The Single Most Baffling Thing About Ford in 2018

"Great leaders are almost always great simplifiers, who can cut through argument, debate and doubt, to offer a solution everybody can understand."

-- Colin Powell

Understanding problems and finding solutions: That's what every great management team is tasked with. And Ford Motor Company (NYSE: F) has been presented with plenty of challenges during 2018. For many smaller problems, Ford has offered solutions. But the most baffling thing about Ford in 2018 has been its lack of communication, vision, and details surrounding its massive restructuring plan and strategy going forward.

Examples of problems solved

Before we get to Ford's baffling bumble with its lack of restructuring plans and postponed investor day presentation, it's not as if Ford hasn't produced solutions to some of its problems in 2018.

For instance, Ford's woes in China have been well documented, especially during the second quarter. Its sales in China tanked 32% during July, compared to the prior year, and have dropped 26% year to date through July. Ford's results in China were the key force behind its Asia-Pacific region posting a staggering $394 million loss during the second quarter, compared to the prior year's $167 million EBIT profit.

The problem behind those poor results was simply Ford's aging vehicle portfolio in the region, causing consumers to look elsewhere for new vehicles. Ford's solution was to announce the launch 50 new vehicles in China by 2025 to drive revenue by 50% over the same time period.

Another massive problem for the folks at the Blue Oval this year hit closer to home. Ford brand year-to-date sales in the U.S. posted a 0.9% decline through August, driven almost entirely by a staggering 15.3% decline in its passenger car sales. That problem worsened during the months of July and August with a steeper 27% and 21% decline, respectively, compared to the prior year. Ford's solution, which has been controversial with some analysts and investors, was to end the production of nearly all its sedans in the U.S. and dedicate that production capacity to more profitable SUVs such as the Bronco and the returning midsize Ranger truck.

Here's what's baffling

Ford's management has proven capable of addressing multiple problems throughout 2018, but it has so far failed to put together a big-picture plan. Through CEO Jim Hackett's first year at Ford, presentations were filled with catchphrases such as "getting fit," but there were few details about how that was going to transpire. Further muddling the road map, management canceled its investor day presentation, which drew the ire of some analysts during its second-quarter conference call. One analyst even questioned whether Hackett would be around to present at a later date.

While we have heard a few more scattered details since the second quarter, management has admitted it only plans to release information as we trudge through a mysterious turnaround. That's completely different from the clear and concise turnaround plan Ford delivered to investors under former CEO Alan Mulally. That plan -- called One Ford -- was communicated thoroughly. It helped make overall product development roughly two-thirds more efficient between 2006 and 2012, and also produced vehicles consumers wanted to buy in higher-demand categories.

Investors and analysts agree it's time to evolve beyond One Ford, which has done its job. But it's baffling that Ford isn't using the same recipe of clear communication, vision, and details -- attributes that helped Ford stand above its peers during and after the recession.

There are so many questions and few answers: Will Ford's vague $11 billion price tag for restructuring charges include worker buyouts or market exits? Is Ford's dividend as safe as CFO Bob Shanks tells The Motley Fool it is? Is buying shares at a cheap sub-6 price to earnings ratio too risky after Moody's Investors Service downgraded Ford's credit rating to one step above junk? Can Ford turn around its struggling European, South America, and China operations before North America faces a downturn? And is Ford being left in the dust with its driverless vehicle ambitions?

Consider that General Motors has already made decisive moves to exit its European operations and has surged forward on its driverless ambitions with GM Cruise -- which one Wall Street analyst says is worth $43 billion -- to produce a driverless vehicle at scale in 2019. Fiat Chrysler Automobiles delivered an ambitious and concrete five-year plan that checked the boxes for analysts and investors, including a path to doubling profits, phasing out diesel vehicles in Europe, an autonomous-vehicle plan, and specific brand strategies.

Will Ford get it in gear?

In the years following the recession, Ford seemed to be heeding Colin Powell's aforementioned advice. It stood above its competitors after avoiding bankruptcy, using concise turnaround plans, strong communication, and an ability to simplify solutions across the globe. Ford had a story, and told it well. It's baffling that, after having done such a tremendous job then, management today has left so many unanswered questions and provided little vision. As a shareholder, I hope that changes soon.

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Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford. The Motley Fool has a disclosure policy.