Ford faced its fair share of challenges in 2022, ranging from its supply chain and production struggles to soaring inflation, all while attempting to invest heavily in the emerging all-electric vehicle market. Regardless, The Blue Oval issued more recalls than any manufacturer last year, battling quality issues that Ford CEO Jim Farley says will take “years” to fix, as well as an overstaffing problem and an internal combustion vehicle lineup that Farley notes is “too complex,” both of which are hampering profitability. FoMoCo is working to solve these issues, and is set to trim its European workforce in the coming months, but the automaker’s disappointing earnings results have clearly frustrated the Ford CEO.
“And while we generated record cash flow, we left about $2 billion of profit on the table due to cost and especially continued supply chain issues,” Farley said while speaking on Ford’s earnings call with investors. “These are the simple facts. And to say I’m frustrated is an understatement because the year could have been so much more for us at Ford. Now, this is what we should be known for. It’s our legacy, and we’ll show we can do it again. We have deeply entrenched issues in our industrial system that have proven tough to root out. Candidly, the strength of our products and revenue has masked this functionality for a long time.”
“It’s not an excuse, but it’s our reality, and we’re dealing with it urgently. Over the past year, we have made sweeping leadership changes and brought in world-class talent to reenergize and rebuild a leading industrial organization. We’ve committed companywide to implement a lean operating system that will scrub billions of dollars of waste out of our company. And we are shining the light on every inch of our legacy business with knowledge that we must do better every day.”
Ford’s fourth-quarter net income came in at $1.3 billion, which is $11 billion lower than the same period one year prior. The automaker reported $44 billion in revenue, which was higher than Wall Street’s expectations of $40.73 billion, while earnings per share (EPS) fell to $0.51, compared to Wall Street estimates of $0.62.
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Comments
After reading several articles about Ford’s latest earnings, Farley’s actions finally make some sense. Not mentioned in this article, but Ford has 25,000 more employees than GM with roughly the same revenue. The Farley-speak of Ford being “too complex” etc. all boils down to Ford being held captives by unions. Ford is too inefficient and has too many employees and needs to shed tens of thousands of employees. But Farley is stuck and can’t get rid of that many people. GM had the advantage of bankruptcy that took some decisions out of their hands. Farley’s hard pivot to EVs makes a lot of sense in this light because it is his sly way of cutting all the fat from Ford without directly cutting the fat. He is trying to move to the less labor-intense production line so he can get rid of the inefficient employees he can’t just come out and fire. Finally, the guy makes some sense (not saying he is right).
Yes… but when it wants to expand to take advantage of the booming market, the company doesn’t think about the future, it just wants to know how to produce as much as possible… that is, the worker is just a disposable pawn that can be left aside when you are not being more favorable to her… do you want coherence? so set an example by being too!
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The dude can’t win with you.
When you don’t understand where he’s going, he’s wrong.
(Despite him being quite consistent about the personnel issues ((and frankly other issues too)), and how he is going to tackle them.)
And when you finally do get a glimmer of understanding, he’s still not right.
That kind of dissonance is really quite impressive.
Ps you are getting closer but things to know: 1. the company is top heavy with white collar workers who become redundant with simplified ordering and distribution, and engineers who likewise become redundant with the move to BEV. Nearly none of these are unionized;
2. the Union is not the enemy and will work to fairly reduce headcount in good faith given a ford commitment to insource major parts of the powertrain stack (and possibly other high value commodities??).
I have witnessed some pretty terrible behavior from American unionized employees. Drinking beer from Stryofoam cups on the line, smoking and barely working and the Union saves their job anyway. this is a small portion of an otherwise good workforce in most cases though.
two thing that hurt quite a bit this year was lost investment revenue from Rivian and then also lost investment revenue from the AI driving company. neither mentioned above, but certainly a reality. But none of it compares to lost revenues due to expensive recalls. I also think they under priced the Lightning, and Maverick as evidenced by the price hikes. so even though those vehicle seemed like a good deal to us, I think even with the price hikes, they will not be profitable for another year or more. Not because of overhead white collar people, as much as $hitty purchasing agreements and/or amended agreements after the fact.
“Ford faced its fair share of challenges in 2022, ranging from its supply chain and production struggles to soaring inflation, all while attempting to invest heavily in the emerging all-electric vehicle market. Regardless, The Blue Oval issued more recalls than any manufacturer last year, battling quality issues that Ford CEO Jim Farley says will take “years” to fix, as well as an overstaffing problem and an internal combustion vehicle lineup that Farley notes is “too complex,” both of which are hampering profitability.”
But funny that this doesn’t seem to have influenced Ford’s decision to return to F1… if it wants to avoid costs why is it wanting to invest in the category? Even because she is already in Nascar, including being the great champion last year in two divisions, including the main one (Monster Cup)!
Ford doesn’t want to avoid all costs, it wants to avoid costs that it sees as harmful or non value added.
Obviously they see F1 as not harmful and value added.
Full disclosure: I am mystified how F1 will build Ford’s brand.
Big F1 fan, really excited that the are back in the game. Ford was the seed that started Red Bull team years ago.
$2 billion net loss but somehow Ford workers are going to cash in $9k profit share. Sounds like a minimum accountability model to me…
Ford needs to shed about 10k jobs in the US alone; this could have been the time to do that after a couple billion thrown down the drain.
The accountability is falling where it should, at the top.
The reduction from 148% to 90% represents a 40% cut in executive salary compensation.
Sum this up in 3 lines:
1. Bad management.
2. Quality/recall issues.
3. No sedan/cars.
LoL the cars and the overseas manufacturing in SA and India were weapons of mass capital destruction.
👍 speed of the train is the speed of the engine. Sure miss the Mulally leadership.
Another comment worthy of a cow analyzing the rail industry based on seeing the engineer in a passing locomotive.
I can’t speak about the issue of bad management; I don’t know enough of the inner workings of the company. I agree that Quality/recall issues is a problem – at least to other people. I’ve bought new – a ’95 Ranger, ’03 Ranger FX4, ’06 F150, ’12 Mustang GT, ’16 Edge, ’20 F150 , and ’22 Explorer, and NONE have every failed to start, or left me stranded somewhere. I don’t recall any of them going into the shop except for SEVERAL recalls, about half being for Takata airbags. I’ve not (so far, at least) ever experienced any of the problems that the recalls were intended to fix. I applaud Ford for being forthright about defects in their products (with a couple of glaring exceptions) and being proactive in getting them fixed. One of the exceptions is the design error on the 2015 – 2019 EcoBoost engine block design which allows coolant to leak in the cylinders. The other glaring exception is the design of the 10 speed tranny, which allows trans fluid to leak by a seal inside the transmission. Incidentally, my ’16 Edge is lightyears better than any other car I have driven in it’s class. I travel several times a year, and my Edge is much more solid, stable, and QUIET in the interior than anything else I’ve rented.
What a shame.
Burned billions with adventures like rivian, argo ai, poor quality and recalls.
Looks more like serious management issues rather than anything else.
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You guys make me laugh.
Farley’s been quite transparent and self critical about where the problems, challenges, and opportunities are.
And he’s run a decent plan to cut away the parts of the company that have been pointlessly burning profit and redirecting that capital to businesses that do and will earn profit.
But from the comments here are like the analysis a cow would give of the railroad industry based on its comprehension of seeing the engineer in the cab of a locomotive on a train rolling by.
Here we go again…still the apologist for Ford…..face it,. your opinion of Ford is just that…an opinion….get over yourself…the world does not need YOUR spin on it.
Get a life “professor”…….
Oh hi zoleg how is it with Big Oil down on Zk-street?
The process of an earnings call is to explain the state of the companies finances and produce a way forward to greater profitability. Mr. Farley appears to have done that, in a very candid fashion. My take is his plan for Ford is working, however they know they left money on the table in 2022 and lingering challenges and problems remain. AS for ‘Oleh’, take your own advice and ‘get over yourself’. This is an opinion blog about Ford and yours, is way off the mark.
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Agreed Mike, on all points.
Ps don’t be too hard on Xoleg, he’s just working to a price.
This is what happens when EVs are pushed but Americans aren’t interested. Stock fell and is down an immediate 7.61% since yesterday. Even the Executives on the call said EVs were to blame. Our Free Market working perfectly by giving customers all of the power.
Oohhh accurate to hundredth of a decimal point. Yes convincing but only to the ignorant.
The stock was run up before the announcement and after the fall was withing ca 0.19% of where the run up started.
Hopefully my using hundredths of a percent accuracy has hard the same hard hitting creds as your out of context bad faith nonsense.
Funny, I was in on the call and I don’t recall the “our EV be bad” mea culpa you are trying to gin up.
Ps we are not in a free market. You obviously don’t quite know what that term fully means.
Jim Farley is under a lot of heat from everyone (shareholders, customers, board members). He has steadily weakened Ford with his unpopular EV pipe dream, most at the earnings call blamed EVs . Toyota stated again just a few days ago under their new CEO that they will not focus on EVs, and they are performing flawlessly and perfectly positioned for the future since Americans aren’t accepting EVs. If Jim is smart he is dusting off his lackluster resume.
Oh god, not fake Finance Advisor twat again!
I was on the call and Ford didn’t “blame” EV’s.
Toyota’s new CEO didn’t double down on the “reject EVs” falsehood you Toyota sockpuppets are trying so hard to push until TMC has something to show the market. (And now the Toyota sockpuppets try to cloud the issue by pushing “hydrogen!” and “lithium shortage” and “can’t we all just be friends building hybrids?” and “I love Ford sedans, since they are no more, my wife bought a 4-runner.” Hahaha so very believably authentic. (Also here TMC FUDsters are also suggesting Farley is on an ejection seat. Shows how low TMC is going to compensate for its mispositioning.)
Speaking of ejection seats…
Fact: Mr Toyoda slept on a bed of hybrid laurels and upon being jolted awake by the world passing them by, was ejected up to Chairman as he was replaced with a new CEO (you don’t fire the dynastic grandson. And if sales start to sag in the next two years, Toyoda can blame his successors for not delivering BEVs.)
Fact: Most consumers are very interested in EVs and the segment is growing rapidly, Ford’s EV sales are growing faster than the segment.
As a Toyota sockpuppet it’s telling and also funny you call Farley’s resume “lackluster” as he was Toyota’s golden boy and was primed to be CEO of Toyota US before he bailed as dude in charge of Lexus to go to Ford. (Amazing Toyota’s still so butthurt about him leaving after 15 years.)
Please enjoy some 3rd party rebuttal of your BS disinfo:
ft. com/content/2edc2630-a0b6-4b45-8e18-ac3917a68eed
I’m not sure why you describe the shift to EV’s as an ”unpopular pipe dream”. ALL of the car manufacturers (including Toyota) envision a shift to some sort of non-ICE powertrains in the future. GM, Ford, Audi, VW, Kia, Nissan, and everybody else, are introducing new non-ICE vehicles, and the rate of these introductions are only going to increase in the future. The car companies want to sell cars in states such as CA, OR, WA, and others in 2035, and I suspect they believe there will ultimately be a federal law banning ICE powertrains completely at some point. I believe Ford is on the right path to aggressively push EV development, as they see the writing on the wall. I guess time will tell, but at this point I agree with that strategy.
Realistic view and good take summary.
I don’t think a total ICE ban will happen soon, but the boundary conditions of ICE ownership will become less favorable as EVs become more competitive (thru scaled manufacture, R&D, competition) and as the charging network continues to be built out.
I also think ICE vehicles will become more expensive as the scale of their production decreases.
Our family had/has a long list of Fords over the years, going back to the mid eighties. This fool has ruined a once great company. Recently pushed my wife into a new Toyota 4Runner, we will be happy to keep Toyota’s numbers high given that they aren’truining themselves with electrics.
More Toyota sock puppetry detected.
My lord could you guys be any more obvious?
Jim Farley and his executive team should receive no bonus at all. One wonders if Farley is up to the tough action that is required to lead Ford. Nothing but promises. All we see are puff PR about Farley racing cars etc. Go back a year or so on Farley’s very positive comments on Ford. Nothing has changed. Yet bonuses are paid to Senior Executives. There should be NO bonuses at all. Their performance led by Farley is inexcusable.
Clearly you are just arriving from another dimension.
Tough decisions? He’s closed chronically unprofitable plants around the world and exited money burning segments that nobody else would touch.
You are so ignorant of all the big and hard moves being made I am left chuckling at your chuckleheaded comment.
Farley let all of Ford’s problems happen. How much does his bonus get cut?
Yeah! So many problems from one guy only in the job 2 years!
He’s clearly doing too much and doing nothing both at the same time!
As for cuts, all mgt LL3 and above got salary+bonus cuts of 40%.
How do you think we feel when the price of vehicles is through the roof. Suck it up buttercup.
I think you will whine even more but with tears added for full coping sympathy effect.
But in the meantime, rest assured that the Buttercup card you’ve played has unlocked your master alpha status (in your mythical world).
Farley may be a car guy, but is he a CEO leader? He shoots from the hip, gets out in front of himself talking about things he hasn’t thought out or put implementation plans in place to achieve. That puts his organization in chaos which is evident now. What’s the ICE to EV plan? Quality has to improve NOW, not over a few years (other companies have achieved that). Don’t build vehicles you don’t have all the parts for. The list goes on and on. The very things he cites in the Q4 miss are HIS RESPONSIBILITY. Farley isn’t acting like a CEO. In some ways he is like his late cousin, comedian Chris Farley.
Here we have JackassJackassLoser cruelly invoking the personage of a dead man (as at least 2x before under other guises) to bolster the stupidest of inaccurate takes easily refuted by reality.
The reality: Ford has been pretty transparent with its basic plan to clean up all the ballast and crud accumulated over a century and it’s delivering that plan in a difficult environment.
It’s time for the stockholders to protest and riot! Maybe Mary can charge a consulting fee to show Ford how to run a company correctly. GM appears to have their act together and they know Cadillac is King. You can’t pay me enough (bribe?) to buy anything Ford related. Waiting for your unintelligent fanboy remark as always Robert WFA. Bring it on.
Ford’s biggest problem is quality. They don’t have the leadership to fix it.
After that, Ford has lost their core competency. They no longer compete in cars, where a decade ago they offered the best ones due to being shared with Europe. Their heavy duty trucks benefit from fleet sales, but even diehard Ford guys want a Cummins if they buy a diesel truck. GM dominates them in fullsize SUVs, and Durango handily.putclasses explorer in the way explorer differentiates itself from the import crossovers that beat it in every other way. Ford’s electric cars are languishing on lots, with people not interested in buying them. Mustang is the only real winner left, and only because dodge killed off challenger that was walloping it. F150 is a bright spot too, but ramhad them bested in terms of luxury trucks, and the hurricane i6 is likely going to make the new ram the best truck on the market by aile.
Ford needs some sort.of.idemtity other than hoping for 2nd place, but 3rd would be fine too. Until they fix that, everyone will be disappointed by their ear rings.