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Ford Strategy Coming Under Tight Scrutiny

Board of directors expected to press Mark Fields for answers.

by on May.11, 2017

Ford CEO Mark Fields may be forced to answer some tough questions from the company's board of directors this week.

With its long history of sudden changes in top management, any suggestion inside the Ford Motor Co. that a key executive might be facing tough questions about the direction of their management is certain to create ripples.

The tremors around this week’s meeting of the company’s board of directors prior to the Ford’s annual shareholders meeting were created by reports that CEO Mark Fields was being asked to explain the company’s less than stellar performance in the first quarter of 2017.

Beyond the Headlines!

Ford’s profits dropped at the same time rivals such as General Motors Co., Fiat Chrysler Automobiles NV and Daimler AG were all posting big increases in profitability. The concerns were exacerbated by thousands of headlines indicating that on a market cap basis Tesla was now worth more than Ford.

In addition, the company’s stock price has languished, falling by more than a third since reaching a post-recession peak of more than $17 per share at the end of 2014 a few months after Fields took over as CEO from Alan Mulally. The stock is now trading at around $11 per share even in the midst of post-election-day rally that lifted key market indexes this year.

(Weak auto sales lead to new Ford layoffs. For the story, Click Here.)

The website Seeking Alpha noted that Ford’s problems could be temporary. But Ford’s shares seem to face some stiff headwinds. “The negativity around shares right now is extremely high, and it seems everybody and their mother is giving themselves an ‘attaboy’ for seeing the price depreciation ahead of time,” the site noted this week.

Ford hopes to gain share in a fast-growing Chinese market for electrified vehicles, but the automaker lags GM and others in their development in the U.S.

With the first quarter results in the books, it comes as no surprise that Ford’s directors might decide to start asking for more clarity about Ford’s strategy at this point.

Since taking over as CEO, Fields has stressed the need to adapt to a fast-changing world where new technology and new business models are reshaping the whole notion of what is now being called at “mobility.”

Ford is now a recognized leader in the development of autonomous vehicles. At the same time, the company has become steadily more dependent on selling trucks to remain profitable, while its product development cadence seems to have slowed to a crawl.

(Click Here for details about Ford’s tough Q1 finanicals.)

Thus it shouldn’t be a shock that some inside the company are suggesting that Ford spend less time in Silicon Valley and more time in Dearborn, Michigan, addressing the problems with the company’s core business, which continues to lose market share as the company’s sales for Ford passenger vehicles have dropped.

A Ford spokesman declined to comment on the board’s deliberations, noting the company doesn’t comment on the board’s agenda.

At the same time, Ford has fallen behind GM in development of electric vehicles, a point recently noted by GM Executive Vice President Mark Reuss, who added that the GM’s edge in electrification also gives it advantages in the ongoing race to develop autonomous vehicles.

“GM has been a bit more aggressive in pure electric cars and on car-sharing and ride-hailing with their investment in Lyft,” said David Whiston, an analyst with Morningstar Inc.

(Ford will build EVs, plug-ins in China. Click Here for the story.)

“This is the first public sign that the board is becoming impatient,” Whiston said. “It’s likely proof that the board is frustrated with the stock price languishing for the past several years. It may be a grilling session for Mark (Fields).”

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