Howes: Ford brass fumbles answer to lagging share price

Howes: Ford brass fumbles answer to lagging share price
Daniel Howes , The Detroit News 10:55 p.m. ET May 11, 2017

Bill Ford Jr. chats with CEO Mark Fields before the start of the press conference on January 11, 2016. Ford shareholders used the automaker’s first-ever virtual annual meeting Thursday to probe for something, anything, that might juice Blue Oval stockPity Ford Motor Co.
With its share price down nearly 40 percent since CEO Mark Fields ascended to the top job in July 2014, shareholders used the automaker’s first-ever virtual annual meeting Thursday to probe for something, anything, that might juice Blue Oval stock.
The answer: not much.
Buybacks? Management continues to evaluate them. More profit-rich trucks and SUVs? Yeah, but all that does is reinforce the trucks-first reality weighing on the share price now that the auto cycle has peaked and investors are looking for the next new thing.
Investments in electrification, autonomy and mobility? Necessary, but not yet sufficient to drive the kind of growth Executive Chairman Bill Ford Jr. is betting his legacy on. Options? Ford’s brass sounded an awful lot like it doesn’t have many, save planting one metaphoric foot in the present and the other in the future.
Illustrative, that, but hardly the stuff of a market rally. The cold, hard facts are less comforting for long-suffering shareholders whose stakes are stuck in reverse as the broader equity markets trade near record highs — and shares in the tiny electric-car upstart, Tesla Inc., are worth more than iconic Ford.
Options are few. There are no more foreign brands to sell. No more Mercury to euthanize. No more rebirths, please, of Lincoln, a would-be luxury brand in search of a niche. No evidence — so far — that the automaker that was global before global was cool is looking to make like rival General Motors Co. and abandon a large swath of the globe.
The dirty little secret of the magic performed by super-CEO Alan Mulally is that he led a radical re-engineering of Ford’s core business — rationalizing its product portfolio and plant network, paring its brands to two from eight, deploying industry-leading infotainment technology to give the Blue Oval brand some much-needed high-tech cred.
He succeeded, positioning the automaker for a long, strong run of profitability; an impressive rebuilding of its struggling European business, a feat that eluded rival GM; an expanding business in China; and the inescapable fact that a traditional Detroit automaker actually can change its ways without needing direct intervention from American taxpayers.
But position the automaker for next-generation mobility? Not so much. That responsibility falls to Fields, a Ford veteran, and the chairman whose name is on the building. More than anyone, Bill Ford is the visionary behind the incipient transformation — and the prominent constant linking the industrial Mulally era to a digital future in search of realization.
Bridging the divide, and persuading investors it’s for real, is proving far more difficult than it sounds. Ford and its Detroit rivals bear the burden of their own history, a past of broken promises and capital destruction too fresh for investors to forget.
That’s the harsh reality. For a company coming off record earnings the past two years, you’d be forgiven for thinking the Boys in Dearborn can’t win. Just when years of tough restructuring and a virtuous business cycle combine to deliver fat profits, paradigm-breaking technology shifts market and investor sentiment.
Cars are yesterday’s news, the smaller models shipped off to production sites in low-cost countries. Trucks and SUVs, the heart of Ford’s business, don’t deliver enough growth for investors demanding it. And investments in electrification, autonomy and mobility services represent promises the Blue Oval may not necessarily be able to keep.
“We’re as frustrated as you are by the stock price,” Bill Ford told investors in their first-ever virtual annual meeting. “The Ford family wants the stock to go up. Our net worth is tied up in this company. Of course we want it to go up.”
Of course they do. But wanting and doing are two different things, and the options are limited for the company to make it happen.
Even bold strokes — think GM’s decision to sell its European business to PSA Group of France for $2.2 billion — are insufficient to change the investment thesis hanging around Detroit’s figurative neck. Managing profitably through the next slowdown, and making discernible progress in the mobility-and-autonomy space, increasingly looks like the only paths forward.
Ford, and the guy named Ford, knows that. Directors pressing CEO Fields for more growth-oriented action know it. And shareholders who bother to think through the broad sweep of the past 10 years, of the existential crisis Ford survived, should know it, too.
The question is whether Ford, or GM or Toyota Motor Corp., emerge as the “right” century-old industrial players to plant themselves in the automotive present and the mobility future. Whoever gets there first, successfully, will be the one for shareholders to own.

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