(Bloomberg) -- Ford Motor Co.’s recently appointed chief operating officer sees the struggling automaker operating with the same sense of urgency and crisis that kept the company out of bankruptcy a decade ago.
“Everyone at Ford knows the situation we’re in,” Jim Farley, who becomes COO on March 1, said Wednesday at a Wolfe Research conference in New York. “I can see it on the faces of my colleagues and it takes me back to about 10 years ago. I’ve seen the look before.”
Ford lost $14.8 billion in 2008, the most in its then 105-year history, but was the only automaker in Detroit to avoid the bailouts and bankruptcies that befell General Motors and Chrysler a year later. The tables have turned recently as Ford let its product lineup lapse, posted a string of dismal earnings results and botched the launch of its redesigned Explorer sport utility vehicle. Its stock closed Tuesday at the lowest in more than a decade.
Farley contends Ford functions best when its back is against the wall.
“When I see Ford at its best was in ’08, coronavirus, Thai floods, earthquake in Japan,” Farley said, recounting the current and previous calamities the company has faced. “When there was a threat, the team comes together, decisions get made quickly at the right level. It’s very natural.”
The promotion of Farley, 57, was announced earlier this month along with the early retirement of Joe Hinrichs, the other president of the company.
Immediate Fix
Farley said he is focused on fixing Ford’s problems, accelerating Chief Executive Officer Jim Hackett’s $11 billion turnaround plan and growing its business.
His first priority is improving Ford’s financial performance by smoothly launching important new models, including the revived Bronco sport-utility vehicle, the electric Mustang Mach-E and a redesigned version of the F-150 pickup, the company’s biggest money maker.
“We need to immediately fix the reliability of our cost performance and especially our launches,” Farley said. “We’re launching very, very expensive products. So the first one is to really fix our execution capability around launches, warranty costs, delivery and revenue. I would say that’s No. 1.”
Ford shares rose 2.7% to $7.42 as of 10:54 a.m. in New York. The stock has dropped about 20% this year.
Farley sees an opportunity to wipe away much of the $5 billion it spends annually on warranty repairs by harnessing data coming from newly connected cars to head off problems. But that will require Ford to hire new tech talent that can create software solutions for the flood of data coming from its cars, which will all have modems by the end of this year.
“It’s a completely new muscle,” Farley said of the data mining that will save the company billions in repairs. “You really have to wire up the company differently.”
(Updates with additional COO comments from fourth paragraph.)
To contact the reporter on this story: Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net
To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson
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