Ford Motor Co.'s board of directors is replacing Chief Executive Mark Fields with industry outsider Jim Hackett amid a sagging stock price. It is not just poor communication with Wall Street that cost Mr. Fields his job -- he also struggled with Washington.
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A longtime Ford executive, Mr. Fields is seen as having unnecessarily put the iconic car company on President Donald Trump's radar during last year's campaign, according to a person familiar with the board's thinking. As then-candidate Mr. Trump was railing on companies that make products in Mexico and ship them to U.S. stores, Mr. Fields boldly told shareholders about a plan to move production of the Ford Focus from Michigan to San Luis Potosí.
What Mr. Fields didn't make clear was that the auto maker had specific products in mind to replace the Focus and preserve jobs, the person said. Mr. Trump pounced, painting the 114-year-old auto maker founded by Henry Ford as the poster child for outsourcing and Exhibit A of why the North American Free Trade Agreement was bad for American workers, including the roughly 150,000 factory workers employed by Detroit's Big 3.
The spotlight came at a bad time for Mr. Fields because he was working to change the perception of Ford by making a slew of announcements about so-called mobility projects (such as ride hailing or car sharing) at a time when the auto maker is primarily dependent on pickups and sport utilities. The timing of Mr. Fields' Mexico announcement was seen internally as a major gaffe, reinforcing a growing perception internally that his management team struggled to connect with constituents ranging from wealthy investors to everyday Americans, according to the person.
The actions Mr. Fields took in the span between Mr. Trump's nomination as the Republican candidate for president and Inauguration Day only created more confusion, the person said, and ended up costing the company hundreds of millions of dollars in lost investment due to the cancellation of the San Luis Potosi plant.
Mr. Fields couldn't be reached for comment. A Ford spokeswoman declined to comment on management moves.
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Almost as soon as he announced the Mexico strategy for outsourcing small cars, Mr. Fields worked to clarify it, saying the company would invest heavily to retool the Michigan factory for production of more popular trucks ad SUVs. The company also worked to highlight its North American footprint, providing stats that showed an overwhelming amount of the products sold in America were built in the U.S.
The company, for instance, said it had created 28,000 new jobs in the U.S. since 2011, part of $12 billion worth of investments. Employees also highlighted 488 open U.S. positions at the company, and pointed out that the trucks taking the compact Focus model's place on the Michigan assembly line are more profitable for Ford.
Mr. Trump, however, wouldn't let Ford off the hook, highlighting Ford's strategy in debates with Democratic rival Hillary Clinton, at campaign stops and on Twitter. The United Auto Workers union, long seen as cooperating with Ford more than it typically cooperated with General Motors Co. or Fiat Chrysler Automobiles NV, supported Mr. Trump's sentiments.
Mr. Trump didn't solely target Ford, having taken aim at the overseas manufacturing plans of Carrier Corp., Whirlpool Corp. and the makers of Oreo cookies and Sentry Safe. Criticism of Ford reflected wider concern about a U.S. manufacturing base in which car factories have long been the backbone. Ford, GM and several other major auto makers committed more than $26 billion to investment in Mexico since 2013, sparking a factory-building spree there at a time when new U.S. vehicle plants are rare and some Rust Belt car facilities have closed.
Mr. Fields fielded questions about the Mexico strategy on earnings calls and at auto shows, occasions where he would rather talk about profit growth prospects or new products and moonshot projects like autonomous cars. In December, he told The Wall Street Journal the Mexico plan was set even after Mr. Trump was elected and turned up pressure on Ford. Mr. Fields insisted it was too late to stop a construction project because small Focus sedans needed to start rolling off the line in 2018.
Then, Mr. Fields abruptly changed course, announcing the $1.6 billion San Luis Potosi factory project would be stopped, and the small cars would be built at an existing Mexico facility. The company had earlier told Mr. Trump that it was also reversing course on sending a Lincoln product to Mexico.
The auto maker booked a $200 million hit related to the factory cancellation, but said some of the money saved on the overall investment would be used to create hundreds of jobs in Flat Rock, Mich. Mr. Trump has since highlighted Ford as one of the companies investing in America due to political pressure he applied during and after the campaign.
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(END) Dow Jones Newswires
May 23, 2017 02:47 ET (06:47 GMT)