Ford CEO Jim Farley has long made it quite clear that the automaker needs to cut costs in a big way, as he sees a huge perceived cost gap between The Blue Oval and its rivals. In fact, then-Ford CFO John Lawler pointed out that this very same cost gap stood at somewhere between $7-$8 billion back in 2023, which is precisely something Ford has been working to trim back in the years since. However, according to Farley, it seems as if Ford hasn’t been cost competitive in quite a few years.
“Well, I’ve been at Ford for over 15 years, and there’s really been one period of time where we did have our costs in a competitive zone, which is in ‘08, ‘09, but we restructured to do that in North America, and then the cost came screaming back,” Farley said during a fireside chat at the recent Wolfe Research Auto, Auto Tech, and Semiconductor Conference. “So for us as a leadership team, it’s been a humbling journey, but it became very clear to me about a year and a half ago that we had to change our approach to cost.”
This long-time cost gap is a big driving factor behind some of Ford’s more recent moves, including a decision to not give around half of the company’s middle managers a stock bonus this year – a decision designed to help the automaker further cut costs while also incentivizing employees to improve their performance. Farley previously stated that he believes Ford employed around 25 percent more engineers than it actually needed as well, too.
As Ford Authority reported yesterday, The Blue Oval is also reportedly pushing back the launch of the next-generation Ford F-150 from 2027 to 2028, though it’s unclear why the automaker opted to make that move. However, some have speculated that a desire to cut costs could be a motivating factor, though that’s completely unsubstantiated at the moment.
Comments
Like I said a few hours ago, the problems have been going on for 15-ish years. But, Ford has made a bevy of poor decisions in that timeframe, so it’s not just costs, Jim, it’s also poor management.
I am recommending you to lead Ford, you always have all the answers. Thank you my trusted friend.
In 2023, Jim Farley, the CEO of Ford Motor Company, earned $26.5 million in compensation. This was a 26% increase from the previous year.
Breakdown of compensation
Base salary: $1.7 million
Stock awards: $20.3 million
Non-equity incentives: $2.4 million
Other compensation: $2 million, which included perks like company vehicles and private aircraft
Factors affecting compensation
Farley earned 84% of his potential annual bonuses.
T.
Get Rid of All the Compensation! Cut his Salary at Least in Half!!! If he don’t like that??? Then he can Go Somewhere Else and Screw up another Company! No one is worth that Kind of Money. NO ONE!!!
Just a note about motivating the non-union work force…there’s a old practice which I was the fortunate beneficiary of while I was working…and it was called a Profit Sharing Plan. There were several benefits to a plan like this: first, the company could reduce in taxable income by literally giving some of the profits to the employees in terms of a 401K or other retirement based vehicle. Second, it certainly was an incentive for employees to do their best, come up with innovative ideas on how to improve company performance, knowing that they would get
funds deposited into their retirement fund if the company did well. Stock options are variable over time, and their values rise and fall. Funds from Profit sharing is cash invested in whatever vehicle the employee see fit. It’s old, and most companies don’t use it anymore…but I can with certainty, it works!
Oh, and innovation and new ideas on how to improve things, don’t come from the top, they come from the employee base. The best practices a manger or leader can exhibit, is to listen, get out of the way if an idea or approach seems like it has merit, and let the idea run to ground…test it out. Too many mangers want to take credit for ideas that are not really theirs. Instead of being advocates for those employees that do and try to be creative. Nothing stifles creativity more than than leaders who haven’t been taught to properly lead.
Very wise words Mark. Your comments are always spot on.
Except when it comes to politics. Yikes.
He has a good idea of most other things though, agreed.
Just Like in Vietnam Mark, If you were a Lieutenant and were on the Field of Battle, you Got off that Field of Battle… Or you Got SHOT!!! Stay outta the way Jimmy, Let the Troops Speak and Listen to them “OR”?????
Why not make Ford edge hybrid. You would have the best of both gas and electric. Electric is not efficient. No long distance driving. Does do well in extreme cold temperatures.
Look at how much Ford is pissing away on Racing LeMans, F-1 got be close to a Billion +!
Mark ,above is spot on .
The biggest problem Ford has today is Jim Farley. It funny how Jim continues to put out press on what he says is the problem, when for the most part all he has to do is go look in a mirror.
Ford stopping building Cars, to focus on the F150, and a few SUVs automatically limited or eliminated all low to moderate income new vehicle buyers. Jim’s insistence on making more money from each vehicle, as opposed to selling more vehicles at a lesser profit pushed many loyal customers to other brands, that offer not only more variety, but lower out the door prices, with more and better tech, and better interiors.
Under Jim’s watch Quality has suffered big time! There are costs with building vehicles in Foreign countries, and one of those is Quality. In short, Upper managements poor decisions , and some of them are huge , have not increased efficiency at Ford, virtually every one has harmed Fords bottom line. Jim insisted and still did up until very recently on full EVs. When Americans were overwhelmingly moving toward HYBRIDS to save fuel, and not have to deal with the plug ! What was Jim’s reaction, he cut production of the popular Explorer Hybrid to only Police forces. Dumb ! Every vehicle they offer should have a Hybrid option.
So Jim, look inward to find Ford’s problems, not to your workers or economy factors, as much…
Ford’s best quality vehicles come from other countries. The ones made in the US are the ones with the most build quality issues.
He didn’t “cut” Explorer hybrids to just Police vehicles. The police ordered so many that it took up all of production and they had contracts to fulfill.
What Barra and Farley do not realize is that you can’t cut your way to prosperity. GM for the past 40 years, and to a lesser extent Ford since 2003, have been doing this and all they have to show for it is record low US market share and loss of industry dominance.
GM under Barra has vastly outperformed Ford and Stellantis in just about every measurable performance category. I really can’t believe the Ford family hasn’t gotten rid of Farley at this point, his performance has been abysmal.
Why pay big dividends when there lots of debt service going on. Hows that train station working out for s free billion ford motor is a piggy bank gorvyhe ford fzmily
Jim and Mark are spot on their comments on Farley. I have been driving Fords for over 5O years and my parents before me. I am so disappointed in a great American Brand that has the last two CEO’s that have not had a clue what they are doing and not listening to their customers. They would do better to hire a Dealership owner who knows what Fords customers want and the quality they expect.. I have never seen so many recalls on our family vehicles and company vehicles! I hate to say this there is no quality is job one any more period!!! Even the dealers are getting brand new vehicles in with no fluids in them..My wife has a 22 Lincoln Aviator and wants a 25 Expedition Platinum but who in the hell knows what we will get in all the new electronics..I really want to buy Fords and from American companies but I am tired of pissing money away!!!!! Enough is enough!!!
Get rid of the unions, hire people based on merit and not the fact that their daddy or mommy worked there.
Spending Billions on EV’s that consumers don’t want and can’t afford.. Serious quality issues with the Super Duty trucks, and overinflated cost for an F-150… Go figure..
Not to mention spending Billions on EV’s that consumers don’t want, and also cannot afford… Super Duty truck quality issues, and over inflated pricing on F 150’s … go figure…
Keep pushing electric vehicles no one wants
Sometimes when one makes a lot of money, they like to pass the buck, but when one gets paid an outrages amount of money it kind of hoes to their head and guess who pays in the end? It’s not those who have a lot more & make a lot more than most! We got one of those in the Whitehouse right now, I hope he doesn’t rub off to the company leaders in this country!
I have read some great comments on this site as reactions to the article. I agree with many of them and it is sad that it took Jim Farley this long to recognize some of the obvious issues with Ford. He also talks about cuts, but if you look at the executive salaries and total compensation packages, they are patently absurd.
All that it would take to address some feature issues that are sorely lacking in vehicles like the Lightning and the Mach E is to drive a Tesla for a week. Yes, Tesla has some fundamental problems, but they have done so many things right that Ford cannot seem to address as they are locked in a culture that is from a different era and will not ever be the basis for a truly new model of a modern company.
Look at the idea of requiring massive EV charging expenditures on the part of their dealers without any plans or education for what that would cost them in operating costs for such things as demand charges. How basic is this failure in planning? Farley comes across as massively arrogant and I too wonder what the Board and the Ford family are thinking. All too often these Boards will NOT challenge a CEO until way too late as they are protecting their own positions that are very lucrative and provide social prominence. They need to do their jobs and dive in to look at Ford AND the competitors to really understand what Ford and its competitors each do right and wrong.
Tesla is headed to the bone yard.
😂😂😂?????
I agree with you, why not cut back on the upper management and not the middle management? Farley’s pay should be based off of performance also. Yes, Ford made a lot of money last year, but they also lost of lot of money (Model e) and his inability to actually realize how far behind Ford is with the rest of the competition and what consumers want.
The Ford design team is falling behind on good looking vehicles with features that people want. They keep raising their prices and it’s crazy. Just read that the Expedition, Explorer and some other trucks have gotten a price bump already. How can they keep raising the prices, while the inventory is still high? That doesn’t seem to help sell more vehicles.
The board needs to start looking for a new CEO and executive team to take the lead at Ford because the current leadership is failing.
No mention of the almost 6 billion dollar money pit called Blue Oval City, Mr. Farley? No mention of a complete design disaster of the new all-electric F150, Mr Farley? No mention of chasing away the first step of life-long loyal customers by ceasing production of those pesky “low profit margin” automobiles, Mr Farley? No mention of your and the board’s complete fiduciary duty failure to your stockholders, Mr. Farley? That’s okay, Mr Farley. The good news is it seems you have the answer to all of Ford’s revenue and efficiency (quality) problems. Motivation by compensation reduction to your…. middle….. managers….?
Another problem for Ford Motor Company is Ford has the same quality issues as everybody else these days. But Ford’s sticker prices are still quite a bit more than the other manufacturers. In the past, Ford was able to get away with that because Ford had the best and most reliable products on the road, and the public knew it. However, cost cutting and “lowest-bidder-wins” (both of which are design-stage issues) have put Ford in the same quality toilet as the other companies. Problem is, Ford is still higher priced and the public knows that too, Mr. Farley.
Boom! Well put
Only Ford products I have bought is a early mustang and Pickup. Greatly over engineered trucks and slant eyes mustangs have turned me off , never mind countless issues with the company. Can’t say enough about the awful front-ends of the vehicles. And of course, ECONOMY cars are Greatly needed! Analog dashboard with only air-conditioned on these. JIM was always the wrong pick and the ford’s screwed up.
Meanwhile the ford maverick goes up by around $1,000 or more every single year since it was introduced. It was the only ford i would consider (and bought and sold after 14 months but that’s a different conversation), and i would NOT consider it ot at all at current pricing. There’s not a single thing ford sells that i would consider, but they keep increasing the prices. Doesn’t seem like a winning plan to me. F150, maverick and police fleet explorers are the only things I’m seeing them move in volume.
Fire Jim and bring in Carlos Ghosen but keep an eye on Carlos’ finances. 😂
Complacent Motor Company or Decontent Motor Company. Hmm. Maybe they need a slogan like Quality is Job 1. Oops already fooled everyone on that one….
At Ford, disappointing the customer is Job 1.
You make a $100,000 pickup truck. Duh
” Ford CEO Jim Farley Says Company Hasn’t Been Cost Competitive Since 2009″
A good portion of that time under his watch.
Obviously Farley doesn’t know how to fix it.
He should resign and let the healing begin
Look into the Mirror, Jim Farley ! Look to what you have done to a viable Company ! The wagon Master is no more . You have no wide line of products; from young peoples products like a Falcon, no Torino, no Fairlane, no Ford Galaxie, no Thunderbird, ! What do you sell from a young person’s vehicle to an older Persons vehicle ! Look to Toyoya , Kia, Hundai , Genesis ! Then FIRE Yourself ! The Ford Family needs to hire a New Executive !
Farley is killing Ford. Wake up Billy and can this overpaid pos
Farley has made some poor strategic decision, such as betting on the demand for electric vehicles, that have really hurt Ford. He needs to be replaced. He seems to be the victim and doesn’t own his mistakes.
Farley seems in over his head . Bad decisions and weak leadership. Time to go.
If you have to recall cars every week because of the poor quality you will never gonna be cost competitive.
Seems like Failure Farley has no intentions of resigning; therefore, Ford will never be cost competitive and quality control issues will be permanent.
I grew up driving a ford and I have ford’s now but! Our 2014 ford explorer is not holding up as well as the 2004 f250. I’m probably going with a different company when I can afford to buy a newer vehicle.
Farley needs a CAN tied to his ass and kicked down the ROAD. Ford stock is junk, recalls and recalls, 14 on my 2021 Ford F-150 Lariat. You realize how much time your truck is in and out of the shop. Our local Dealership has 1 yes ONE Tech. Anything beyond an oil change they have to take it 70 miles to the next Ford Dealership, where is can sit for a week. Spend $76k so you can be abused.
I don’t know about hardware engineers, but Ford certainly doesn’t have 25% more software developers than needed. In fact judging from their lack of velocity in pushing out promised updates, they need to something like QUADRUPLE them if they want to catch up to competitors.
The software update velocity on theit EVs has been abysmal and not at all what Farley himself promised.
Yep. The year after they stopped selling the Crown Victoria to the public and it went fleet only until its demise in 2011.
Instead of doing a hot rod Crown Vic with a Cobra Mustang engine to go along with the Marauder I’ll never know.
Why Lincoln never did a V10 Town Car L with the longer wheel base, real leather, more bespoke interiors, I’ll never know.
They stopped selling us American cars. I love mine. Loved my Fusion, but I think if Ford before 1987, before the Taurus. LTD’s and mile long town cars. Grand Marquis that were actually Grand. Not wanna be euro junk.
Farley is a con man. He has no answers but only excuses. He’s throwing out cars just to get rid of them knowing that they will be recalled. He admits Fords are overpriced. Farley is over priced.
I worked Fords between 1968 and 2014 as a maintenance technician in Uk..
Through the good and bad times.
One of the biggest mistakes Ford managemeng made was when Jacque Nasser was Ceo and they decided to set up an elite brand of luxury brand model cars.
PAG. it was called
Premier Automotivd Group
Buying brands such as Volvo, Jaguar, Land Rover, Aston Martin cost a fortune. They had old technology that cost Ford a lot to upgrade on top of purchasing the companies.
Where are they now?
Ford had to sell them off at a loss. Billions in wasted money.
So let’s just remember it’s management that make silly decisions and don’t listen to the shopfloor when they say ‘Must have been mad to buy them in first place.
And what has he done in the last 3 years? The situation has gotten much worse! The current CEO likes to blame others but he is never the one to blame, morale in the company has never been so low, employees do not believe in the CEO because there is no strategy, plan, vision, nothing. Jim is the worst CEO ever in the history of Ford…
It’s always someone else’s fault, isn’t it Jim ? Ahahahahah almost 4 years as CEO always running away from responsibility and not to blame for anything, it’s never his fault even though he’s losing 5 billion a year on EVs lolllll
I will hang on to my older Ford vehicles till the company comes to its senses and makes normal gas powered cars again.
Calling Jim Farley, do you hear us?
Mind if I travel down memory lane as it relates to Ford? Thanks!
My first car was a Torino. A/T, A/C am Philco Radio and Pwr Steering. Stop. It was 3 years old when I bought it and I spiffed it up really nice and to this day, miss it dearly. Another vehicle collided into mine.
Ok, so Ford, GM and Chrysler were in serious financial trouble. GM and Chrysler ask for a bailout but Ford having just hired the best ever, CEO Alan Mulally. He and only he, straightened out Ford. He consolidated vehicle platforms, got rid of the trophy companies- Volvo, Aston Martin, Rover etc. All the cash went into R&D and he saved the Taurus from the scrap heap. He cut through multiple layers of Ford corporate. Bill? It wasn’t your best move by letting Alan get away. Then the heir apparent, Mark Fields came in. Huge shoes to fill and he couldn’t follow Mulally. After that……..a monumental unforced error…..Hackett. What were you thinking, Bill??? Then finally, Farley. Farley and Bill must drink from the same lefty water fountain because they went all-in on Biden’s BEV mandate. How many billions did the govt give you at Ford? COVID hits and you don’t have the chips to build regular ICE vehicles let alone, BEVs. Again, what were you thinking? Consumers were starving for vehicles so some of them bought the Mach Edsel. Very few could afford the F150 Lightning. But the REAL question begs…why did Ford outsource something as critical as microchips in the first place? Are you so greedy that you just can’t keep something in America? How much did you think you saved by doing that? Was it worth it to NOT have the chips needed and you had to store unfinished 47,000 F150s at a Kentucky Speedway?
And what about the Ford dealerships, Bill and Jim? You build the F150 Lightning and Mach Edsel and you don’t sell the vehicles to dealerships with the forever standard invoice and Monroney Sticker. Nope. You sell it to them and they have no margin of profit. Instead, you tell them Well…when you deliver one, we’ll pay you “x” and if you do “y” you’ll get an additional “z” payment, etc. What in the hell are you doing? Oh and you were complaining, Jim that Tesla had this “advantage” over Ford because Ford was forced to go through dealerships in the first place and “wah wah wah”. Yeah, some folks believe THAT is the reason you created Ford E and Ford Blue. You wanted once again, to circumvent the dealerships and lay the groundwork for direct to the public, sales. I just have one question, Jim and associates…….just how well did you perform, selling cars and trucks at the Ford and Lincoln dealerships that you worked at? I mean, you must have thrived, raised children, paid the mortgage on your fantastic sales achievements, right? What’s that? You never SOLD cars? But you’re certain that you can do it better than the people who REALLY built Ford into the automotive juggernaut it has been for over 100 years? Please tell me that you’re not that arrogant and ignorant. Please!
Wait…..perhaps you were engineers who could repair the products built at Ford! Yeah, that must be it! So….every year, Ford and Lincoln is more and more reliant on microchips and you’re still wondering why the warranty costs are through the roof. Remember, Jim? You’ve been complaining how high the warranty costs are. Why don’t you guys add some more modems, actuators, chips, sensors and such. It’s working great, right?
Jim farley, hahaha, how the hell dose he keep his job, when he lets his franchises rip people off like they did us, £65000 in one trip to ford for a van and a pickup , the van never worked correctly , it stranded myself, wife ,Dog , and brand new 25 bmw motorcycle in Spain, and cost us around £8000 to repatriate everything, inc the van ford couldn’t fix , i was then told by trust ford barnsley after the 4th time this brand new van had to go back, that if i took the van back to them, they would report it to the police as just dumped on their forecourt, Ford and this Jim Farley, washed their hands of my £35000 van and just left it not working , on my drive for 13 months, again, Not Working, and did nothing , the ranger we got my wife was no better, never buy ford again, diabolical, dreadful company, who rob you blind, and dont have the knowledge of how to fix their product, and the ignorant, arrogant sraff like farley who wouldnt sort this despite around 100+emails, he didnt even have the common curtesy to reply to any of our emails, all we got were lies from start to finish, YOU SHOULD BE SACKED as you have no idea of customer importance, Shame on you Farley!!
I have been a Ford guy all my life. Since 16 years old (I’m 62 now) I have never been without a ford , and up to 5 at times.
At this point I wouldn’t think about buying a new Ford. All you hear about is recalls, and engines blowing up!!! I’m not even going to mention the ridiculous prices.
The CEO’s and a lot of engineers need to go!!!! If you can’t build a drive train you can maintain without pulling the cab of the pickup truck off for normal maintenance stop building the damn trucks!!!!
Until then I’ll be in my garage doing a frame off restoration of my 1988 F-250 & building my 1965 Falcon 2dr wagon!!!
Jim, Doyle Coppinger, Indianapolis, Indiana. It’s not the manufacturers problem. It’s what a dealership sells the vehicle for. A poor man my, can’t afford a Ford truck any longer. My Dad, God, rest his soul, would turn over in his grave if he saw the prices of a Ford truck now. At one time anyone could buy a Ford truck. Not now. 58 to 62,000? Out of this world. I love Ford. I have a new Mustang now. I wanted a new F150. But, couldn’t afford it. They want sometimes 20 to 30% down. No blue collar worker can afford that. My point is over the years, cars and trucks are just too expensive for a common man or woman. Thank you for your time. A loyal Ford owner.
He is the problem. He came in and said the future of vehicles was crossovers and SUVs. Cars no longer played a part in the industry. Now he is back tracking by saying smaller vehicles will be the future when he is the one that stopped making cars in the US. He is just campaigning to keep his job.