Like any mechanic with a misfiring car, Ford's new boss has had his head under the hood working out what needs attention.
Jim Hackett emerged on Oct. 3 with a checklist of repairs to present to investors, who have been awaiting his diagnosis since he took over in May. The list is short but the engineering is complicated: restore Ford's competitiveness while preparing for a future of electric vehicles (EVs), self-driving cars and transport services. But those expecting a radical overhaul were probably disappointed.
Hackett's predecessor, Mark Fields, was shown the door by Bill Ford, the firm's chairman, for failing to make a persuasive case that he was reinventing Ford as a mobility firm at the forefront of automotive technology. Despite acknowledging to investors that he and Ford agreed that his new job was "about the future not the past," Hackett was clearest about how to make Ford fit for the present.
In recent years, Ford has underperformed even amid the lowly stock market valuations of carmakers challenged by tech firms with bolder ideas. Hackett acknowledged to investors that, despite record profits of late, Ford had fallen short on margins, depriving them of billions of dollars. He hopes to put that right chiefly by using old-fashioned means — cutting costs.
Reducing complexity by pruning the huge variety of different specifications available for each vehicle (in the case of the Focus, from 35,000 to 96) and sharing parts across more cars will help to lower costs, which have risen almost as fast as revenue since 2010. Bringing better technology to the industrial process should also cut the time that it takes to develop new vehicles, by as much as a fifth.
This will all bring savings of $14 billion over the next five years, Hackett said. Plans are also afoot to make more of the sort of cars that people want to buy. Buyers are turning against saloon cars and are demanding SUVs and trucks, so Ford will make more of them. But altering the lineup of products is hardly a step-change. These are sensible fixes. But it is unlikely that Hackett's measured tone will reassure investors that Ford is taking a lead in the new technologies that will determine success in the longer term.
Neither does it help that its rival in Detroit, General Motors, is doing a much better job. It launched a long-range EV, the Chevrolet Bolt, last year, and on Oct. 2 said that it planned 20 electric models by 2023.
Despite announcing that it would reduce spending on internal combustion engines by a third by 2022 and divert that cash to electric powertrains, Ford will not launch a similar vehicle until 2020. Ford insists that it is only interested in profitable EVs. But withstanding losses while learning how to make and market battery-powered cars may give GM and other carmakers a long-term advantage.
Ford also aims to become the world's most trusted mobility company. Much like all bosses of carmakers faced with the puzzle of finding business models around ride-hailing and autonomous cars, Hackett was vague about how Ford might provide services profitably. He did at least signal that it would find partners for self-driving technology, abandoning Fields's riskier strategy of doing everything internally.
Striking the right balance between "thinking and doing" is important, said Hackett, who wants to "bend the arc toward doing."
That is certainly what catching up with GM will require. Deutsche Bank recently suggested that Ford's rival may have commercial driverless cars on the road within the next couple of years, well ahead of any competitors.
Ford has plenty of ground to regain. As Barclays, a bank, points out, it went from being the "darling" of the industry a few years ago to a firm that investors now treat with "indifference, disinterest [and] apathy." Hackett has announced more than mild tinkering. Investors will doubtless welcome the attack on costs but he has no revolutionary scheme that might make them love Ford again.