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.
The giveaway has conjured up tremendous interest.
More fallout from a recent supplier plant fire.
Another quarter, another record for the commercial division.
Albeit, one using a different battery chemistry.
As is the case with the existing model.
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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"?????
I always had a staying back when I worked, I’d rather see a great sermon then hear one !!!
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..