his own counsel to be by far the best source when it comes to decision making. And because of that, as well as a host of other annoyances, Farley left such a bitter taste in people’s mouths that when he was shipped off to run Ford of Europe several years ago the overwhelming sense of relief internally at Ford was palpable.

Blissfully unaware that he was universally loathed back in Dearborn, Farley seized upon his assignment in Europe, seeing it as a stepping stone to the executive suite at Ford. And the planets were aligned for him to come off as a hero there, too, because the European market had been in the doldrums for so long that the only way it could go was up. Steve Odell, who had been running Ford of Europe and had done all of the heavy lifting by closing plants and laying off people, set the table for Farley to succeed. And the inevitable happened, as Ford’s fortunes recovered in Europe along with the overall market. Farley took advantage of the opportunity and made sure all of the execs back in Dearborn could see what a genius he was, and unfortunately, too many fell for it.

And when Mark Fields was jettisoned from the company, not only did Bill Ford bring in Hackett, he brought Farley back from Europe and made Joe Hinrichs and Farley co-No. 2 executives reporting to Hackett. It proved to be a fateful decision, because at that very moment Farley decided that he was very much going to be The Guy.

An emboldened Farley, unfettered by rational thought and untethered by accountability, turned out – predictably – to be disastrous. With his eyes set firmly on Hackett’s job, the very worst of Farley returned to Ford headquarters, only now his most repugnant qualities were magnified and amplified, with no one seemingly able to rein him in.

Besides his now-signature belligerence and rudeness in full view, Farley started to get out ahead of his skis, making decisions that were puzzling at best and potentially harmful to the long-term health of the company. Having been gunning for Ford’s advertising agency – the WPP-owned GTB – for years for slights both real and imagined, Farley almost immediately put the massive Ford account up for review. This, after WPP/GTB had been involved with Ford for 73 years. Could the advertising be improved? Certainly. And there's a way to do that. But destroying a long, fruitful relationship to assuage Farley’s gargantuan ego was flat-out irresponsible and uncalled for.

Farley also commandeered company appearances in front of financial analysts, something completely beyond his ken, thinking that if he demonstrated his acumen there he would gain favor with Bill Ford and the board. And true to form, this proved to be a total disaster as well. Industry analysts are still talking about Farley’s cringeworthy performance at a Deutsche Bank Global Auto Industry Conference here in Detroit several years ago, where he came off as being someone who was flippant, woefully ill-prepared and not ready for prime time, and consequently Ford came off poorly too. Do you wonder why Ford can’t gain any traction on Wall Street? Farley’s dismal performance that night didn't do the company any favors.

Am I picking on Farley? Hardly. I have only scratched the surface in describing this egomaniacal character and his blatant power grab, and now that he has been given the reins and deemed to be the heir apparent, he could wreak havoc on the company’s future for years. And this simply shouldn’t be, of course. One bad actor shouldn’t be causing this much consternation and hand-wringing throughout the enterprise, threatening to jeopardize everything the Ford Motor Company stands for. 

The only good part of Ford’s announcement today was that Hau Thai Tang – Ford’s Product Chief – will still be a factor. That Thai Tang is extremely talented and capable, and one of the best and brightest at Ford is indisputable. In fact, he should be the future of the company, not Farley.

As I said earlier, Ford PR has been working overtime on pumping up Jim Farley’s image for well over a year now. It has been a charm offensive - or should it be smarm offensive - that has known no bounds. In fact, reading some of these stories, the uninformed might think that Farley walks on water, possesses the riveting intellect that occupies a space in the stratosphere beyond mere mortals, has never put a wheel wrong in his entire career, and is now solidly in the discussion to replace Jim Hackett when "Professor Moon Beam" wanders off into the sunset. These pieces were designed to portray a wonderfully benign Farley, an executive whose rise has no perceptible limit, and whose enduring warmth is something that people crave to bask in. This latest "humanization" campaign of Farley is unmitigated bullshit - and it has nothing to do with the "real" Jim Farley - the one hordes of people at Ford have grown to loathe with a seething level of disgust that is palpable. 

This announcement from Ford makes me fear for the very future of the company. In fact, the company has embarked on a Highway to Hell. I think Ford has five years – tops – to make it. And I am not optimistic. At that juncture the family could very well be forced to make a deal to sell the company, or have their share significantly reduced in some sort of orchestrated takeover. That’s how dire I view this situation to be.

Because when everything is factored in, Jim Farley is simply the wrong person, at the wrong time, at the wrong car company.

And that’s the High-Octane Truth for this week.